Location Based Technologies Inc (OTC:LBAS) Lost Their Bearings

Location Based Technologies Inc (OTC:LBAS)have been quite desperate for attention recently. After they reached a short peak during 2011 when the price per share reached a respectable $1.6 per share, they have been steadily going down. Apparently, the management team are not happy with that idea and are trying to change it.

How are they going to do it? Well, if they go for the stop-moaning-and-turn-the-company-into-a-profitable-venture path, it’s not going to be easy. The products that LBAS offers could be indeed quite useful. The idea is not that bad but since so many devices are now equipped with GPS functionality, the reason for buying a dedicated gizmo for keeping track of your child, dog or car is somewhat washed away.

That being said, LBAS have generated some revenues, although it’s not enough to cover for the expenses. The numbers speak for themselves, but the more disconcerting thing is that compared to last year’s statement, the assets have gone down while the losses and liabilities have been mounting. Here’s what we mean:

• cash (November 2012): $130 thousand
• cash (November 2011): $376 thousand
• current assets (November 2012): $2.3 million
• current assets (November 2011): $2.7 million
• current liabilities (November 2012): $7.3 million
• current liabilities (November 2011): 5.3 million
• revenue (November 2012): $127 thousand
• revenue (November 2011): $41 thousand
• net loss (November 2012): $2 million
• net loss (November 2011): $1.9 million

Indeed the revenues have gone up for the last 12 months but this is clearly far from enough.

In any case, LBAS‘ management team are not as focused to get the ball rolling and generate some revenue, and instead they seem to rely on paid pumpers to draw attention to their company. Newsletters mentioning LBAS have been flying around since the end of January and one particular email caught our attention. It was sent by The Stock Braniac and the fine print at the bottom states that they received $20 thousand from a third party and a further $30 thousand from LBAS themselves. We don’t know about you, but in our humble opinion, this is not what the company needs.

A further red flag appears when you take a closer look through the latest financial statement. Due to the astronomical losses LBAS were forced to issue quite a lot of convertible notes and right now, they have millions worth of debt that they have to pay off or convert the notes and crush investors. The huge net losses however, also prevent them from repaying the money which means that they have already defaulted on at least two notes and this number could increase really soon.

They don’t seem to be paying too much attention to who they borrow money from either. The primary lender seems to be a company called JMJ Financing, and a short research on them reveals that investors don’t exactly view them as the most trustworthy financial institution. In December 2012, the LBAS and JMJ stormed through the doors of the courtroom accusing each other of a breach of contract and we can’t wait to see what the outcome will be.

We wanted to show you just how wrong an approach advertising your own company through paid pumpers is, so we looked through history of Stock Mister – the ones who sent the last email. SuperDirectories Inc (PINK:SDIR) and since we have covered them before, we decided to see how they have been doing. The chart on the right clearly shows that it has been anything but plain sailing.