UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarter ended ~~November~~February 3028, ~~2014~~2015.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to

Commission File Number 333-139395

LOCATION BASED TECHNOLOGIES, INC.

(Name of registrant as specified in its charter)

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

49 Discovery, Suite 260, Irvine, California 92618

(Address of principal executive offices)

888-600-1044

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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 ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒Yes ☐No

Indicate by check mark whether the registrant is a large accelerated file, 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 ☒

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

As of ~~January~~April 13, 2015, there were ~~268~~ 277,~~580~~530,645 shares of the registrant’s $.001 par value common stock issued and outstanding.

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION	3
ITEM 1.	CONDENSED FINANCIAL STATEMENTS (UNAUDITED)	3
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1719
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2428
ITEM 4.	CONTROLS AND PROCEDURES	2428
PART II	OTHER INFORMATION	2529
ITEM 1.	LEGAL PROCEEDINGS	2529
ITEM 1.A.	RISK FACTORS	2529
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2529
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	2529
ITEM 5.	OTHER INFORMATION	25
ITEM 4.	MINE SAFETY DISCLOSURES	29
ITEM 6.	EXHIBITS	26
ITEM 5.	OTHER INFORMATION	29
SIGNATURES		27
ITEM 6.	EXHIBITS	30
SIGNATURES		31

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Location Based Technologies, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

~~November~~February 3028, ~~2014~~2015 and August 31, 2014

(~~UNAUDITED~~Unaudited)

	November 30,		August 31,
	February 28,		August 31,
	2014		2014
	2015		2014
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	~~623~~237,~~028~~099	$	146,200
Accounts receivable, net of allowances		~~100~~97,~~030~~243		78,422
Inventory, net of reserves		~~791~~749,~~242~~806		793,332
Prepaid expenses and other assets		4321,~~003~~272		45,062
Deferred financing costs		-		5,506
Total current assets		1,~~557~~105,~~303~~420		1,068,522
Property and equipment, net of accumulated depreciation		5038,~~200~~377		65,817
OTHER ASSETS
Intangible assets, net of accumulated amortization		~~579~~562,~~613~~441		596,977
Inventory, net of reserves		513,~~104~~084		565,146
Deposits		30,000		30,000
Total other assets		1,~~122~~105,~~717~~525		1,192,123
TOTAL ASSETS	$	2,~~730~~249,~~220~~322	$	2,326,462

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Location Based Technologies, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

~~November~~February 3028, ~~2014~~2015 and August 31, 2014

(~~UNAUDITED~~Unaudited)

	November 30,			August 31,
	February 28,			August 31,
	2014			2014
	2015			2014
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Convertible demand notes payable and accrued interest	$	3028,~~818~~960		$	30,163
Related party convertible demand notes payable and accrued interest		1,~~217~~245,~~836~~316			1,192,187
Accounts payable and accrued expenses		1,~~808~~812,~~877~~367			1,865,282
Deferred compensation		~~259~~281,~~867~~844			261,814
Deferred revenue		178,~~272~~127			29,691
Advances from officer and accrued interest		~~108~~111,~~967~~038			106,872
Convertible term notes payable and accrued interest, net of unamortized discounts		45,~~113~~103,~~069~~916			3,100,361
Related party convertible term notes payable and accrued interest, net of unamortized discounts		~~109~~2,~~479~~735,995			106,986
Current portion of term loans and accrued interest		1,~~355~~155,~~403~~918			1,618,462
Total current liabilities		9,021,588			8,311,818
Derivative liabilities		601,627			-
Convertible term notes payable		880,734			843,787
Total current liabilities		13,085,108			8,311,818
Related party convertible term notes payable and accrued interest, net of unamortized discounts		3,392,937			2,820,106
Convertible term notes payable		-			843,787
Term loans		250,000			333,333
Related party convertible term notes payable and accrued interest, net of unamortized discounts		1,068,711			2,820,106
TOTAL LIABILITIES		13,545,259			12,309,044
Term loans		125,000			333,333
TOTAL LIABILITIES		14,278,819			12,309,044
Commitments and contingencies		-			-
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued or outstanding		-			-
Common stock, $0.001 par value; 300,000,000 shares authorized; 258,691,822 and 241,095,488 shares issued and outstanding at November 30, 2014 and August 31, 2014, respectively		258,692			241,096
Common stock, $0.001 par value; 300,000,000 shares authorized; 277,530,645 and 241,095,488 shares issued and outstanding at February 28, 2015 and August 31, 2014, respectively		277,531			241,096
Additional paid-in capital		150,~~273~~921,~~611~~523			51,036,456
Prepaid services paid in common stock		~~(24,110~~-	)		(48,225	)
Accumulated deficit		(6263,~~323~~228,~~232~~551	)		(61,211,909	)
Total stockholders' equity (deficit)		(1012,~~815~~029,~~039~~497	)		(9,982,582	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	2,~~730~~249,~~220~~322		$	2,326,462

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Location Based Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended ~~November~~February 3028, ~~2014~~2015 and ~~2013~~2014

(~~UNAUDITED~~Unaudited)

	For the three months ended						For the six months ended
	November 30,			November 30,
	February 28,			February 28,			February 28,			February 28,
	2014			2013
	2015			2014			2015			2014
Net revenue
Devices	$	~~213~~149,~~035~~295		$	~~243~~107,~~391~~582		$	362,330		$	350,973
Services		~~312~~280,~~967~~631			~~165~~233,~~413~~509			593,598			398,922
Total net revenue		~~526~~429,~~002~~926			~~408~~341,~~804~~091			955,928			749,895
Cost of revenue
Devices		~~150~~106,~~393~~122			~~143~~92,~~817~~152			256,515			235,969
Services		~~181~~134,~~673~~888			~~237~~255,~~990~~253			316,561			493,243
Total cost of revenue		~~332~~241,~~066~~010			~~381~~347,~~807~~405			573,076			729,212
Gross profit		193,936			26,997
Gross profit (loss)		188,916			(6,314	)		382,852			20,683
Operating expenses
General and administrative		~~277~~258,~~863~~595			~~728~~290,~~634~~576			536,458			1,019,210
Officer compensation		112,500			~~246~~233,~~687~~059			225,000			479,746
Professional fees		~~233~~130,~~807~~313			~~374~~174,~~493~~465			364,120			548,958
Rent		195,~~740~~003			19,~~203~~202			24,743			38,405
Research and development		~~125,000~~-			899,~~758~~790			125,000			99,548
Salaries and wages		89208,~~440~~860			4861,~~579~~243			298,300			109,822
Total operating expenses		~~858~~715,~~350~~271			1788,~~507,354~~335			1,573,621			2,295,689
Net operating loss		(~~664~~526,~~414~~355	)		(1794,~~480,357~~649	)		(1,190,769	)		(2,275,006	)
Other income (expense)
Financing costs		(~~130~~50,~~500~~585	)		(~~148~~105,~~880~~000	)		(181,085	)		(253,880	)
Amortization of beneficial conversion feature		-			(3228,~~647~~301	)		-			(60,948	)
Amortization of deferred financing costs		~~(5,506~~-	)		(1790,~~827~~523	)		(5,506	)		(108,350	)
Amortization of debt discount		(51,~~608~~609	)		(98106,~~906~~264	)		(103,217	)		(205,170	)
Interest income (expense), net		(259,251	)		(153,290	)
Interest expense, net		(276,773	)		(168,146	)		(536,024	)		(321,436	)
Gain on debt settlement		-			~~886,548~~-			-			886,548
Gain (loss) on asset disposal		-			569
Loss on asset disposals		-			(49,000	)		-			(48,431	)
Foreign currency gain (loss), net		~~(44~~3	)		-(470	)		(41	)		(470	)
Total other income (expense)		(~~446~~378,~~909~~964	)		~~435~~(547,~~567~~704	)		(825,873	)		(112,137	)
Net loss before income taxes		(1905,~~111,323~~319	)		(1,~~044~~342,~~790~~353	)		(2,016,642	)		(2,387,143	)
Provision for income taxes		-			~~800~~-			-			800
Net Loss	$	(1905,~~111,323~~319	)	$	(1,~~045~~342,~~590~~353	)	$	(2,016,642	)	$	(2,387,943	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Location Based Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended ~~November~~February 3028, ~~2014~~2015 and ~~2013~~2014

	For the three months ended
	November 30,			November 30,
	2014			2013
Basic and Diluted - Earnings (loss) Per Share	$	(0.00	)	$	(0.00	)
Basic and Diluted - Weighted Average Number of Shares Outstanding		249,292,118			212,015,680

(Unaudited)

	For the three months ended						For the six months ended
	February 28,			February 28,			February 28,			February 28,
	2015			2014			2015			2014

Basic and Diluted - Earnings (loss) Per Share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)

Basic and Diluted - Weighted Average Number of Shares Outstanding		265,330,116			216,584,974			257,266,813			214,133,373

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Location Based Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015 and ~~2013~~2014

(~~UNAUDITED~~Unaudited)

	For the three months ended
	For the six months ended
	November 30,			November 30,
	February 28,			February 28,
	2014			2013
	2015			2014
Cash Flows from Operating Activities
Net loss	$	(12,~~111~~016,~~323~~642	)	$	(12,~~045~~387,~~590~~943	)
Adjustment to reconcile net loss to net cash used in operating activities:
Loss (gain) on asset disposals and impairment		-			(569	)
Loss on asset disposal		-			49,000
Gain on sale of trademark		-			(569	)
Gain on debt settlement		-			(886,548	)
Provision for doubtful accounts and sales returns		(516,~~436~~500	)		81,000
Provision for inventory reserve		(80129,~~497~~609	)		-(330	)
Depreciation and amortization		3665,~~064~~059			3061,~~927~~306
Amortization of beneficial conversion feature		-			3260,~~647~~948
Amortization of deferred financing costs		5,506			17108,~~827~~350
Amortization of prepaid services paid in common stock		2448,~~115~~225			~~167~~239,~~499~~169
Amortization of debt discount		51103,~~608~~217			98205,~~906~~170
Common stock issued for services and financing costs		3544,~~781~~281			1788,~~500~~670
Stock options issued for services		-81,576			2033,~~630~~132
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable		(162,~~172~~321	)		~~(58~~41,~~550~~501	)
(Increase) decrease in inventory		~~134~~225,~~629~~197			~~(12~~6,~~430~~986	)
(Increase) decrease in prepaid expenses and other assets		223,~~059~~790			(2517,~~362~~099	)
Increase (decrease) in accounts payable and accrued expenses		7881,~~066~~557			~~141~~317,~~137~~643
Increase (decrease) in accrued officer compensation		(120,~~947~~030	)		~~(65~~21,~~999~~691	)
Increase (decrease) in deferred revenue		(1221,~~419~~564	)		(28,~~899~~298	)
Increase (decrease) in accrued interest		~~178~~382,~~377~~182			~~118~~267,~~461~~351
Net cash used in operating activities		(~~681~~1,~~589~~106,016	)		(1,~~444~~798,~~413~~870	)
Cash Flows from Investing Activities
Purchase of property and equipment		(3,083	)		(1749,~~965~~467	)
Proceeds from sale of trademark		-			7,500
Net cash used in investing activities		(3,083	)		(1041,~~465~~967	)
Cash Flows from Financing Activities
Advances / (repayments) from officers, net		-			(283,825	)
Payments on term loans		(254,500	)		-
Payment on term loans		(397,502	)		-
Proceeds from convertible notes payable		950,000			-150,000
Proceeds from related party convertible notes payable		~~466~~650,000			~~900~~1,100,000
Net cash provided by financing activities		1,161,500			871,175
Repayments of related party convertible notes payable		(2,500	)		-
Net increase (decrease) in cash and cash equivalents		476,828			(583,703	)
Net cash provided by financing activities		1,199,998			1,246,175
Net increase (decrease) in cash and cash equivalents		90,899			(594,662	)
Cash and cash equivalents, beginning of period		146,200			680,914
Cash and cash equivalents, end of period	$	~~623~~237,~~028~~099		$	9786,~~211~~252
Supplemental disclosure of noncash financing and investing activities:
Conversion of deferred compensation into convertible demand notes payable	$	-		$	55,500
Issuance of common stock for services and financing costs	$	134,472		$	-
Issuance of warrants for financing costs classified as debt discount	$	-		$	165,922
Issuance of common stock for conversion of debt	$	84,500		$	-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Location Based Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended February 28, 2015 and 2014

(Unaudited)

	For the six months ended
	February 28,		February 28,
	2015		2014

Non-Cash Financing Activities:
Issuance of common stock for conversion of debt	$	262,800	$	-
Issuance of common stock for services and financing costs	$	134,472	$	312,500
Conversion of accrued compensation into convertible notes payable	$	-	$	55,500
Conversion of accounts payable into common stock	$	-	$	315,000
Issuance of warrants for financing costs classified as debt discount	$	-	$	201,978
Derivative liability for insufficient number of authorized shares	$	601,627	$	-

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~November~~February 3028, ~~2014~~2015

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

The Company designs, develops, and sells personal, pet, and vehicle locator devices and services including PocketFinder® People, PocketFinder® Pets and PocketFinder® Vehicles. The PocketFinder® is a small, completely wireless, location device that enables a user to locate a person, pet, vehicle or valuable item at any time from almost anywhere using Global Positioning System (“GPS”) and General Packet Radio Service (“GPRS”) technologies. The Company is located in Irvine, California.

Organization

Location Based Technologies, Inc. (formerly known as Springbank Resources, Inc.) (the “Company,” “our,” “we” 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., and in October 2007 was merged into LBT.

On September 30, 2009, the Company formed Location Based Technologies, Ltd. (“LBT, Ltd.”), an England and Wales private limited company, to establish a presence in Europe. LBT, Ltd. is a wholly owned subsidiary of the Company.

Consolidation Policy

The accompanying consolidated financial statements include the accounts and operations of the Company and its wholly owned subsidiary, Location Based Technologies, Ltd. Intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation

The unaudited consolidated 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 8-01 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~~have been no material changes in the information disclosed in the notes to financial statements included in the annual report on Form 10-K of Location Based Technologies, Inc. for the year ended August 31, 2014. 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~~six months ended ~~November~~February 3028, ~~2014~~2015, 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 consolidated financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended August 31, 2014, included in the Company’s report on Form 10-K.

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~November~~February 3028, ~~2014~~2015

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

Going Concern

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has incurred net losses since inception, and as of ~~November~~February 3028, ~~2014~~2015, had an accumulated deficit of $6263,~~323~~228,~~232~~551 and negative working capital of $711,~~464~~979,~~285~~688. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management recognizes that the Company must generate additional resources to enable it to continue operations. Management intends to raise additional financing through debt and equity financing or through other means that it deems necessary, with a view to moving forward and sustaining prolonged growth in its strategy phases. However, no assurance can be given that the Company will be successful in raising additional capital. Further, even if the Company raises additional capital, there can be no assurance that the Company will achieve profitability or positive cash flow. If management is unable to raise additional capital and expected significant revenues do not result in positive cash flow, the Company will not be able to meet its obligations and may have to cease operations.

Allowance for Doubtful Accounts

The allowance for doubtful accounts on accounts receivable is charged to operations in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and the current status of accounts receivable. Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired. As of ~~November~~February 3028, ~~2014~~2015 and August 31, 2014, the allowance for doubtful accounts amounted to $3932,~~564~~000 and $27,000, respectively.

910

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~November~~February 3028, ~~2014~~2015

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

Allowance for Sales returns

An allowance for sales returns is recorded as a reduction to revenue and based on management’s judgment using historical experience and expectation of future conditions. As of ~~November~~February 3028, ~~2014~~2015 and August 31, 2014, the allowance for sales returns amounted to $95,~~000~~500 and $27,000, respectively.

Inventory

Inventories are valued at the lower of cost (first-in, first-out) or market and primarily consisted of components and finished goods for the Company’s PocketFinder® products. Packaging costs are expensed as incurred. The Company provides for a lower-of-cost-or-market ("LCM") adjustment against gross inventory values. Management estimates the current ~~wholesale~~ selling price of $58.00 as the realizable value of the inventory. Management estimated sales for the next 24 month period based on historical sales data and prospective sales trends and determined that all inventory is expected to be sold in the next two years. Management analyzed and tested certain components that could possibly become obsolete and determined that the useful life exceeded the two year estimate to sell the inventory. In addition, a portion of the components inventory, net of the LCM valuation reserve, totaling $513,~~104~~084 is classified as a noncurrent asset at ~~November~~February 3028, ~~2014~~2015 (see Note 3).

Deferred Revenue

Deferred revenue is a liability related to revenue producing activity for which revenue has not yet been recognized. As of ~~November~~February 3028, ~~2014~~2015 and August 31, 2014, deferred revenue amounted to $178,~~272~~127 and $29,961, respectively, and consisted of prepaid service revenue from subscribers.

Advertising Costs

Advertising costs are expensed as incurred. For the three months ended ~~November~~February 3028, 2015 and 2014, the Company incurred $4,590 and ~~2013~~$0 of advertising costs, respectively. For the six months ended February 28, 2015 and 2014, the Company incurred $1418,~~092~~682 and $~~485~~466,~~391~~612 of advertising costs, respectively.

1011

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~November~~February 3028, ~~2014~~2015

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

Derivative Liabilities

During the six months ended February 28, 2015, the Company issued additional convertible notes and common stock for the conversion of debt. The Company has determined that there are no longer sufficient authorized shares to satisfy outstanding warrants, option agreements and convertible notes if all such agreements were to be exercised or noteholders elected to convert. Accordingly, the Company recognized this as a derivative liability and recorded such liability $601,627 and a reduction to additional paid-in-capital using the Black-Scholes valuation method to estimate the fair value of the derivative liability as of February 28, 2015. The Company used a weighted average risk free interest rate of 2.0%, an expected life of .88 years, an annual volatility of 727% and no dividends to determine the value of the derivative liability.

2.	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 FASB ASC 260 – 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.

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. The following potential common shares are excluded from diluted loss per share as their effect would be anti-dilutive.

	November 30,		August 31,
	February 28,		August 31,
	2014		2014
	2015		2014
Warrants		17,~~956~~684,~~715~~022		17,956,715
Stock options		3,~~025~~495,~~000~~163		3,025,000
Convertible notes payable		5258,~~253~~568,438		40,564,550
Dilutive potential common shares		7379,~~235~~747,~~153~~623		61,546,265

3.	INVENTORY

Inventory at ~~November~~February 3028, ~~2014~~2015 and August 31, 2014 consisted of the following:

	November 30,			August 31,
	2014			2014
Current:
Finished goods	$	882,842		$	1,016,876
Device Components		515,602			419,681
Inventory valuation reserve		(607,202	)		(643,225	)
Inventories, current	$	791,242		$	793,332
Noncurrent:
Device components	$	955,207		$	1,051,722
Inventory valuation reserve for components		(442,103	)		(486,576	)
Inventories, noncurrent	$	513,104		$	565,146

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~November~~February 3028, ~~2014~~2015

3.	INVENTORY (Continued)

In the first quarter of 2012, the Company purchased a substantial amount of inventory components to produce PocketFinder® devices. Management analyzed its inventories based on existing purchase orders and current potential orders for future delivery and determined we may not realize all of the inventory components within the next year. The Company expects that it will take approximately six months to sell finished goods inventory on hand at November 30, 2014. Following the sale of all finished goods inventory, components inventory will be utilized to manufacture additional devices that are expected to be sold in year 1 and 2. Inventories totaling $513,104 which may not be realized within a 12-month period have been reclassified as long-term as of November 30, 2014.

	February 28,			August 31,
	2015			2014
Current:
Finished goods	$	792,823		$	1,016,876
Device Components		515,423			419,681
Inventory valuation reserve		(558,441	)		(643,225	)
Inventories, current	$	749,805		$	793,332

Noncurrent:
Device components	$	954,837		$	1,051,722
Inventory valuation reserve for components		(441,753	)		(486,576	)
Inventories, noncurrent	$	513,084		$	565,146

In the first quarter of 2012, the Company purchased a substantial amount of inventory components to produce PocketFinder® devices. Management analyzed its inventories based on existing purchase orders and current potential orders for future delivery and determined we may not realize all of the inventory components within the next year. The Company recently signed a new distribution agreement to sell product in Mexico and now expects that it will take approximately four months to sell finished goods inventory on hand at February 28, 2015. Following the sale of all finished goods inventory, components inventory will be utilized to manufacture additional devices that are expected to be sold in year 1 and 2. Inventories totaling $954,837 which may not be realized within a 12-month period have been reclassified as long-term as of February 28, 2015.

4.	RELATED PARTY TRANSACTIONS

Advances from Officer

During the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015 and ~~2013~~2014, there were advances from our Chief Development Officer totaling $0 and $48151,~~825~~000, respectively; and repayments totaling $0 and $20154,~~000~~824, respectively. As of ~~November~~February 3028, ~~2014~~2015, there was $105,000 of outstanding advances and $36,~~967~~038 of related accrued interest.

SkyBell Technologies, Inc.

The Company occupies office space at a facility leased by SkyBell Technologies, Inc. (“SkyBell”). In addition, the Company outsources its customer service to SkyBell under a month to month contract that commenced in February 2014. SkyBell is owned and operated by Joseph Scalisi, Chief Development Officer, and Desiree Mejia, Chief Operating Officer. During the three months ended ~~November~~February 3028, ~~2014~~2015, the Company incurred $4915,~~807~~355 in costs related to these services. During the six months ended February 28, 2015, the Company incurred $65,162 in costs related to these services.

~~Accounts Payable~~13

~~Amounts~~LOCATION ~~payable~~BASED ~~to related parties totaled $596~~TECHNOLOGIES,~~787~~ ~~as of November 30, 2014~~INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2015

4.	RELATED PARTY TRANSACTIONS (Continued)

Accounts Payable and Accrued Expenses

Amounts payable to related parties totaled $696,883 and $471,979 as of February 28, 2015 and August 31, 2014, respectively.

DEBT

New Debt Issuances

The following debt was issued during the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015:

On September 5, 2014, the Company entered into a convertible promissory note for $450,000. The note bears interest at 10% per annum, may be converted into common stock of the Company at $0.10 per share, or 50% of the Company’s closing stock price at any time after April 15, 2015, upon written notice. The note is due on September 5, 2015 and is secured by certain intellectual property owned by the Company.

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2014

5. DEBT (Continued)

On September 11, 2014, the Company entered into a convertible promissory note for $150,000 with a board member. The note bears interest at 10% per annum, may be converted into common stock of the Company at $0.10 per share, or 50% of the Company’s closing stock price at any time after April 15, 2015, upon written notice. The note is due on September 11, 2016 and is secured by all assets of the Company.

On October 14, 2014, the Company entered into a convertible promissory note for $100,000 with a board member. The note bears interest at 10% per annum, may be converted into common stock of the Company at $0.10 per share, or 50% of the Company’s closing stock price at any time after April 15, 2015, upon written notice. The note is due on October 14, 2016 and is secured by all assets of the Company.

On November 21, 2014, the Company entered into a convertible promissory note for $500,000. The note bears interest at 10% per annum, may be converted into common stock of the Company at $0.10 per share, or 50% of the Company’s closing stock price at any time after April 15, 2015, upon written notice. The note is due on December 1, 2015 and is secured by all assets of the Company.

On November 26, 2014, the Company entered into a convertible promissory note for $216,000 with a board member. The note bears interest at 10% per annum, may be converted into common stock of the Company at $0.10 per share, or 50% of the Company’s closing stock price at any time after April 15, 2015, upon written notice. The note is due on November 26, 2016 and is secured by all assets of the Company.

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2015

5.	DEBT (Continued)

On December 3, 2014, the Company entered into a convertible promissory note for $84,000 with a board member. The note bears interest at 10% per annum, may be converted into common stock of the Company at $0.10 per share, or 50% of the Company’s closing stock price at any time after April 15, 2015, upon written notice. The note is due on December 3, 2016 and is secured by all assets of the Company.

On January 7, 2015, the Company entered into a convertible promissory note for $50,000 with a board member. The note bears interest at 10% per annum, may be converted into common stock of the Company at $0.10 per share, or 50% of the Company’s closing stock price at any time after April 15, 2015, upon written notice. The note is due on January 7, 2017 and is secured by all assets of the Company.

On February 3, 2015, the Company entered into a convertible promissory note for $50,000 with a board member. The note bears interest at 10% per annum, may be converted into common stock of the Company at $0.10 per share, or 50% of the Company’s closing stock price at any time after April 15, 2015, upon written notice. The note is due on February 3, 2017 and is secured by all assets of the Company.

Debt Amendments

The following debt amendments were executed during the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015:

On September 5, 2014, the Company amended the secured promissory note payable totaling $1,000,000 to extend the maturity date to September 5, 2015 and to allow the Lender at the Maturity Date, or during any time after April 15, 2015, the right, but not the obligation, to convert this Note into shares of the Company’s common stock at a price equal to the lower of $0.20 per share or 50% of the closing stock price on the day after the Company is given notice of the conversion by the Lender (the “Conversion Price”).

On November 28, 2014, the Company amended one convertible demand note payable totaling $28,500 to eliminate the extension fee and increase the interest rate to Ten Percent (10%) per annum.

13On November 28, 2014, the Company amended five convertible notes payable to related parties totaling $1,114,487 to eliminate the extension fee and increase the interest rate to ten Percent (10%) per annum.

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~November~~February 3028, ~~2014~~2015

5.	DEBT (Continued)

On ~~November~~February 2827, ~~2014~~2015, the Company amended ~~five~~two ~~convertible~~secured ~~notes~~promissory note payable towith ~~related~~a ~~parties~~board member totaling $1,~~114~~400,~~487~~000 to ~~eliminate~~allow the ~~extension~~Lender ~~fee~~at ~~and~~the ~~increase~~Maturity Date, or during any time after April 15, 2015, the ~~interest~~right, ~~rate~~but not the obligation, to ~~Ten~~convert ~~Percent~~these ~~(10%)~~Notes into shares of the Company’s common stock at a price equal to the lower of $0.20 per ~~annum~~share or 50% of the closing stock price on the day after the Company is given notice of the conversion by the Lender (the “Conversion Price”).

Principal Repayments

As of ~~November~~February 3028, ~~2014~~2015, the principal maturities of the convertible notes payable and related party convertible notes payable are as follows:

For the Years Ending:

November 30, 2015	$	7,244,439
February 28, 2016	$	8,066,939
November 30, 2016		1,667,500
February 29, 2017		1,026,500
Total	$	89,~~911~~093,~~939~~439

6.	LINE OF CREDIT AND TERM LOANS

SVB Line of Credit

On January 5, 2011, the Company entered into a Loan and Security Agreement (“Loan Agreement”) with Silicon Valley Bank (“SVB”) for a $1,000,000 non-formula line of credit. The principal amount outstanding under the credit line accrues interest at a floating per annum rate equal to the greater of (i) the Prime Rate, plus 2.5% or (ii) 6.5% and is to be paid monthly. The Company must maintain certain financial covenants under the Loan Agreement. The personal guarantor for the credit line is a director and stockholder of the Company.

In connection with the Loan Agreement, the Company entered into a Financing Agreement and Loan Guarantor Agreement with a board member to personally guarantee the Loan Agreement. As compensation for the guarantee under the Financing Agreement, the guarantor is entitled to payment of $5,000 per month, plus Two Percent (2%) of the outstanding balance of the SVB loan balance (“guarantee fee”), payable in cash or shares of the Company’s common stock at the guarantor’s option. As of ~~November~~February 3028, ~~2014~~2015, the Company’s accounts payable and accrued expenses included $~~478~~528,000 in guarantee fees owed to the board member.

1416

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~November~~February 3028, ~~2014~~2015

6.	LINE OF CREDIT AND TERM LOANS (Continued)

As of ~~November~~February 3028, ~~2014~~2015, the outstanding balance on the line of credit and accrued interest totaled $~~750~~625,000 and $107,~~691~~508, respectively. Of the total amount of principal and interest due on the line of credit, $~~510~~507,~~691~~508 has been included in the current portion of term loans and accrued interest on the balance sheet as of ~~November~~February 3028, ~~2014~~2015 and the balance of $~~250~~125,000 in the non-current portion of term loans.

JMJ Notes Payable

As of ~~November~~February 3028, ~~2014~~2015, the outstanding balance on the notes payable and accrued interest totaled $~~844~~648,~~712~~412 and $0, respectively. The total amount has been included in the current portion of term loans and accrued interest on the balance sheet as of ~~November~~February 3028, ~~2014~~2015.

7.	EQUITY

Common Stock

The Company issued 375,000 shares of common stock to three members of the board of directors in exchange for six months of service during the ~~three~~six months ~~November~~ended 30February 28, ~~2014~~2015. The shares were valued at $3,338, which represents the fair market value of the shares provided on the award date.

The Company issued 1,359,254 shares of common stock in connection with note payable maturity date extensions during the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015. The shares were valued at $81,555, which represents the fair market value of the shares issued on the award date of March 2014.

The Company issued 1230,~~762~~750,~~080~~903 shares of common stock for the conversion of debt amounting to $84262,~~500~~800 during the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015.

The Company issued 3,~~100~~950,000 shares of common stock to consultants in exchange for various advisory services during the ~~three~~six months ~~November~~February 3028, ~~2014~~2015. The shares were valued at $8540,~~360~~943, which represents the fair market value of the shares provided on the award date.

8.	PROVISION FOR INCOME TAXES

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.

1517

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~November~~February 3028, ~~2014~~2015

8.	PROVISION FOR INCOME TAXES (Continued)

The components of the Company’s deferred tax asset as of ~~November~~February 3028, ~~2014~~2015 and August 31, 2014 are as follows:

	November 30,			August 31,
	February 28,			August 31,
	2014			2014
	2015			2014
Net operating loss carry forward and deductible temporary differences	$	21,~~302~~649,~~867~~179		$	20,880,437
Valuation allowance		(21,~~302~~649,~~867~~179	)		(20,880,437	)
Net deferred tax asset	$	-		$	-

As of ~~November~~February 3028, ~~2014~~2015, the Company had federal and state net operating loss carryforwards of approximately $5354,~~481~~353,~~351~~953 which can be used to offset future federal income tax. The federal and state net operating loss carryforwards expire at various dates through 2033.

As of ~~November~~February 3028, ~~2014~~2015 no accrued interest and penalties are recorded relating to uncertain tax positions. Any such interest and penalties would be included in interest expense as a component of pre-tax net income or loss. The Company's tax filings are no longer open to examination by the Internal Revenue Service for tax years prior to ~~2009~~2012 and by state taxing authorities for tax years prior to ~~2008~~2012.

9.	SUBSEQUENT EVENTS

On ~~December~~March 39, ~~2014~~2015, the Company entered into a convertible promissory note for $84300,000 with a board member. The note bears interest at 10% per annum, may be converted into common stock of the Company at $0.10 per share, or 50% of the Company’s closing stock price at any time after April 15, 2015, upon written notice. The note is due on ~~December~~March 39, ~~2016~~2017 and is secured by all assets of the Company.

On ~~January~~April 6, 2015, the Company ~~issued 9~~entered into a convertible promissory note for $50,~~888~~000 with a board member. The note bears interest at 10% per annum,~~823~~ ~~shares~~may ofbe converted into common stock ~~for~~of the ~~conversion~~Company ofat ~~debt~~$0.10 inper ~~the~~share, ~~amount~~or 50% of ~~$97~~the Company’s closing stock price at any time after April 15,~~300~~ 2015, upon written notice. The note is due on April 6, 2017 and is secured by all assets of the Company.

1618

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

FORWARD LOOKING STATEMENTS

This report contains certain forward-looking statements of our intentions, hopes, beliefs, expectations, strategies, and predictions with respect to future activities or other future events or conditions. These statements are usually identified by the use of words such as “believe,” “will,” “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “should,” “could,” or similar expressions. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined ~~under~~in ~~Part I, Item 1A. “Risk Factors” and other sections of~~ this report, that may cause our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements, express or implied by these forward-looking statements.

Although we believe that the assumptions underlying the forward-looking statements contained in this report are reasonable, any of the assumptions could be inaccurate, and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements in this report and any amendments to this report. We will not update these statements unless the securities laws require us to do so. Accordingly, you should not rely on forward-looking statements because they are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results to differ materially from those contemplated by the forward-looking statements

Overview. We were incorporated under the laws of the State of Nevada in April 2006 as Springbank Resources, Inc. (“SRI”). SRI was formed to engage in the exploration and development of oil and gas, and by 2007 had disposed of all of its assets and satisfied its liabilities. In October 2007, SRI acquired all of the outstanding stock of Location Based Technologies, Corp. (“Old LBT”), following which SRI merged Old LBT into itself and, in the process, SRI’s name was changed to Location Based Technologies, Inc. Old LBT was incorporated in September 2005 by David Morse, Joseph Scalisi and Desiree Mejia, who became our officers and directors, in order to develop the PocketFinder personal locators.

Our principal executive offices are located at 49 Discovery, Suite 260, Irvine, California 92618, and our telephone number is 888-600-1044.

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.”

Unless otherwise stated, all references to “we,” “us,” “our,” the “company” and similar designations refer to Location Based Technologies, Inc.

Location Based Technologies®, PocketFinder® and PocketFinder Pets® are registered trademarks, and PocketFinder Network™, PocketFinder People™, PocketFinder Vehicle™, PocketFinder Luggage™, PocketFinder Mobile™, LBT-886™, “Powered by LBT”™ and VehicleFleetFinder™ are trademarks, of the company. With respect to this report, we reserve all rights to the foregoing trademarks regardless of whether they carry the “®” or “™” designation.

Our Business. The company is doing business in one of the fastest growing and dynamic industries that exists today - the Internet-of-Things (“IoT”). The Internet has changed so many aspects of our lives and the marriage of GPS location devices with Internet and mobile Internet access for easy to use data display is bringing exciting new capabilities to businesses and families. LBT ~~designs, develops, and~~ sells commercial and consumer wearable GPS tracking solutions that enhance the way people and things stay connected within our highly mobile society. LBT’s products and services provide data intended to enhance safety, security, connectivity, operational savings, and coordination of mobile assets and enhanced managerial or parental decisions. Our devices operate on the worldwide GSM network and therefore work ~~around~~on most of the wireless networks around the world. ~~Consumer~~Our consumer products are primarily ~~intended to be~~ used to track any portable asset (powered or unpowered), vehicles, pets, and people. ~~Unlike~~Our acommercial ~~cell phone, the GPS functionality, or the phone, cannot be turned off. Commercial~~ products are ~~marketed~~available to businesses of all sizes and governmental organizations that need to track vehicles, mobile equipment, portable assets and workers. ~~In late calendar year 2014 select businesses will be able to add advanced storm and weather tracking capability integrated from the Department of Energy’s VERDE system.~~

Consumer products are sold under the PocketFinder brand and include: ~~PocketFinder,~~applications ~~PocketFinder~~for ~~Luggage~~children, ~~PocketFinder~~seniors, ~~Pet~~pets and ~~PocketFinder Vehicle~~vehicles. All PocketFinder products display user information regarding device location, (longitude, latitude), altitude, heading or direction, speed and 60 days of location or “breadcrumb” tracking history. Users can also set alerts that will trigger an email, text or push notification to notify them when their device exceeds a pre-determined parameter such as speed, battery life or entry/exit of a geo-zone.

17PocketFinder and PocketFinder Personal/Pet or luggage devices are small (roughly 2 inches in diameter), rugged and waterproof devices that are ideal for tracking or locating any mobile asset (person, pet or valuable item) at any time from almost anywhere outdoors. These devices use the Assisted Global Positioning System (“A-GPS”) network to acquire location data and transmit data over the global GSM wireless network.

PocketFinder and PocketFinder Personal/Pet or luggage devices are small (roughly 2 inches in diameter), rugged and waterproof devices that are ideal for tracking or locating any mobile asset (person, pet or valuable item) at any time from almost anywhere outdoors. These devices use the Assisted Global Positioning System (“A-GPS”) network to acquire location data and transmit that data through the global GSM wireless network. 19

The PocketFinder Vehicle tracker is intended to be hardwired to any powered asset (vehicle, watercraft or mobile generator). The device is rugged, spark-proof and water resistant and enables the user to locate and track a mobile asset at any time from almost anywhere outdoors.

PocketFinder and PocketFinder Vehicle users can view all of the devices on their account by logging on via the web at www.pocketfinder.com or our PocketFinder App, which is native to the iPhone, iPad and Android phone.

LBT’s IoT Commercial products are streamlining and lowering the cost of business processes and logistics, increasing worker safety, security and management oversight. Devices sold under the LBT brand include the LBT-886 (“886”) and the LBT Vehicle Tracker. The LBT-886 is a compact, rugged, long-lasting location device that enables a user to locate and track people or any mobile asset at any time from almost anywhere with GSM wireless coverage. Battery life of the LBT-886 typically ranges from 21 days to 3 months, depending upon environmental and usage factors.

The LBT GPS Vehicle Tracker provides all tracking features and offers additional capabilities. Its 7 wire harness can increase the device’s functionality by adding capabilities such as temperature, light and humidity monitoring, engine on/off monitoring and “starter interrupt” engine capability or lone worker Emergency Alert features.

Commercial customers can access their account by logging in through our LBT corporate website (www.locationbasedtech.com) which is optimized for web browsing, or through our App, which is native to the iPhone, iPad and Android phone. The commercial user-interface features enhanced ~~back~~backend ~~end~~ services that include additional reporting features and zone capabilities.

We generate revenue through product sales and monthly subscription service fees. Currently, PocketFinder consumers in the US and Canada pay a monthly service fee of $12.95 per month with no contract, while commercial customers in the US and Canada typically pay $15.95 per month.

All of our devices are made in the USA and come standard with an AT&T SIM card, which enables them to roam internationally on the AT&T network ~~and~~or onone ~~their~~of AT&T’s roaming partners’ networks. Roaming charges can be up to $29.95 per month.

Devices can also be supplied with SIM cards provided by EE or Telefonica (through the Aeris platform). Monthly service rates will vary from region to region depending on the fee charged by the local network carrier; however, in nearly all instances the monthly fees will be less than $29.95. We typically source SIM cards based on the carrier which can provide the best coverage at the most competitive price for a given region.

Research and Development. Our goal is to always be a leader in the location based technologies market. Our ongoing research and development is intended to either improve our existing products and services or create new products and services.

In an ongoing effort to improve the user’s experience we are constantly upgrading our device software and our system’s back end. Our software development efforts are intended to result in additional features on our end user interface and increased device functionality through our back end. The software updates for all of our products are delivered over the air, which allows every customer to receive the latest version of our firmware simply by charging their device.

Our current hardware development iswill ~~primarily~~enhance ~~focused on enhancing~~ the indoor tracking capability of a new 3G PocketFinder device. ~~and~~This anew miniaturized dual Iridium/GSM device ~~both~~is ofcurrently ~~which~~in ~~are close to~~ the final stages of building prototypes, testing and certification before market entry. Having a 3G consumer device will enable usthe Company to sell PocketFinder Personal Locator and PocketFinder Pet devices into territories that predominately operate on the 3G network, like Canada and Australia. New Wi-Fi capability will significantly improve indoor location accuracy and greatly reduce “false alert” reports that result from relying on GPS capability only. This will be particularly beneficial to the child and pet markets.

We will continue to invest in our research and development efforts for the foreseeable future.

Consumer Sales Channels. In the US, our PocketFinder family of products can be found at the following online locations: Amazon.com, Walmart.com, Bestbuy.com/Future Shop (Canada), ~~Crutchfield.com~~New Egg, our www.pocketfinder.com website and numerous affiliate marketing websites. LBT ~~has~~is ~~recently~~working ~~entered agreement~~ with a global distributor in the US that will significantly expand our retail footprint with our new 3G PocketFinder product.

18With the introduction of our 3G vehicle tracker devices, LBT has launched a new and innovative Auto Dealership Reseller Program in North America in 2015 focused on increasing installations at the time of new and pre-owned vehicle sales. LBT has found solid interest in the US and, most recently, in Mexico. The program consists of a new auto-dealer portal to enable resellers to create user accounts and to activate the GPS tracker devices. New sales people will be added in second quarter, 2015 to focus on sales in this new market segment.

With the introduction of our 3G vehicle tracker devices, LBT is launching a new and innovative Auto Dealership Reseller Program in North America in 2015 focused on increasing installations at the time of new and pre-owned vehicle sales. This is expected to appeal to a larger and wider audience of car buyers who may be averse to purchasing aftermarket electronics. The program consists of a new auto-dealer portal to enable resellers to create user accounts and to activate the GPS tracker devices. The program was completed at the end of November, 2014 with the initial launch in December 2014. 20

Internationally, our devices are being sold and marketed in Mexico, United Kingdom (“UK”), other European Union countries, Colombia and Ecuador. The Company has recently entered an agreement with a leading distributor in Mexico with ~~plans~~initial orders received and product expected to ~~distribute~~be ~~devices~~shipped ~~and~~in the Company’s fiscal third quarter. These sales are anticipated to generate ~~higher~~ significant device and service revenues in 2015 through both online and major retail partners. The ~~company~~Company ismay ~~pursuing~~pursue ~~the~~a ~~same~~similar expansion strategy in Europe ~~and~~based ~~actively~~on ~~engaged~~recent ininterest ~~discussions~~ with ~~well established~~ distribution partners in UK, Germany, and The Netherlands. In the UK, LBT has partnered with EE (the largest mobile-to-mobile telecommunications company in the UK). Recent reports show Europe at the forefront of M2M (“Machine-to-Machine”) or the adoption of “Internet-of-things” applications with revenues from M2M services market wide expected to grow at a compounded annual rate of 33% through 2016 in a selection of European markets, including Germany, France, Poland, Russia, Sweden and the UK. These are the findings of new research from Frost & Sullivan, which predicts that the number of SIM connections will increase to 75 million in 2016, with the UK emerging as the biggest market and Germany a close second. LBT is currently negotiating with an interested European distributor, but has not yet signed an agreement.

Commercial Sales Channels. Our ~~relationship~~Auto ~~with~~Dealer ~~AT&T~~Program ~~has~~will ~~the~~significantly ~~potential~~strengthen toour ~~continue~~commercial tosales ~~grow~~and ~~over~~augment ~~the~~our ~~coming~~ongoing ~~year.~~business ~~Related~~sales toduring ~~the~~calendar ~~utility~~2015. ~~market,~~Given weour ~~signed~~refocus anand ~~exclusive~~unexpected ~~contract~~delays with ~~the~~our ~~Department~~Tennessee ofbased ~~Energy~~reseller, (the, ~~“DOE”)~~Company ~~for~~has anot ~~project~~been ~~that~~able ~~has~~to ~~allowed~~penetrate usthe toutility ~~integrate~~market anthus far. We have completed the integration of Oak Ridge National Laboratory’s technology that provides real-time status of the electric grid and critical energy sectors along with real-time severe weather condition tracking. The system, called VERDE (Visualizing Energy Resources Dynamically on the Earth), enables decision-makers to respond swiftly to major power disruptions. VERDE, which combines the display capabilities of Google Earth with analysis and modeling components, significantly enhances situational awareness and speeds recovery times from power outages and other utility interruptions. We ~~have~~expect ~~completed~~to ~~integration of the system and will soon~~ begin sales of the feature to public utilities (power, water and telecom) through aour ~~reseller~~existing ~~partner~~or inother ~~Tennessee~~resale partners. The Company will evaluate expansion of this new capability for “fit” to specific commercial and other first responder agencies throughout the ~~United States~~US.

LBT ~~expects~~has tolaunched ~~jointly initiate first-phase launch of~~ commercial ~~business~~sales in Australia with Pacific-Asia partner, Finda, through the Australian Warranty Network service provider this month. Finda is gaining acceptance of LBT devices in multiple applications for both ~~Consumer~~consumer and ~~Commercial~~commercial customers in Australia and New Zealand.

Our Intellectual Property Investment. LBT retained the well-established Washington D.C. firm of Hunton & Williams to assist in the generation of additional revenues through licensing our intellectual property and potential sale of LBT’s patents.

We continue to invest in intellectual property that consists of apparatus patents and applications and system and method patents and applications. We have filed claims that cover many aspects of our devices, its operating system and user interface. Our intellectual property portfolio includes 3839 issued US patents, 32 pending US patents, 2 issued foreign patents, 3 pending foreign patents, 6 PCT filings, 16 registered trademarks and 4 Madrid protocol trademark cases.

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

Our Target Markets and Marketing Strategy. We provide wireless location based solutions for global positioning products along with our proprietary “friendly user interface” software system. We deliver rugged, compact products with near real time location-based information over its proprietary server architecture. Our products optimize the way businesses utilize mobile assets, save money and connect with key personnel; similarly, families utilizing our products in our ever increasingly mobile society are now able to easily stay connected with one another while on the go and from wherever they are.

Our 2015 marketing initiatives ~~will~~ include:

●

Expanding our retail outreach through industry leading distributors in the US, Canada, Mexico and Europe;

●

Partnering with US based new and used car dealers through our innovative Auto Dealer Program; and,

●

Bringing a new 3G wearable device to market with enhanced Wi-Fi capability to deliver higher reliability location information for the people and a more complete solution for the pet markets

1921

Our Revenue Sources. We expect our revenues to be derived from the following sources:

● Software licensing fees;

● Organizations that will self-brand LBT’s services for specialized niche markets (“private label”);

● Asset and personal locator device sales to commercial customers and through retailers;

● Personal locator device sales through affinity groups and through our website; and

● Monthly subscription service fees.

Our Growth Strategy. Our objective is to become a premier provider of personal and asset location services in the Location Based Services consumer and commercial markets.

We subdivide the commercial market into three categories: small/midsize businesses, (including the strategic utility company market), enterprise businesses and governmental organizations (including the US military). We ~~will~~are ~~attempt~~focused toon ~~gain market share in~~ the small/midsize business segment through channel sales efforts. The enterprise businesses and military segments are far more difficult to penetrate because they tend to require long sales cycles and rigorous testing but, once approved, tend to be good long-term partners. ~~To date, most of the large companies and organizations we are working with have approached us.~~ We expect that as we continue to gain traction with large, reputable institutions, their peers will continue to seek us out. ~~The exclusive contract integrating DOE’s VERDE feed positions us with a significant differentiator in the utility market throughout the US and Canada.~~

Our Competition. Even though there has been tremendous growth in tracking Apps for mobile phones, personal location (wearables) and property tracking devices are beginning to significantly penetrate the marketplace. In fact, growth for asset tracking solutions is projected to be very strong over the next five years.

Our competitors include, but are not limited to: Geospatial Platform Providers, Application Developers, Garmin’s GTU-10, Tagg, Amber Alert, Spark Nano, LiveView GPS, eZoom, iTrack, 5 Star, Meitrack, iTrack GPS Locator, Lo-Jack, SpotLight, and commercial providers such as Fleetmatics, NetworkFleet, and Qualcomm. Some competitors may be better financed, have superior technology 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 $100 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 Federal Communications Commission, 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 are NOM and NYCE certified and ready to begin sales in Mexico. 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.

Employees and Outsourced Assistance. We have limited our use of contracted professionals who have been engaged in hardware and software development, early marketing and sales preparation, and preparation for customer service support. Mr. Morse, our President and Chief Executive Officer, Ms. Mejia, our Chief Operating Officer, Mr. Scalisi, our Chief Development Officer, Mr. Dan Hogan, our VP of Marketing, and Mr. Dave Morse, Jr., as VP of Customer Service, constitute the employee senior leadership team for the Company. Ms. Tina Florance, Controller, and Mr. Gregory Andrews, CFO, are key contributors of the leadership team and contracted with the Company. Mr. Scalisi, our Chief Development Officer, has recently been sharing his time with other ventures that may continue ~~over~~for the ~~coming~~foreseeable ~~year~~future. Ms. Mejia and Mr. Scalisi are also active with another privately held corporation. LBT’s Board has determined that their obligations to the outside organization do not conflict with their duties or responsibilities at LBT. The Board further determined that the outside business is not competitive with LBT, nor is it a corporate opportunity that LBT intends to pursue. Since its inception, LBT has used an extended workforce concept which includes outsourcing partners and vendors, and using a contingent workforce (consultants, part-time /interim executives and temporary workers) and strategic partners to stay competitive in the marketplace. We do not see this as a trend. We will continue to use this model for the foreseeable future with an eye to reduce corporate overhead and expenses.

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

RESULTS OF OPERATIONS

For the quarter ended November 30, 2014 compared to the quarter ended November 30, 2013.

● Total paid monthly users (defined as the total number of users that paid a minimum of $12.95 for a month of service) exceeded 24,000, an increase of 89% compared to the three months ended November 30, 2013;

● Monthly service income averaged $104,000 per month;

● Service income exceeded break-even levels generating a positive 42% gross margin compared to a negative 44% for the three months ended November 30, 2013; and

● Total revenues for the quarter were 29% higher than 2014.

Revenue. For the three months ended November 30, 2014, the Company generated $526,002 of net revenue compared to $408,804 of net revenue for the three months ended November 30, 2013. The 29% increase in total revenue was due to the following:

● Device revenue – For the three months ended November 30, 2014, we generated $213,035 of net device revenue compared to $243,391 for the three months ended November 30, 2013. The 12% decrease in net device revenue consists of the following:

o Decrease in revenue of $8,691 (-7%) for the three months ended November 30, 2014 compared to the three months ended November 30, 2013 from the sale of PocketFinder Personal devices. During the three months ended November 30, 2014 the Company sold 313 fewer devices, a decrease of 18%, compared to the three months ended November 30, 2013. The decrease is due to reduction in business with certain internet retailers and some price erosion in the channel. The Company continues to align with more established national retailers that can deliver more sustainable resale volumes. The Company expects sales of the PocketFinder Personal devices to improve from the addition of one new global distributor in Q1 2015 and expanding into Mexico and the Cayman Islands; and

o Decrease in revenue of $39,162 (-35%) for the three months ended November 30, 2014 compared to the three months ended November 30, 2013 from the sale of the PocketFinder Vehicle devices. During the three months ended November 30, 2014, the Company sold 491 fewer units compared to the previous year. This decrease is due to the introduction of the new 3G PocketFinder Vehicle device in August 2014 that created some disruption of sales during the model transition. The Company expects sales of the PocketFinder Vehicle devices to improve with the addition of the 3G product, launch of the new Auto Dealer Program, expansion into Mexico and the Cayman Island and the addition of a new global distributor in Q1 2015.

● Service revenue - – For the three months ended November 30, 2014, we generated $312,967 of service revenue compared to $165,413 for the three months ended November 30, 2013. The 89% increase in service revenues was due to the following:

o Increase of approximately 11,394 (+89%) paid monthly users for the three months ended November 30, 2014 compared to November 30, 2013. The Company converted to the new Zuora billing/collections software in Q3 2014 and the total number of paid monthly users increased as a percentage of total active devices during Q1 2015, as additional system functions were activated.

Cost of Revenue. For the three months ended November 30, 2014, cost of revenue totaled $332,066 resulting in a gross margin of $193,936 compared to $26,997 for the three months ended November 30, 2013. The gross margin of 37% for the three months ended November 30, 2014 improved from 7% in the three months ended November 30, 2013, due to the following:

● Devices – For the three months ended November 30, 2014, cost of sales for devices was $150,393 compared to $143,817 for the three months ended November 30, 2013. The gross margin on devices of 29% for the current year was lower that the gross margin for the three months ended November 30, 2013 due to the following:

o Decrease in number of units sold from approximately 2,631 in the three months ended November 30, 2013 compared to 1,773 units in the three months ended November 30, 2014 as the Company saw greater competition and slower commercial market unit sales; and

o Decrease in the amount of favorable physical inventory adjustments totaling $186,167 in the three months ended November 30, 2013 compared to the amount of credit for inventory reserves totaling $80,497 for the three months ended November 30, 2013. Excluding the effects of the physical inventory adjustments and credit for inventory valuation reserves, gross margin on devices would have been negative 8% and negative 36% for the three months ended November 30, 2014 and 2013, respectively.

● Services – For the three months ended November 30, 2014, the cost of sales for services was $181,673 resulting in a gross margin of $131,294 compared to a negative gross margin of $72,577 for the three months ended November 30, 2013. The gross margin on services of 42% for the three months ended November 30, 2014 represents an improvement from a negative 44% over the three months ended November 30, 2013 due to the following:

o Increase of approximately 11,394 (+89%) paid monthly users for the three months ended November 30, 2014 compared to November 30, 2013 as the number of paid monthly users exceeded break-even levels in Q3 2014. Exceeding break-even will enable gross margins from service revenues to accelerate in future periods as most costs related to service revenue are fixed in nature. The average number of paid monthly users per month during Q1 2015 was approximately 8,056 compared to approximately 4,258 during Q1 2014, representing a 89% increase;

o Decrease in the amount AT&T network access fees in the amount of $160,185 for the three months ended November 30, 2013 compared to $113,018 for the three months ended November 30, 2014. The decrease of 29% was due to the decreased number of active devices during 2015 over 2014. The average total service and access fee per paid monthly user cost decreased from $12.54 in the three months ended November 30, 2013 to $4.68 for the three months ended November 30, 2014, representing a 63% reduction in per subscriber cost; and

o Decrease in costs associated with the call center operations of $18,033 for the three months ended November 30, 2014 compared to the three months ended November 30, 2013. In Q2 2014 the Company terminated its outsourcing contract for its call center operations and brought operations of the call center in-house, resulting in a savings of approximately 30% for the three months ended November 30, 2014 compared to the three months ended November 30, 2013.

Operating Expenses. For the three months ended November 30, 2014, our total operating expenses were $858,350 compared to total operating expenses of $1,507,354 for the three months ended November 30, 2013. Operating expenses decreased by $649,004 or 43% in 2015 from 2014. The decrease in operating expenses is primarily attributed to the following fluctuations:

● A $450,771 decrease in general and administrative expenses to $277,863 for the three months ended November 30, 2014, compared to $728,634 for the three months ended November 30, 2013. The decrease in general and administrative expenses in fiscal 2015 compared to fiscal 2014 is due to the following:

	o	Decrease of $465,000 in advertising fees related to NASCAR sponsorship in 2014; and
	o	Increase of $17,349 in costs related to the website development for the new auto dealer program.

● A $134,187 decrease in officer compensation to $112,500 for the three months ended November 30, 2014, compared to $246,687 for the three months ended November 30, 2013 due to the replacement of one officer (Chief Marketing Officer) with a non-officer, elimination of a full-time Chief Legal Officer and the outsourcing of the Chief Financial Officer duties in fiscal 2015 compared to fiscal 2014 ; ● A $140,686 decrease in professional fees to $233,807 for the three months ended November 30, 2014, compared to $374,493 for the three months ended November 30, 2013 primarily due to a lower fees related to business development, accounting and capital raising efforts in fiscal 2015 compared to fiscal 2014; ● A $35,242 increase in research and development costs to $125,000 for the three months ended November 30, 2014, compared to $89,758 for the three months ended November 30, 2013 as the Company commenced development on the new 3G PocketFinder device; and ● A $40,861 increase in salaries and wages to $89,440 for the three months ended November 30, 2014, compared to $48,579 for the three months ended November 30, 2013 due to the addition of one position that was previously held by an officer, offset by a lower amount of stock options vesting in fiscal 2015 compared to fiscal 2014.

Other Income/Expenses. For the three months ended November 30, 2014, we reported net other expenses totaling $446,909 that consisted of financing costs, deferred financing costs, debt discounts, net interest expense and foreign currency losses compared to net other income totaling $435,567 for the three months ended November 30, 2013. The $882,476 decrease in other income and expenses is primarily due to the following:

● A $18,380 decrease in financing costs to $130,500 for the three months ended November 30, 2014, compared to $148,880 for the three months ended November 30, 2013 due to a decrease in capital raising advisory services; ● A $32,647 decrease in the amortization of beneficial conversion features on notes payable to $0 for the three months ended November 30, 2014, compared to $32,647 for the three months ended November 30, 2013 as there were no new convertible notes entered into in fiscal 2015 that contained beneficial conversion features; ● A $12,321 decrease in the amortization of deferred financing costs to $5,506 for the three months ended November 30, 2014, compared to $17,287 for the three months ended November 30, 2013 as there was were no new notes payable issued with common stock resulting in deferred financing costs in fiscal 2015;

●RESULTS AOF $47,298 decrease in the amortization of debt discounts associated with the issuance of warrants on convertible notes payable to $51,608 for the three months ended November 30, 2014. There were fewer warrant issuances during the three months ended November 30, 2013; ● A $105,961 increase in interest expense to $259,251 for the three months ended November 30, 2014, compared to $153,290 for the three months ended November 30, 2013 as there was approximately $10.5 million in notes payable at November 30, 2014 as compared to $8.3 million in notes payable at November 30, 2013; and ● The recognition of an $886,548 gain in connection with the JMJ debt settlement was recognized during the three months ended November 30, 2013; whereby, there was no such debt settlement during the three months ended November 30, 2014.OPERATIONS

~~Net Loss.~~ For the ~~three~~quarter ~~months~~ ended ~~November~~February 3028, ~~2014,~~2015 ~~we reported a net loss of $1,111,323~~ compared to ~~a net loss of $1,045,790 for~~ the ~~three~~quarter ~~months~~ ended ~~November~~February 3028, ~~2013, due to fluctuations in operating and other expenses as previously discussed~~2014.

●

Total paid monthly users (defined as the total number of users that paid a minimum of $12.95 for a month of service) exceeded 21,500, an increase of 20% compared to the three months ended February 28, 2014;

●

Monthly service income averaged $93,500 per month;

●

Service income exceeded break-even levels generating a positive 52% gross margin compared to a negative 9% for the three months ended February 28, 2014; and

●

Total revenues for the quarter were 26% higher than 2014.

Revenue. For the three months ended February 28, 2015, the Company generated $429,926 of net revenue compared to $341,091 of net revenue for the three months ended February 28, 2014. The 26% increase in total revenue was due to the following:

●

Device revenue – For the three months ended February 28, 2015, we generated $149,295 of net device revenue compared to $107,582 for the three months ended February 28, 2014. The 39% increase in net device revenue consists of the following:

Increase in revenue of $52,396 (+211%) for the three months ended February 28, 2015 compared to the three months ended February 28, 2014 from the sale of PocketFinder Personal devices. During the three months ended February 28, 2015 the Company sold 779 more devices, an increase of 537%, compared to the three months ended February 28, 2014. The increase is due to an increase in business from certain internet retailers and addition of new channel partners. The Company continues to align with more established national retailers that can deliver more sustainable resale volumes and pricing. The Company expects sales of the PocketFinder Personal devices to improve in Q3 2015 from better relationships with current channel partners, coupled with promotions in key online accounts; and

Decrease in revenue of $523 (-1%) for the three months ended February 28, 2015 compared to the three months ended February 28, 2014 from the sale of the PocketFinder Vehicle devices. During the three months ended February 28, 2015, the Company sold 106 fewer units compared to the previous year. The lower unit sales were mostly offset by the sale of the new 3G PocketFinder Vehicle device which were sold at higher prices than the 2G devices which were offered in 2014. The Company expects sales of the PocketFinder Vehicle devices to continue improving with the signing up new dealerships in the newly launched Auto Dealer Program, expansion into Mexico and the Cayman Island and expected introduction of the product in Canada.

●

Service revenue – For the three months ended February 28, 2015, we generated $280,631 of service revenue compared to $233,509 for the three months ended February 28, 2014. The 20% increase in service revenues was due to the following:

Increase of approximately 3,639 (+20%) paid monthly users for the three months ended February 28, 2015 compared to February 28, 2014. The Company converted to the new Zuora billing/collections software in Q3 2014 and the total number of paid monthly users increased as a percentage of total active devices during Q1 2015, as additional system functions were activated.

Cost of Revenue. For the three months ended February 28, 2015, cost of revenue totaled $241,010 resulting in a gross margin of $188,916 compared to a negative gross margin of $6,314 for the three months ended February 28, 2014. The gross margin of 44% for the three months ended February 28, 2015 improved from a negative 2% in the three months ended February 28, 2014, due to the following:

●

Devices – For the three months ended February 28, 2015, cost of sales for devices was $106,122 compared to $92,152 for the three months ended February 28, 2014. The gross margin on devices of 29% for the current year was higher than the gross margin for the three months ended February 28, 2014 due to the following:

Increase in number of units sold from approximately 548 in the three months ended February 28, 2014 compared to 1,195 units in the three months ended February 28, 2015 as the Company saw better sell through of its primary channel partners; and

Increase in the amount of credit for inventory valuation reserves from $49,112 in the three months ended February 28, 2015 compared to $330 for the three months ended February 28, 2014.

●

Services – For the three months ended February 28, 2015, the cost of sales for services was $134,888 resulting in a gross margin of $145,743 compared to a negative gross margin of $21,744 for the three months ended February 28, 2014. The gross margin on services of 52% for the three months ended February 28, 2015 represents an improvement from a negative 9% over the three months ended February 28, 2014 due to the following:

Increase of approximately 3,639 (+20%) paid monthly users for the three months ended February 28, 2015 compared to February 28, 2014 as the number of paid monthly users exceeded break-even levels in Q3 2014. Exceeding break-even will enable gross margins from service revenues to accelerate in future periods as most costs related to service revenue are fixed in nature. The average number of paid monthly users per month during Q2 2015 was approximately 7,223 compared to approximately 6,011 during Q2 2014, representing a 20% increase;

Decrease in the amount AT&T network access fees to $106,016 for the three months ended February 28, 2015 from $173,373 for the three months ended February 28, 2014. The decrease of 39% was due to a reduction in the number of active devices in 2015 as the Company deactivated devices that were no longer being paid by customers or used for demonstration purposes. The average total service and access fee per paid monthly user cost decreased from $9.61 in the three months ended February 28, 2014 to $4.89 for the three months ended February 28, 2015, representing a 49% reduction in per subscriber cost; and

Decrease in costs associated with the support center operations of $8,884 for the three months ended February 28, 2015 compared to the three months ended February 28, 2014. In Q2 2014 the Company terminated its outsourcing contract for its support center operations and brought operations of the support center in-house, resulting in a savings of approximately 14% for the three months ended February 28, 2015 compared to the three months ended February 28, 2014.

Operating Expenses. For the three months ended February 28, 2015, our total operating expenses were $715,271 compared to total operating expenses of $788,385 for the three months ended February 28, 2014. Operating expenses decreased by $73,604 or 9% in 2015 from 2014. The decrease in operating expenses is primarily attributed to the following fluctuations:

●

A $31,981 decrease in general and administrative expenses to $258,595 for the three months ended February 28, 2015, compared to $290,576 for the three months ended February 28, 2014. The decrease in general and administrative expenses in fiscal 2015 compared to fiscal 2014 is due to the following:

Decrease of $52,500 in fees paid to Board of Directors; and

Increase of $23,296 in costs related to the website development for the new auto dealer program.

●

A $120,559 decrease in officer compensation to $112,500 for the three months ended February 28, 2015, compared to $233,059 for the three months ended February 28, 2014 due to the replacement of one officer (Chief Marketing Officer) with a non-officer, elimination of a full-time Chief Legal Officer and the outsourcing of the Chief Financial Officer duties in fiscal 2015 compared to fiscal 2014;

●

A $44,152 decrease in professional fees to $130,313 for the three months ended February 28, 2015, compared to $174,465 for the three months ended February 28, 2014 primarily due to a lower fees related to business development, accounting and capital raising efforts in fiscal 2015 compared to fiscal 2014;

●

A $9,790 decrease in research and development costs to $0 for the three months ended February 28, 2015, compared to $9,790 for the three months ended February 28, 2014 as the Company completed development of the new 3G PocketFinder device in Q1 2015; and

●

A $147,617 increase in salaries and wages to $208,860 for the three months ended February 28, 2015, compared to $61,243 for the three months ended February 28, 2014 due to the addition of one position that was previously held by an officer, higher call center payroll and a higher amount of stock options vesting in fiscal 2015 compared to fiscal 2014.

Other Income/Expenses. For the three months ended February 28, 2015, we reported net other expenses totaling $378,964 that consisted of financing costs, debt discounts, net interest expense and foreign currency losses compared to net other expense totaling $547,704 for the three months ended February 28, 2014. The $168,740 decrease in other income/expenses is primarily due to the following:

●

A $54,415 decrease in financing costs to $50,585 for the three months ended February 28, 2015, compared to $105,000 for the three months ended February 28, 2014 due to a decrease in capital raising advisory services;

●

A $28,301 decrease in the amortization of beneficial conversion features on notes payable to $0 for the three months ended February 28, 2015, compared to $28,301 for the three months ended February 28, 2014 as there were no new convertible notes entered into in fiscal 2015 that contained beneficial conversion features;

●

A $90,523 decrease in the amortization of deferred financing costs to $0 for the three months ended February 28, 2015, compared to $90,523 for the three months ended February 28, 2014 as there was were no new notes payable issued with common stock resulting in deferred financing costs in fiscal 2015;

●

A $54,655 decrease in the amortization of debt discounts associated with the issuance of warrants on convertible notes payable to $51,609 for the three months ended February 28, 2015, compared to $106,264 for the three months ended February 28, 2014 as there were fewer warrants issuances during the three months ended February 28, 2015.

●

A $108,627 increase in interest expense to $276,773 for the three months ended February 28, 2015, compared to $168,146 for the three months ended February 28, 2014 as there was approximately $10.4 million in notes payable at February 28, 2015 as compared to $8.9 million in notes payable at February 28, 2014; and

●

A loss on the disposal of assets in the amount of $49,000 during the three months ended February 28, 2014; whereby, there was no such loss during the three months ended February 28, 2015.

Net Loss. For the three months ended February 28, 2015, we reported a net loss of $905,319 compared to a net loss of $1,342,353 for the three months ended February 28, 2014, due to fluctuations in operating and other expenses as previously discussed.

For the six months ended February 28, 2015 compared to the six months ended February 28, 2014.

●

Total paid monthly users (defined as the total number of users that paid a minimum of $12.95 for a month of service) exceeded 45,000, an increase of 49% compared to the six months ended February 28, 2014;

●

Monthly service income averaged $98,500 per month;

●

Service income exceeded break-even levels generating a positive 47% gross margin compared to a negative 24% for the six months ended February 28, 2014; and

●

Total revenues for the quarter were 27% higher than 2014.

Revenue. For the six months ended February 28, 2015, the Company generated $955,928 of net revenue compared to $749,895 of net revenue for the six months ended February 28, 2014. The 27% increase in total revenue was due to the following:

●

Device revenue – For the six months ended February 28, 2015, we generated $362,330 of net device revenue compared to $350,973 for the six months ended February 28, 2014. The 3% increase in device revenue consists of the following:

Increase in revenue of $43,705 (+30%) for the six months ended February 28, 2015 compared to the six months ended February 28, 2014 from the sale of PocketFinder Personal devices. During the six months ended February 28, 2015 the Company sold 466 more devices, an increase of 25%, compared to the six months ended February 28, 2014. The increase is due to reduction in business with certain internet retailers and some price erosion in the channel. The Company continues to align with more established national retailers that can deliver more sustainable resale volumes. The Company expects sales of the PocketFinder Personal devices to improve in Q3 2015 from better relationships with current channel partners, coupled with promotions in key online accounts; and

Decrease in revenue of $39,685 (-23%) for the six months ended February 28, 2015 compared to the six months ended February 28, 2014 from the sale of the PocketFinder Vehicle devices. During the six months ended February 28, 2015, the Company sold 597 fewer units compared to the previous year. This decrease is due to the introduction of the new 3G PocketFinder Vehicle device in August 2014 that created some disruption of sales during the model transition. The Company expects sales of the PocketFinder Vehicle devices to improve with the addition of the 3G product, signing up new dealerships in the newly launched Auto Dealer Program, expansion into Mexico and the Cayman Island and expected introduction of the product in Canada.

●

Service revenue - – For the six months ended February 28, 2015, we generated $593,598 of service revenue compared to $398,922 for the six months ended February 28, 2014. The 49% increase in service revenues was due to the following:

Increase of approximately 15,033 (+49%) paid monthly users for the six months ended February 28, 2015 compared to February 28, 2014. The Company converted to the new Zuora billing/collections software in Q3 2014 and the total number of paid monthly users increased as a percentage of total active devices during Q1 2015, as additional system functions were activated.

Cost of Revenue. For the six months ended February 28, 2015, cost of revenue totaled $573,076 resulting in a gross margin of $382,852 compared to $20,683 for the six months ended February 28, 2014. The gross margin of 40% for the six months ended February 28, 2015 improved from 3% in the six months ended February 28, 2014, due to the following:

●

Devices – For the six months ended February 28, 2015, cost of sales for devices was $256,515 compared to $235,969 for the six months ended February 28, 2014. The gross margin on devices of 29% for the current year was lower than the gross margin for the six months ended February 28, 2014 due to the following:

Decrease in number of units sold from approximately 3,179 in the six months ended February 28, 2014 compared to 2,968 units in the six months ended February 28, 2015 as the Company saw greater competition from competitors continuing to sell 2G devices resulting in a slowdown in unit sales to commercial market; and

Decrease in the amount of favorable physical inventory adjustments totaling $186,167 in the six months ended February 28, 2014 compared to the amount of credit for inventory reserves totaling $129,608 for the six months ended February 28, 2015. Excluding the effects of the physical inventory adjustments and credit for inventory valuation reserves, gross margin on devices would have been negative 7% and negative 20% for the six months ended February 28, 2015 and 2014, respectively.

●

Services – For the six months ended February 28, 2015, the cost of sales for services was $316,561 resulting in a gross margin of $277,037 compared to a negative gross margin of $94,321 for the six months ended February 28, 2014. The gross margin on services of 47% for the six months ended February 28, 2015 represents an improvement from a negative 24% over the six months ended February 28, 2014 due to the following:

Increase of approximately 15,033 (+49%) paid monthly users for the six months ended February 28, 2015 compared to February 28, 2014 as the number of paid monthly users exceeded break-even levels in Q3 2014. Exceeding break-even will enable gross margins from service revenues to accelerate in future periods as most costs related to service revenue are fixed in nature. The average number of paid monthly users per month during the first six months of 2015 was approximately 7,640 compared to approximately 5,134 during the first six months of 2014, representing a 49% increase;

Decrease in the amount AT&T network access fees to $219,034 for the six months ended February 28, 2015 compared to $333,558 for the six months ended February 28, 2014. The decrease of 34% was due to a reduction in the number of active devices in 2015 as the Company deactivated devices that were no longer being paid for by customers or used for demonstration purposes. The average total service and access fee per paid monthly user cost decreased from $10.83 in the six months ended February 28, 2014 to $4.78 for the six months ended February 28, 2015, representing a 56% reduction in per subscriber cost; and

Decrease in costs associated with the call center operations of $20,276 for the six months ended February 28, 2015 compared to the six months ended February 28, 2014. In Q2 2014 the Company terminated its outsourcing contract for its call center operations and brought operations of the call center in-house, resulting in a savings of approximately 16% for the six months ended February 28, 2015 compared to the six months ended February 28, 2014.

Operating Expenses. For the six months ended February 28, 2015, our total operating expenses were $1,573,621 compared to total operating expenses of $2,295,689 for the six months ended February 28, 2014. Operating expenses decreased by $722,068 or 31% in 2015 from 2014. The decrease in operating expenses is primarily attributed to the following fluctuations:

●

A $482,752 decrease in general and administrative expenses to $536,458 for the six months ended February 28, 2015, compared to $1,019,210 for the six months ended February 28, 2014. The decrease in general and administrative expenses in fiscal 2015 compared to fiscal 2014 is due to the following:

Decrease of $440,000 in advertising fees related to NASCAR sponsorship in 2014;

Decrease of $52,500 in fees paid to Board of Directors; and

Increase of $40,645 in costs related to the website development for the new auto dealer program.

●

A $254,746 decrease in officer compensation to $225,000 for the six months ended February 28, 2015, compared to $479,746 for the six months ended February 28, 2014 due to the replacement of one officer (Chief Marketing Officer) with a non-officer, elimination of a full-time Chief Legal Officer and the outsourcing of the Chief Financial Officer duties in fiscal 2015 compared to fiscal 2014 ;

●

A $184,838 decrease in professional fees to $364,120 for the six months ended February 28, 2015, compared to $548,958 for the six months ended February 28, 2014 primarily due to a lower fees related to business development, accounting and capital raising efforts in fiscal 2015 compared to fiscal 2014;

●

A $25,452 increase in research and development costs to $125,000 for the six months ended February 28, 2015, compared to $99,548 for the six months ended February 28, 2014 as the Company commenced development on the new 3G PocketFinder device; and

●

A $188,478 increase in salaries and wages to $298,300 for the six months ended February 28, 2015, compared to $109,822 for the six months ended February 28, 2014 due to the addition of one position that was previously held by an officer, higher call center payroll and a higher amount of stock options vesting in fiscal 2015 compared to fiscal 2014.

Other Income/Expenses. For the six months ended February 28, 2015, we reported net other expenses totaling $825,873 that consisted of financing costs, deferred financing costs, debt discounts, net interest expense and foreign currency losses compared to net other expenses totaling $112,137 for the six months ended February 28, 2014. The $713,736 increase in other income/expenses is primarily due to the following:

	●	A $72,795 decrease in financing costs to $181,085 for the six months ended February 28, 2015, compared to $253,880 for the six months ended February 28, 2014 due to a decrease in capital raising advisory services;

	●	A $60,948 decrease in the amortization of beneficial conversion features on notes payable to $0 for the six months ended February 28, 2015, compared to $60,948 for the six months ended February 28, 2014 as there were no new convertible notes entered into in fiscal 2015 that contained beneficial conversion features;

	●	A $102,844 decrease in the amortization of deferred financing costs to $5,506 for the six months ended February 28, 2015, compared to $108,350 for the six months ended February 28, 2014 as there were no new notes payable issued with common stock resulting in deferred financing costs in fiscal 2015;

	●	A $101,953 decrease in the amortization of debt discounts associated with the issuance of warrants on convertible notes payable to $103,217 for the six months ended February 28, 2015, compared to $205,170 for the six months ended February 28, 2014 as there were fewer warrant issuances during the six months ended February 28, 2014;

	●	A $214,588 increase in interest expense to $536,024 for the six months ended February 28, 2015, compared to $321,436 for the six months ended February 28, 2014 as there was approximately $10.4 million in notes payable at February 28, 2015 as compared to $8.9 million in notes payable at February 28, 2014; and

	●	The recognition of a $886,548 gain in connection with the JMJ debt settlement during the six months ended February 28, 2014; whereby, there was no such debt settlement during the six months ended February 28, 2015.

Net Loss. For the six months ended February 28, 2015, we reported a net loss of $2,016,642 compared to a net loss of $2,387,943 for the six months ended February 28, 2014, due to fluctuations in operating and other expenses as previously discussed.

LIQUIDITY AND CAPITAL RESOURCES

We had cash and cash equivalents of $~~632~~237,~~028~~099 as of ~~November~~February 3028, ~~2014~~2015, compared to $146,200 as of August 31, 2014.

As of ~~November~~February 3028, ~~2014~~2015, current assets totaled $1,~~557~~105,~~303~~420 compared to $1,068,522 as of August 31, 2014 and consisted of cash, accounts receivable, inventory, prepaid expenses and other assets. The increase at ~~November~~February 3028, ~~2014~~2015, from August 31, 2014 is primarily due to an increase of cash.

As of ~~November~~February 3028, ~~2014~~2015, current liabilities totaled $913,~~021~~085,~~588~~108 compared to $8,311,818 as of August 31, 2014 and consisted of accounts payable and accrued expenses, deferred compensation, ~~line~~deferred ofrevenue, ~~credit~~advances from officer, derivative liabilities, convertible notes payable and accrued interest. The increase at ~~November~~February 3028, ~~2014~~2015, is due to the issuance of additional convertible notes payable, reclassification of convertible notes payable from long-term to current, increase in derivative liabilities and the repayment of term loans during the ~~three~~six months ended ~~November~~February 3028, ~~2014~~2015.

As at ~~November~~February 3028, ~~2014~~2015, the Company had a working capital deficit of $711,~~464~~979,~~285~~688 compared with a working capital deficit of $7,243,296 as of August 31, 2014.

Cash Flows from Operating Activities. During the ~~quarter~~six months ended ~~November~~February 3028, ~~2014~~2015, the Company used ~~$681,589 of~~ cash ~~used~~ for operating activities in the amount of $1,106,016 compared with $1,~~444~~798,~~413~~870 for the quarter ended ~~November~~February 3028, ~~2013~~2014. The decrease in the cash used for operating activities was primarily attributed to the $886,548 adjustment for the gain on debt settlement to reconcile the net loss to net cash used in operating activities during the ~~quarter~~six months ended ~~November~~February 3028, ~~2013~~2014.

Cash Flows From Investing Activities. During the ~~quarter~~six months ended ~~November~~February 3028, ~~2014~~2015, the Company used $3,083 of cash for investing compared with $1041,~~465~~967 for the ~~quarter~~six months ended ~~November~~February 3028, ~~2013~~2014. The decrease in the cash used for investing operating activities was attributed to fewer capital expenditures during the ~~quarter~~six months ended ~~November~~February 3028, ~~2014~~2015 compared to the ~~quarter~~six months ended ~~November~~February 3028, ~~2013~~2014.

Cash Flows from Financing Activities. During the ~~quarter~~six months ended ~~November~~February 3028, ~~2014~~2015, the Company received $1,~~416~~600,000 in cash from financing activities related to the issuance of convertible promissory notes and made principal payments of $662,800 on term loans ~~totalling~~and ~~$254,500~~demand notes payable. During the quarter ended ~~November~~February 3028, ~~2013~~2014, the Company received $~~900~~1,250,000 from the issuance of convertible promissory notes. Demand convertible notes payable totaling $1,~~142~~140,~~987~~487 are unsecured, bear interest at 10% per annum, and are to repaid out of future operating cash flow. Current convertible notes payable totaling $36,~~301~~926,452 and ~~are unsecured,~~ bear interest at 8%-36% per annum, and are to be repaid out of future operating cash flow. Long-term convertible promissory notes totaling $41,~~467~~026,500 are secured, bear interest at 10% per annum with due dates ranging from ~~September~~March 305, ~~2015~~2016 to ~~November~~February 263, ~~2016~~2017 and are to be repaid out of future operating cash flow.

Going Concern. We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

CASH REQUIREMENTS

We are a wireless technology company focused on the marketing and sales of the PocketFinder family of products for retail and commercial distribution. Since our inception, we have generated significant losses. As of ~~November~~February 3028, ~~2014~~2015, we had an accumulated deficit of $6263,~~323~~228,~~232~~551 and we expect to incur continual losses until sometime in calendar year 2015.

23As of February 28, 2015, we had $237,099 in cash and cash-equivalents. Over the next several quarters we expect to invest significant amounts of funds to develop our sales and marketing programs associated with the commercialization and branding of the PocketFinder family of products. We also expect to fund any necessary general overhead requirements.

As of November 30, 2014, we had $623,028 in cash and cash-equivalents. Over the next several quarters we expect to invest significant amounts of funds to develop our sales and marketing programs associated with the commercialization and branding of the PocketFinder family of products. We also expect to fund any necessary general overhead requirements.

We expect to have to obtain additional financing in the coming months for overhead costs, general and administrative expenses and for related purposes such as packaging, shipping, and direct sales and marketing costs. 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 further the commercialization of the PocketFinder family of products;

●

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 devices and the PocketFinder Network platform services; and

●

Other general and administrative expenses associated with running the day to day operations of our Company.

Product Research and Development

We plan to continue to develop new product enhancements to our existing product on the market including PocketFinder People and PocketFinder Vehicles. New 3G devices will meet the requirements of pending GSM network changes in multiple countries, including the US, and the dual GSM/Iridium device will open new government and commercial shipping markets.

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 significant amounts of plant and equipment, or significant numbers of employees. We currently have six employees and do not anticipate hiring any significant number of additional employees during the next twelve months.

Off-Balance Sheet Arrangements

As of ~~November~~February 3028, ~~2014~~2015, we had no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of ~~November~~February 3028, ~~2013~~2015, due to the material weaknesses resulting from a lack of segregation of duties in our accounting department.

2428

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1.A. RISK FACTORS

Not applicable.

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

Common Stock Issuances for Services Provided

On ~~November~~February 262, ~~2014~~2015, the Company issued ~~375~~850,000 shares of common stock to ~~three~~consultants ~~of the board of directors~~ in exchange for ~~their~~certain accounting and advisory services valued at $38,~~338~~500 on the award date.

On November 26, 2014, the Company issued 1,600,000 shares of common stock to consultants in exchange for certain accounting and advisory services valued at $16,360 on the award date.

On November 26, 2014, the Company issued 1,500,000 shares of common stock to consultants in exchange for capital raising efforts valued at $69,000 on the award date.

Common Stock Issuances for Debt Extension

On November 26, 2014, the Company issued 104,000 shares of common stock in connection with two debt extensions valued at $6,240 on the award date.

Common Stock Issuance for Conversion of Debt

On January 6, 2015, the Company issued 9,888,823 shares of common stock in connection with the conversion of debt in the amount of $97,300.

On February 24, 2015, the Company issued 8,100,000 shares of common stock in connection with the conversion of debt in the amount of $81,000.

Exemption From Registration. The shares of Common Stock and Warrants referenced in Part II, Item 2 above were issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(2) of the Securities Act of 1933, as amended, (“Securities Act”), and/or Regulation D, as promulgated by the U.S. Securities and Exchange Commission under the Securities Act, based upon the following: (a) each of the persons to whom the shares of Common Stock and Warrants were issued (each such person, an “Investor”) confirmed to the Company that it or he is an “accredited investor,” as defined in Rule 501 of Regulation D promulgated under the Securities Act and has such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities, (b) there was no public offering or general solicitation with respect to the offering of such shares, (c) each Investor was provided with certain disclosure materials and all other information requested with respect to the Company, (d) each Investor acknowledged that all securities being purchased were being purchased for investment intent and were “restricted securities” for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act and (e) a legend has been, or will be, placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

2529

ITEM 6. EXHIBITS

Exhibit No.*	Document Description
3.1	Articles of Incorporation of Springbank Resources, Inc. (now known as Location Based Technologies, Inc.) (incorporated by reference from Exhibit 3.1 to the Registrant’s Registration Statement on Form SB-2 (Registration No. 333-139395) filed December 15, 2006).
3.1A	Amended Articles of Incorporation, dated October 20, 2008 (incorporated by reference from Exhibit 3.1A to the Registrant’s Form 10-KSB filed December 12, 2008).
3.2	Amended and Restated By-Laws of Location Based Technologies, Inc. (incorporated by reference from the Registrant’s Current Report on Form 8-K filed January 4, 2008).
10.81	Secured Convertible Promissory Note between the Company and Greggory Haugen dated November 26, 2014. †
10.82	Loan Amendment between the Company and David M. Morse dated November 28, 2014. †
10.83	Loan Amendment between the Company and Desiree Mejia dated November 28, 2014. †
10.84	Loan Amendment between the Company and David M. Morse, Jr. dated November 28, 2014. †
10.85	Loan Amendment between the Company and Gregory Harrison dated November 28, 2014. †
10.86	Loan Amendment between the Company and Florance Accountancy Corp. dated November 28, 2014. †
10.87	Loan Amendment between the Company and Eric Fronk dated November 28, 2014. †
10.88	Secured Convertible Promissory Agreement between the Company and Greggory Haugen dated December 3, 2014. †
21.1	Subsidiary of the Registrant †
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †

10.89	Secured Convertible Promissory Note between the Company and Greggory Haugen dated January 6, 2015. †
10.90	Secured Convertible Promissory Note between the Company and Greggory Haugen dated February 3, 2015. †
10.91	Loan Amendment between the Company and Greggory Haugen dated February 27, 2015. †
10.92	Loan Amendment between the Company and Greggory Haugen dated February 27, 2015. †
10.93	Secured Convertible Promissory Note between the Company and Greggory Haugen dated March 9, 2015. †
10.94	Secured Convertible Promissory Note between the Company and Greggory Haugen dated April 6, 2015. †



21.1	Subsidiary of the Registrant †
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. †
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †

101.INS	XBRL Instance Document **
101.SCH	XBRL Taxonomy Extension Schema Document **
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document **
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document **
101.LAB	XBRL Taxonomy Extension Label Linkbase Document **
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document **




*	Management contract or compensatory plan
**	Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections
†	Filed herewith

2630

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LOCATION BASED TECHNOLOGIES, INC.
Dated: January 13, 2015	By:	/s/ David M. Morse
Dated: April 13, 2015	By:	/s/ David M. Morse
		David M. Morse
		President and Chief Executive Officer

Dated: January 13, 2015	By:	/s/ Gregory Andrews
Dated: April 13, 2015	By:	/s/ Gregory Andrews
		Gregory Andrews
		Chief Financial Officer

2731

Filing Compare · Location Based Technologies, Inc.