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 February 28, 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 April 13, 2015, there were 277,530,645 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	19
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	28
ITEM 4.	CONTROLS AND PROCEDURES	28
PART II	OTHER INFORMATION	29
ITEM 1.	LEGAL PROCEEDINGS	29
ITEM 1.A.	RISK FACTORS	29
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	29
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	29
ITEM 4.	MINE SAFETY DISCLOSURES	29
ITEM 5.	OTHER INFORMATION	29
ITEM 6.	EXHIBITS	30
SIGNATURES		31

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Location Based Technologies, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

February 28, 2015 and August 31, 2014

(Unaudited)

 

 

 

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

 

 

Location Based Technologies, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

February 28, 2015 and August 31, 2014

(Unaudited)

 

 

 

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 February 28, 2015 and 2014

(Unaudited)

 

 

 

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 February 28, 2015 and 2014

(Unaudited)

 

 

 

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)

 

 

 

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)

 

 

 

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

 

 

LOCATION BASED TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2015

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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 in 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 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 on most of the wireless networks around the world. Our consumer products are primarily used to track any portable asset (powered or unpowered), vehicles, pets, and people. Our commercial products are available to businesses of all sizes and governmental organizations that need to track vehicles, mobile equipment, portable assets and workers.

 

Consumer products are sold under the PocketFinder brand and include applications for children, seniors, pets and 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.

 

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 data over the global GSM wireless network.

 

 

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 backend 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 or one 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 will enhance the indoor tracking capability of a new 3G PocketFinder device. This new miniaturized dual Iridium/GSM device is currently in the final stages of building prototypes, testing and certification before market entry. Having a 3G consumer device will enable the 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), New Egg, our www.pocketfinder.com website and numerous affiliate marketing websites. LBT is working with a global distributor in the US that will significantly expand our retail footprint with our new 3G PocketFinder product.

 

With 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.

 

 

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 initial orders received and product expected to be shipped in the Company’s fiscal third quarter. These sales are anticipated to generate significant device and service revenues in 2015 through both online and major retail partners. The Company may pursue a similar expansion strategy in Europe based on recent interest with 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 Auto Dealer Program will significantly strengthen our commercial sales and augment our ongoing business sales during calendar 2015. Given our refocus and unexpected delays with our Tennessee based reseller, the Company has not been able to penetrate the utility market thus 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 expect to begin sales of the feature to public utilities (power, water and telecom) through our existing or other resale partners. The Company will evaluate expansion of this new capability for “fit” to specific commercial and other first responder agencies throughout the US.

 

LBT has launched commercial 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 and 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 39 issued US patents, 2 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 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

  

 

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 are focused on 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. We expect that as we continue to gain traction with large, reputable institutions, their peers will continue to seek us out.

 

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 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 for the foreseeable 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 February 28, 2015 compared to the quarter 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 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:

o

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

o

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:

o

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:

o

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

o

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:

o

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;

o

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

o

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:

 

o

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

 

o

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:

o

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

o

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:

o

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:

o

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

o

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:

o

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;

o

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

o

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:

 

o

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

o

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

o

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 $237,099 as of February 28, 2015, compared to $146,200 as of August 31, 2014.  

 

As of February 28, 2015, current assets totaled $1,105,420 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 February 28, 2015, from August 31, 2014 is primarily due to an increase of cash.

 

As of February 28, 2015, current liabilities totaled $13,085,108 compared to $8,311,818 as of August 31, 2014 and consisted of accounts payable and accrued expenses, deferred compensation, deferred revenue, advances from officer, derivative liabilities, convertible notes payable and accrued interest. The increase at February 28, 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 six months ended February 28, 2015.

 

As at February 28, 2015, the Company had a working capital deficit of $11,979,688 compared with a working capital deficit of $7,243,296 as of August 31, 2014.  

 

Cash Flows from Operating Activities. During the six months ended February 28, 2015, the Company used cash for operating activities in the amount of $1,106,016 compared with $1,798,870 for the quarter ended February 28, 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 six months ended February 28, 2014.

 

Cash Flows From Investing Activities. During the six months ended February 28, 2015, the Company used $3,083 of cash for investing compared with $41,967 for the six months ended February 28, 2014.  The decrease in the cash used for investing operating activities was attributed to fewer capital expenditures during the six months ended February 28, 2015 compared to the six months ended February 28, 2014. 

 

Cash Flows from Financing Activities. During the six months ended February 28, 2015, the Company received $1,600,000 in cash from financing activities related to the issuance of convertible promissory notes and made principal payments of $662,800 on term loans and demand notes payable. During the quarter ended February 28, 2014, the Company received $1,250,000 from the issuance of convertible promissory notes. Demand convertible notes payable totaling $1,140,487 are unsecured, bear interest at 10% per annum, and are to repaid out of future operating cash flow. Current convertible notes payable totaling $6,926,452 and bear interest at 8%-36% per annum, and are to be repaid out of future operating cash flow. Long-term convertible promissory notes totaling $1,026,500 are secured, bear interest at 10% per annum with due dates ranging from March 5, 2016 to February 3, 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 February 28, 2015, we had an accumulated deficit of $63,228,551 and we expect to incur continual losses until sometime in calendar year 2015.

 

As 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.

  

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 February 28, 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 February 28, 2015, due to the material weaknesses resulting from a lack of segregation of duties in our accounting department.

 

 

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 February 2, 2015, the Company issued 850,000 shares of common stock to consultants in exchange for certain accounting and advisory services valued at $8,500 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. 

 

 

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).

 

10.89	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

 

 

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:  April 13, 2015	By:	/s/ David M. Morse
		David M. Morse
		President and Chief Executive Officer

 

 

 

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

 

 

31