UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549







FORM
10-K





(Mark
One)


x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the
fiscal year ended December 31, 2008


o
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




Commission
File Number 000-53046




GTX
Corp


(Exact
name of registrant as specified in its charter)





Nevada
              
              98-0493446(State
      of incorporation)
              
              (I.R.S.
      Employer Identification No.)117 W 9thStreet; Suite 1214, Los Angeles,
      CA  90015
              
              213-489-3019(Address
      of principal executive offices)
              
              (Registrant’s
      telephone number, including area
code)




Securities
registered under Section 12(b) of the Act:


Title of each class
    registered:
                
                Name of each exchange on which
      registered:None
                
                None





Securities registered under
Section 12(g) of the Act:


Common
Stock, Par Value $0.001


(Title of
class)





Indicate
by check mark if the registrant is a well known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes oNo þ


Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes oNo þ


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 þNo
o


Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter)  is not contained herein
and, will not be contained, to the best of registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. o


Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o
              Accelerated filer o
              Non-accelerated filer o
                (Do not check if a smaller reporting company)
              Smaller reporting company þ





Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes
oNo þ


The
aggregate market value of the common stock held by non-affiliates as of March
17, 2009 was $1,499,456 based on the closing price of the registrant's common
stock reported by the OTC Bulletin Board on that date.  The
determination of affiliate status is not necessarily a conclusive determination
for other purposes.


The
outstanding number of shares of common stock as of March 17, 2009 was
39,355,540.


Documents
incorporated by reference:  None










TABLE
OF CONTENTS




PART I
                  
                  1ITEM
      1.
                  DESCRIPTION
      OF BUSINESS
                  1ITEM 1A:
                  RISK
      FACTORS
                  13ITEM
      1B.
                  UNRESOLVED
      STAFF COMMENTS
                  24ITEM
      2.
                  DESCRIPTION
      OF PROPERTIES
                  24ITEM
      3.
                  LEGAL
      PROCEEDINGS
                  25ITEM
      4.
                  SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  25PART
      II
                  
                  25ITEM
      5.
                  MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
      EQUITY SECURITIES
                  25ITEM
      6.
                  SELECTED
      FINANCIAL DATA.
                  26ITEM
      7.
                  MANAGEMENT'S
      DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS
                  26ITEM
      7A.
                  QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
                  32ITEM
      8.
                  FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
                  32ITEM
      9.
                  CHANGESIN
      AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
                  33ITEM 9A(T)
                  CONTROLS
      AND PROCEDURES
                  33ITEM 9B.
                  OTHER
      INFORMATION
                  34PART III
                  
                  34ITEM
      10.
                  DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE
                  34ITEM
      11.
                  EXECUTIVE
      COMPENSATION
                  37ITEM
      12.
                  SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
                  43ITEM
      13.
                  CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
                  45ITEM 14.
                  PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.
                  45ITEM
      15.
                  EXHIBITS  AND
      FINANCIAL STATEMENT SCHEDULES
                  46


- i
-


FORWARD
LOOKING STATEMENTS




Information
in this report contains “forward looking statements” which may be identified by
the use of forward-looking terminology, such as “may”, “shall”, “will”, “could”,
“expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”,
“continue”, or similar terms, variations of those terms or the negative of those
terms. The forward-looking statements specified in the following information
have been compiled by our management on the basis of assumptions made by
management and considered by management to be reasonable. Our future operating
results, however, are impossible to predict and no representation, guaranty, or
warranty is to be inferred from those forward-looking statements.




The
assumptions used for purposes of the forward-looking statements specified in the
following information represent estimates of future events and are subject to
uncertainty as to possible changes in economic, legislative, industry, and other
circumstances. As a result, the identification and interpretation of data and
other information and their use in developing and selecting assumptions from and
among reasonable alternatives requires the exercise of judgment. To the extent
that the assumed events do not occur, the outcome may vary substantially from
anticipated or projected results, and, accordingly, no opinion is expressed on
the achievability of those forward-looking statements. No assurance can be given
that any of the assumptions relating to the forward-looking statements specified
in the following information are accurate, and we assume no obligation to update
any such forward-looking statements.




PART
I




ITEM
      1.
            DESCRIPTION
      OF BUSINESS




Unless
otherwise noted, the terms "GTX Corp", the "Company", "we", "us", and "our"
refer to the ongoing business operations of GTX Corp (formerly known as Deeas
Resources Inc.) and our wholly-owned subsidiaries.




Overview
of the Business and Recent Developments




GTX Corp
was incorporated in the State of Nevada on April 7, 2006 under its former name
“Deeas Resources Inc.”  On March 14, 2008, we acquired all of the
outstanding capital stock of Global Trek Xploration, a California corporation
(“GTX California”), in exchange for the issuance of 18,000,001 shares of GTX
Corp common stock (the “Exchange Transaction”).  Prior to the Exchange
Transaction, this company was engaged in the exploration of mineral properties
located in central British Columbia, Canada.  All such prior mineral
exploration activities have been halted, and the only operations we intend to
conduct in the future relate to location-based businesses conducted by our
subsidiaries as described in this Annual Report.




We
currently conduct our operations through three wholly-owned subsidiaries that
operate in related sectors of the personal location-based market specialized in
the monitoring and recovery of missing people, pets and high valued
assets.  In general:




·
            GTX
      California currently offers a GPS and cellular location platform that
      enables subscribers to track in real time the whereabouts of people, pets
      or high valued assets through the company’s miniaturized transceiver
      module, wireless connectivity gateway, middleware and viewing
      portal.




·
            LOCiMOBILE,
      Inc. has developed, and expects to commercially release in the near
      future, an application for the iPhone and other GPS enabled handsets that
      permit authorized users the ability to locate and track the movement of
      the holder of the handset.




·
            Code
      Amber News Service, Inc., a member of ONA (Online News Association) and
      RTNDA (Radio Television News Directors Association), is a U.S. and
      Canadian syndicator and content provider of all state Amber Alerts (public
      notifications of child abductions) and missing person
    alerts.


- 1
-


GTX
California, our principal operating subsidiary, has developed and patented a
personal location services platform consisting of miniaturized, assisted 2-way
GPS tracking and cellular location-transmitting technologies used in consumer
products and commercial applications to locate and track persons or
assets.  Our gpVectorTM module, which consists of a miniature
transceiver, antenna, circuitry and  battery, can be customized and
integrated into numerous products whose location and movement can be monitored
in real time over the Internet through our Location Data Center tracking portal
or on a web enabled cellular telephone.  The GTX California business
model is to license its technology platforms to branded partners who desire to
deliver their own innovative tracking solutions to consumers or their customers
in a wide variety of wearable and portable location devices.  The GTX
California value proposition is its customizable and embedded approach to the
market.  GTX California believes that its ability to customize its
gpVectorTM module or different form factors to the specific needs of its branded
partners sets it apart from its competitors. Until  the fourth quarter
of 2008, GTX California was primarily engaged in the research and development of
its technologies and products, securing an intellectual property portfolio, and
building brand and category awareness.  In September 2008, GTX
California delivered its first commercial product, the “gpVectorTM Powered Athlete Tracking
Systems,” to a licensee.  This product is an ergonomic
shockproof and water resistant device worn by athletes so that their location
and progress can be tracked by spectators and coaches during competitive
endurance events such as running, biking and swimming.  It also gives
the athletes the ability to review and analyze their performance to enhance
training.




LOCiMOBILE,
Inc. has developed and owns LOCi MobileTM (“LOCi MobileTM”), a suite of mobile
tracking applications that turn the latest iPhone and other GPS enabled handsets
into a tracking device which can then be viewed through our Location Data Center
tracking portal.  Our LOCi MobileTM is expected to be released
initially on the Apple iPhone following completion of the Apple certification
process, which certification is expected to be obtained early in the second
quarter of 2009. The LOCi suite of mobile applications will enable GTX to
leverage the estimated 4.6 billion smart phones that will be in the market by
2011, to render location coordinates through its data tracking portal, allowing
the company to enter into new social networking and geo spatial proximity
marketing industries.




Code
Amber News Service, Inc. (“CANS”) was formed in February 2009 after we acquired
the assets of Code Amber, LLC, a U.S. and Canadian syndicator of all state Amber
Alerts (public notifications of child abductions), and the provider of website
tickers and news feeds to merchants, internet service providers, affiliate
partners, corporate sponsors and local, state and federal
agencies.  CANS is using the high visibility of Amber Alerts and
missing person alerts to raise category awareness of our personal location
products and services.  In addition, we have recently restructured the
operations and services provided by CANS in order to generate revenues from the
sale of its content and from sponsorships.




We
maintain an Internet website at http://www.gtxcorp.com. Our annual reports
(previously on Form 10-KSB), quarterly reports (on Form 10-QSB prior to the
Exchange Agreement and thereafter on Form 10-Q), current reports on Form 8-K and
amendments to such reports filed or furnished pursuant to section 13(a) or 15(d)
of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and
other information related to this company, are available, free of charge, on our
website as soon as we electronically file those documents with, or otherwise
furnish them to, the Securities and Exchange Commission. The Company’s Internet
website and the information contained therein, or connected thereto, are not and
are not intended to be incorporated into this Annual Report on Form
10-K.




GTX CALIFORNIA
BUSINESS




GTX
California was incorporated in California on September 10, 2002.  From
its inception in 2002 until the third quarter of 2008, its business was
predominantly focused on research and development, creating intellectual
property, securing strategic relationships and partnerships, and building
category and brand awareness.  Through December 31, 2008, GTX
California had spent approximately $1.088 million on its research and
development activities.  During 2008, GTX California transitioned from
a research and development stage to a marketing and customer driven stage of
operations.  GTX California developed its business as
follows:


- 2
-


·
            In
      2002, GTX California conducted technical feasibility studies and analyzed
      market data, filed patents and began developing its customizable imbedded
      technology business model.




·
            In
      2004, GTX California built its first prototypes and began developing
      partnerships with wireless carriers, contract manufactures and topology
      partners in order to build out its proof of
  concepts.




·
            In
      2006/2007, GTX California developed pre-production personal location
      devices, completed the proof of concept website development (mapping
      interfaces, back office support, etc.), and obtained Federal Communication
      Commission (“FCC”), Industry Canada (“IC”), and Conformite Europeenne
      (“CE”) approvals.




·
            In
      September 2007 GTX entered into its first license agreement and in
      September 2008, GTX California delivered its first large order of
      gpVectorTM modules to its first
licensee.




GTX
California has developed and owns a comprehensive, end-to-end 2-way GPS location
system.  Unlike a one-way GPS location system (such as the standard
automobile GPS systems) that informs the user of the users location, a 2-way GPS
location system allows other parties to locate and track the whereabouts of the
user.   The tested and proven GPS location system enables
subscribers to obtain accurate, real-time location information of persons or
property through the Internet or over any web enabled phone, 24 hours-a-day,
seven days a week.




GTX
California’s first hardware product, a GPS Locator embedded module that the
Company calls “gpVectorTM,” combines the power of assisted GPS and digital
personal communications service (“PCS”) technologies. This miniature gpVectorTM
module can embed within a lightweight enclosures, such as shoes worn by
athletes, collars worn by pets, or containers carrying items whose whereabouts
is critical (such as live organ transportation containers).




GTX
California can provide real-time location and tracking information to customers
using its gpVectorTM module for both routine and emergency situations through GTX
California's 24x7 location data center (“Location Data Center”) and Internet
infrastructures. Following purchase and service activation, a subscriber can
determine the locations of any person or product that carries the locator module
by accessing the Internet either by computer or by a web enabled cellular
telephone.




The
Location Data Center tracking portal is fully equipped with a database and
computer call distribution application software. Subscriber Internet
communications are routed through GTX California’s proprietary, fault-tolerant,
carrier-class, and application-specific interface software.




GTX
California’s gpVectorTM modules are essentially enablers of its location service
system. We expect that the majority of GTX California’s gross margin after
subscriber buildup will come from recurring service fee revenues.




GTX
California’s objective is to be a leading provider of wireless location services
through the convergence of state-of-the-art enhanced global positioning,
wireless communications and other technologies that empower people and
businesses with the ability to locate loved-ones or property whenever and
wherever they choose.  GTX California’s multi-pronged strategy is to
penetrate our target markets by offering exclusive licenses of our technology to
qualified re-sellers of products to consumers or
businesses.  Potential target markets include:




·
            Parents
      of young children (primarily 4 to 12 years of age) who seek the peace of
      mind of being able to know that their children are where they are supposed
      to be when they are supposed to be
there;


- 3
-


·
            Families
      with members who have Alzheimer’s disease and developmentally challenged
      adults;




·
            Elder
      Care support and applications;




·
            Pet
      care and location capability;




·
            Military
      and law enforcement




·
            Asset
      tracking and location capability:  cars, trucks, fleet
      management, luggage, and other assets
and




·
            Competitive
      non-motorized athletes.




GTX
California also intends to offer its Location Data Center services to non-GTX
California products and hardware systems (i.e. handsets, personal electronics)
of major electronics manufacturers as such third-party products and systems
become available through the offer and sale of exclusive licenses to either
geographical regions or product categories.




Products—Hardware;
Location Data Center




GTX
California’s location based products consist of (i) certain hardware and (ii) a
suite of subscription-based internet data-monitoring software and services (its
tracking portal).  Our hardware products include patented,
interchangeable GPS satellite tracking and location reporting modules (which we
have named our “gpVectorTM module”) that can be embedded into wearable consumer
items (such as footwear, clothes, backpacks, life preservers) or can be
integrated into other portable carriers.  For example, our module can
be embedded into the sole of a shoe to track and report on the location of the
wearer of the shoe.  In addition, we also offer a wearable caddy that
houses a miniaturized, ruggedized, portable A-GPS tracking device enclosed in a
buoyant, waterproof, shockproof, clip-on housing. The module can be affixed to
other products and items that need to be located, such trucks, automobiles,
delivery vehicles, as well as pets.




GTX
California’s data tracking portal consists of its proprietary Location Data
Center that provides a complete array of back-end services to subscribers. Upon
purchase of a product that contains our gpVectorTM module from a licensees and
the subscription by the purchaser of a service plan and activation of service,
the subscriber/purchaser can establish his own personal pass code and configure
his account services.  A subscriber can have more than one product
included on his or her account, and can set up individual profiles for each
product.




The
subscriber initiates requests for information on his gpVectorTM module's location
through the Internet via the GTX California licensee’s web site. The Location
Data Center automatically contacts the module via the local cellular
communications infrastructure, requesting the module's location. The embedded
GTX California module utilizes GSM/GPRS technology and transmits its location
data on a GSM network. The GTX California locator utilizes quad-band GSM
technology.




The
module’s GPS electronics, utilizing advanced "weak signal server-enhanced"
technology, provides rapid location identification. With this technology, the
most current satellite data (“Ephemeris data”) is delivered to the module during
the request for location. This greatly enhances GPS performance in
less-than-ideal circumstances (i.e. urban canyons, deep building interiors,
tunnels and other difficult areas), enabling the product to get a location from
GPS satellites ten times faster (10 seconds versus 100 seconds) than with
Standard GPS. The cellular tower ID is also used to augment the location
information provided.




Having
determined its location, the module then communicates the location information
to the Location Data Center. The location information is then passed to the
subscriber via the Internet (with a map and closest street address). In most
cases, the entire process takes less than 30 seconds. A copy of the event is
stored in the customer's files. The Location Data Centers use GTX California’s
proprietary application-specific interface "thin-client" software (patent
pending) equipment that is connected to existing telephony and Internet
infrastructures.


- 4
-


The
accuracy of the location information provided by GTX California’s products is
within 37 feet in optimum conditions, significantly better than that required by
the FCC (150 feet).




In
addition to these basic location reporting capabilities, our gpVectorTM modules
and location tracking services also offers several additional features and
capabilities to our subscribers, including:




Breadcrumbing. The
subscriber is able to get a report on a series of location events through
“breadcrumbing”. With this feature, the user can see the location history
mapping the route of the user with the exact location of the user noted at
various times based on whatever reporting interval is selected (30- second, 1
minute, etc.). Parents may want to use this feature to confirm the whereabouts
of their child if he or she is in the care of a guardian and has several
appointments throughout the day. To utilize this feature, the subscriber
predetermines the number of locations he or she wishes to track, as well as the
desired time interval between locations (i.e. identify a total of 12 locations,
one every 15 minutes). Once all locations are identified, a report will be
automatically issued. The subscriber can then request a mapping of the desired
locations.




Temporary Guardians.
Through the Location Data Center, subscribers can set-up a “temporary guardian”
which will have access to location features only (no account management
functions). Parents may want to use this feature when their child is visiting a
relative and they want that person to be able to determine the child's
location.




GeoFencings.
Subscribers can establish geographic limits for each user that will be
programmed in place through the Internet access provided by the licensee to
their customers.  Once these limits have been programmed into the
account, when the user crosses these boundaries, alerts are sent out to the
subscriber over the Internet through email or to a wireless cellular device by
SMS or text messaging.




Technology




The
current product design utilizes quad-band GSM telephony chip sets and can be
adapted in the future to the then-prevalent wireless technology, be it 2.5G or
3G. Our module’s GPS electronics, utilizing advanced “weak signal
server-enhanced” technology will provide rapid location
identification.




Each
module is programmed with a unique identification number and uses standard
cellular frequencies to communicate its location. The module is also programmed
with a unique subscriber identification number allowing each owner to subscribe
different services.




GTX
California has developed a “carrier-class” architecture and facility to create
and manage the proprietary Location Data Center (reliable to 99.999%). The local
service center runs on redundant off-the-shelf servers. This enables
cost-efficient expansion, without the need for application code
changes.




The
products offer wide network coverage throughout the United States and Canada on
the AT&T Wireless networks.  In addition, the personal locators
will have the ability to roam seamlessly on the networks of 290 partners in over
130 countries.




Multiple
Applications




GTX
California’s planned GPS Personal Locator licenses are targeted to address five
major markets: children, adults with Alzheimer’s disease,
automotive/commercial/payload tracking, pet owners, and institutional
living.


- 5
-


Children. Due to the
emotional nature of the benefit GTX California is offering, we view this segment
as having immediate market potential.  The GPS Personal Locator
license for children will target prospective licensees currently marketing their
existing products to dual-income and single parents of 4-12 year old children.
At the lower end of this age range, children are starting to gain more
independence from their parents and are more likely to be "out of the parent's
sight" for a variety of reasons (day care; school; playing with friends; etc).
We believe that both parent and child interest in the product would level off
after age 12, when a child's range of freedom and desire for privacy increases
dramatically. The service is positioned as "complementary" to parent
supervision, not a replacement for it.




Adults. We believe
the demographic segments offering the greatest opportunities are Alzheimer's
patients, seniors (65+ years of age), and active adults and teens. A primary
application is for "active adults": those who participate in recreational
activities (such as jogging, hiking, camping, etc.) that could put them at risk
of getting lost, being injured or becoming a victim to a violent crime. Other
potential users include working women, teens, couples, Alzheimer's patients and
developmentally challenged adults. For example, GTX Corp has released its first
product, the gpVectorTM Powered Athlete Tracking Systems, a device worn by
athletes or hikers to track their locations.  We believe these people
would be very interested in using the location service during an emergency
situation, as a combination location service/notification to law enforcement
when a crime is in process where a subscriber is the victim, and simply as a
means of communicating one's location to a friend or loved-one.




Vehicular/Commercial/Payload
Tracking.  As competitive forces continue, we believe that
bicycle, truck and motorcycle dealers will continue to look for ways of
increasing their profitability through value-added services and after-market
sales. We believe that GTX California’s products and services would offer a new
profit-building opportunity to prospective licensees now doing business with
dealers.  Permanent installation for theft recovery applications would
be simplified due to the miniaturized nature of the hardware and the embedded
antenna technology. Its small size would allow it to be placed in any car, truck
or motorcycle the dealer sells.  GTX California is also targeting
businesses and organizations that use fleets of vehicles. We believe GTX
California’s products would be attractive to any business owner who needs to
know the location of their vehicles and/or payload(s).




Pet
Owners.  This market segment would utilize GTX California’s
technology to locate pets that have run away, been stolen or become lost. The
pet collar device can be attached to a collar or by similar means and will
utilize the same location (GPS) and communication (cellular) technologies as the
GPS Personal Locator; however, since it will not need many of the added features
(watch display, paging, wearer-triggered alarm), we anticipate that GTX
California will be able to produce it at a lower unit cost.




Institutional
Living.  Current technologies used to monitor individuals with
movement-restrictions often do not meet the needs of law enforcement officials.
For example, house arrest systems that utilize an "RF tether" to monitor an
individual's presence in his or her home will alert officials if the person
leaves the house, but will not provide information on where the person has gone.
We believe the increase in over-crowding in jails and prisons provides a further
incentive to utilize location and tracking products.




Strategic
Relationships




The goal
of GTX California is to offer location based hardware and/or its data monitoring
platform to third parties for the sale and distribution of location based
products/services in various targeted markets worldwide.  Establishing
and building United States and international partnerships, licensing agreements,
OEM, and carrier relationships with major market players, utilizing GTX
California’s technologies will facilitate efficient entry into new
markets.  Forging strategic partnerships including co-branding,
distribution and marketing with telecommunication companies, wireless carriers,
national retailers, major consumer brand companies and mass media aligns the
sales and marketing efforts with licensed sales channels.


- 6
-


Leverage
First Mover Advantage




We
believe GTX California is one of the first companies to successfully design and
develop a low-cost, embedded module for the consumer and business markets using
existing wireless and GPS "chip" sets, networks and technologies. Leveraging
existing third-party telephony, contract manufacturing, application software
packages and data/call center infrastructures has minimized the costs and
time-to-market.




Intellectual
Property Investment




GTX
California has invested significantly in intellectual properties, which consist
of apparatus patents and applications and system and method patents and
applications.  GTX California has filed claims that cover all aspects
of the personal locator, its operating system and user interface.  Set
forth below is a list of our patents and pending patent
applications.




U.S.
Patent Holdings




1.
            U.S.
      Patent No. 6,788,200 title: “Footwear With GPS,” filed October 21, 2002,
      issued September 7, 2004, expires approximately October 21,
      2022.




2.
            U.S.
      Patent No. 7,474,206 title: “Footwear With Embedded Tracking Device And
      Method Of Manufacture,” filed February 6, 2006, issued January 9, 2009,
      expires approximately 7/23/27.




3.
            U.S.
      Patent Application, Serial No. 11/494,751 title: “Footwear With GPS,”
      re-filed July 27, 2006.




4.
            U.S.
      Patent Application, Serial No. 11/506,175 title: “Footwear With GPS,”
      re-filed August 17, 2006.




5.
            U.S.
      Patent Application, Serial No. 11/516,805 title: “Footwear With GPS,”
      re-filed September 6, 2006.




6.
            U.S.
      Patent Application, Serial No. 11/517,603 title: “Footwear With GPS,”
      re-filed September 7, 2006.




7.
            U.S.
      Patent Application, Serial No. 29/301,069 title: “Footwear With Antenna,”
      filed February 7, 2008.




8.
            U.S.
      Patent Application, Serial No. 29/301,068 title: “Footwear With Antenna,”
      filed February 7, 2008.




9.
            U.S.
      Patent Application, Serial No. 12/228,158 title: “Tracking System With
      Separated Tracking Device,” filed August 8,
  2008.




10.
            U.S.
      Patent Application, Serial No.11/402,195 title: “Buoyant Tracking Device
      And Method Of Manufacture,” filed April 11,
  2006.




11.
            U.S.
      Patent Application, Serial No. 12/012,088 title: “System And Method For
      Monitoring The Location Of A Tracking Device,” filed January 31,
      2008.




12.
            U.S.
      Patent Application, (Serial No. is CONFIDENTIAL - Not Published by
      the USPTO) title: “System And Method For Processing Location Data,”
      filed February 11, 2009.


- 7
-




13.
            U.S.
      Patent Application, (Serial No. is CONFIDENTIAL - Not Published by
      the USPTO) title: “Footwear With Embedded Tracking Device and Method of
      Manufacture,” filed January 6,
2009.




14.
            U.S.
      Patent Application, (Serial No. is CONFIDENTIAL - Not Published by
      the USPTO) title: “System And Method For Communication with a Tracking
      Device,” filed February 9, 2009.




15.
            U.S.
      Patent Application, (Serial No. is CONFIDENTIAL - Not Published by
      the USPTO) title: “Wrist Mounted Location Device With Wireless
      Transceiver,” filed July 28, 2008.




Foreign
Patent Holdings




1.
            International
      Patent Application WO 2007/0120586 title: “Buoyant Tracking Device And
      Method Of Manufacture,” filed April 11, 2006.  Has not been
      moved to National Stage at this
time.




2.
            International
      Patent Application WO 2007/0092381 title: “Footwear With Embedded Tracking
      Device and Method of Manufacture,” filed February 6,
  2007.




3.
            International
      Patent Application WO 2008/0094685 title: “System And Method For
      Monitoring The Location Of A Tracking Device,” filed January 31,
      2008.


4.
              Canadian Patent
      Application, Serial No. 2,641,469 title: “Footwear With Embedded
      Tracking Device and Method of Manufacture,” filed August 5,
      2008.


5.
              Mexican Patent
      Application, Serial No. MX/A/2008/010160 title: “Footwear With Embedded
      Tracking Device and Method of Manufacture,” filed August 6,
      2008.




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




Revenue
Sources—Licenses




GTX
California expects that revenues it generates could be based on the following
sales and revenue sources:




·
            License
      fees derived from exclusive and non exclusive grants for territories and
      specific vertical markets




·
            Product
      sales




·
            Non-recurring
      engineering fees




·
            Professional
      services and consulting fees




·
            Monthly
      recurring wireless data  and portal service
  fees




·
            Advertising




·
            Sponsorship
      fees derived from the Code Amber News
Service


- 8
-


In
September 2007, GTX California entered into an exclusive license with My Athlete
LLC pursuant to which GTX California granted My Athlete LLC a five-year
exclusive world-wide license to make, use and sell products that incorporate GTX
California’s products and technologies.  The target market in which My
Athlete can sell those products is limited to non-motorized athletic activity
and sports.  The Company has designed, developed and manufactured a
module (incorporating the company’s gpVectorTM module) for My Athlete that is
being sold under My Athlete’s name.  GTX California receives revenues
under this license agreement for (i) designing the product, (ii) selling the
completed units to MyAthlete, and (iii) providing the cellular connection for
each unit. We charge MyAthlete a set monthly fee per device for providing the
cellular connection and tracking services.




The
Industry




After
several years of fitful industry interest, location-based services are once
again central to the wireless industry.  Technological challenges have
been resolved with 2.5G and 3G network speeds now consistent with higher-speed
coverage that is widely available.  In our ever-mobile society, it
helps to know where we are and where we are going.  According to a
2006 study authored for International Data Corporation (“IDC”) by Rena
Bhattacharyya and Scott Ellison and entitled U.S. Market for Wireless Location
Based Studies, the demand for Global Positioning System (“GPS”) devices is
growing rapidly.  Due to the demands of families with dual earners,
and the number of single parent homes, many children are left without a parent
at home during the day.  Parents in those situations desire the
ability to know where their children are and where they are
going.  Having such information is possible when we have access to
real-time information delivered on-demand.  The technology that makes
this possible has provided us the ability to move faster than
before.




According
to a research report released by the Consumer Electronics Association (“CEA”),
overall satisfaction among owners of such devices is high and consumer interest
for the technology is quickly increasing.  The report, “GPS –
Exploring Ownership and Interest” revealed that the owner satisfaction rate is
at 80 percent, strongly influenced by the ease of use and the display quality of
devices. Navigation assistance in a vehicle was the primary use of the
technology in consumer devices.




Since
2002, IDC research has consistently shown very high levels of consumer interest
in other location based services – especially in family/friend locator
devices.  Access, controlled by the parent and permission-based among
other adults, gives the parents the means to stay connected to their children as
well as the opportunity to use the geofencing technology to control access to
particular areas.  The results of this study indicate that there is
significant opportunity for GPS manufacturers and marketers throughout multiple
industries.  The key will be to respond with products that include GPS
capability in easy-to-use formats and devices to speed adoption.




Target
Markets and Marketing Strategy




We
believe that the primary target market will consist of prospective licensees who
will be characterized as companies currently selling related products or
technology services to numerous markets including home security, child safety,
medical and elder care providers, campers, hikers, backpackers, adventure
seekers, extreme sports enthusiasts, freight and cargo carriers, delivery
services, pet owners, vehicle finance companies, auto dealerships, law
enforcement agencies, military organizations and individuals wishing to track
valuable items.




The
marketing initiatives will include:




·
            Establishing
      licensing relationships with key industry partners who are recognized for
      providing safety and security technologies into a wide array of
      marketplaces;




·
            Utilizing
      public relations outreach in special interest magazines and
      newsletters;




·
            Affinity
      group marketing and outreach;


- 9
-


·
            “White
      label” affiliates which will target niche markets such as court controlled
      parolees; and




·
            Establishing
      licensing relationships with large partners who sell every-day consumer
      goods like shoes, helmets, bicycles,
etc.




Growth
Strategy




Our goal
is to become one of the major providers of personal and asset location services
to specific niche business channel partners and, once we hit critical mass in
pricing, to the mass consumer markets.  The strategy is to establish
licensing relationships with key industry partners who will embed our technology
into their products to sell to their established customer base.  This
would include partners recognized for providing safety and security technologies
into a wide array of marketplaces whether it be for children, pets, or asset
tracking (luggage, vehicles, boats and the like) as well as every-day consumer
goods like shoes, helmets, bicycles, etc.  Key elements of our
strategy include:




·
            Providing
      our Personal Locator embedded module to licensees to empower their
      products with GPS tracking
capabilities;




·
            A
      monthly service fee structure variable as to the needs of the end user and
      having multiple convenient access points (mobile phone, land line, or via
      the Internet);




·
            Ease
      of use at the location interface point as well as with the device;
      and




·
            Rugged
      design that meets the rigors of use. Our goal is to utilize our modules in
      products that are waterproof and can handle weather extremes of heat and
      cold.




Competition




Personal
location and property tracking devices are just beginning to significantly
penetrate the marketplace.  We believe this condition represents a
tremendous opportunity as customers will be attracted in large numbers once the
intrinsic value of the device is recognized and mass market adoption
begins.




Competitors
for our gpVectorTM product, and often also for our LOCi MobileTM system, include
Location Based Technologies, Inc, Zoombak, Inc., gpsfootprints, Google Latitude,
Trimble Navigation, Inc.,  SOS Gps, Inc. and Wherify Wireless,
Incorporated.  GTX California’s competitors may be better financed, or
have greater marketing and scientific resources than we can
provide.  We are also aware of a number of foreign competitors that
offer personal location tracking products similar to ours, which may impact our
ability to expand our products abroad.




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 PDA location devices are
gaining significant market acceptance and commercialization.  Prices
range from $350 to several thousand dollars.  We expect that
increasing consumer demand in these markets will drive additional applications
and lower price points.




Government
Regulation




GTX
California is subject to federal, state and local laws and regulations applied
to businesses generally as well as FCC, IC and CE wireless device regulations
and controls.  We believe that GTX California is in conformity with
all applicable laws in all relevant jurisdictions.  We do not believe
that GTX California’s operations are subject to any environmental laws and
regulations of the United States nor the states in which they
operate.


- 10
-


Research
and Development




GTX
California shifted from a research and development mode in the third quarter
with the completion of the locator device accomplished in September
2008.  Prototype testing was successfully completed and the first
shipment of products to our customer in September 2008.  Additionally,
GTX California is working with several other entities who are conducting
research on key areas to improve the device (including expanded antennae
capability, battery capacity, and enhanced location reliability and
accuracy).  We anticipate GTX California will have ongoing involvement
with such improvement activities throughout the foreseeable future.




Manufacturing
and Materials Procurement




Our goal
is to acquire high quality, highly reliable components and subassemblies
manufactured by other specialized manufacturers and to integrate those
components with our technologies to produce our
gpVectorTM  products.  Accordingly, our PC boards are
manufactured for us by a Colorado company, and most of the other parts and
components of the control board are assembled for us in
California.  Once the control boards arrive at our Los Angeles
facilities, our personnel perform a visual inspection then assemble the control
board with the radio unit.  GTX’s proprietary configuration is then
installed into the radio and the GTX firmware is loaded into the control board’s
processor. The assembled module is then tested by GTX personnel and subsequently
staged for final assembly. Final assembly and final QC testing is performed by
GTX personnel in Los Angeles, California.  Although we currently
source each of the foregoing components from a single source, we have qualified
second sources for these parts.  Also, our principal suppliers are
large, established manufacturers, such as Enfora, the manufacturer of our
radio.  Accordingly, to date we have not experienced any significant
shortages or material delays in obtaining any of our components or
subassemblies.




LOCi
BUSINESS




LOCi
MobileTM is a suite of mobile tracking applications that turn the latest iPhone
and other GPS enabled handsets into a tracking device capable of being rendered
on our Location Data Center tracking portal.  LOCi MobileTM can be
deployed both business to business, through a private label interface and as a
direct to consumer offering.  By being able to sell a mobile tracking
product for use with the iPhone, we are able to enter into new markets supported
by the growing number of world wide handsets and to tap into these markets
without the traditional capital requirements and long lead times associated with
building hardware. Our mobile strategy complements our overall location based
product offering by allowing us leverage the rapid penetration and adoption of
smartphones, including the use of their data plans and distribution, like the
App Store, BB Store and Android store, with the our existing platform
architecture. Our middleware is now a complete offering able to support
applications on handsets along with hardware we make or buy for those
specialized vertical markets.




Our first
release under the LOCi MobileTM umbrella is LOCime version 1.2 which we
anticipated will be distributed through the Apple Application Store (pending the
Apple Store certification). Version 1.2 will be the first national commercial
release of LOCime followed by additional versions in the coming
months.  If the LOCime application is adopted by iPhone users, we
intend to expand the product’s platform to support other mobile operating
systems such as the BlackBerry system and Android, the operating system
developed by Google.




LOCiMe
has been designed to be downloaded by either enterprise users or direct
consumers and is expected to range in pricing from a $2,500 licensing fee on the
enterprise side to a nominal fee of $1.99 per month on the consumer side. The
software will allow users to view their elevation, latitude and longitude, and
allow others to view them on our tracking portal. In later versions of LOCiMe,
we intend to offer additional features which will enhance the users’
experience.  The current LociMe interface is easy to use and intended
to get user feedback allowing us to make variations to the interface for future
version releases.


- 11
-


Part of
the roadmap is to implement a Cloud Architecture, which is a style of computing
in which dynamically scalable and often virtualised resources are provided as a
service over the Internet. This type of architecture will allow our subscribers
to take location data and augment that data with other pertinent information
providing a content rich solution.  This will not only enhance the
user experience but also create value to the viewers and subscribers. Knowing
the whereabouts of a loved one, friend or co -worker has value, but knowing
particulars about those whereabouts and if there are any other friends or loved
ones in the area, or if there are any potential dangers in the area, increases
the value of the information. For example, knowing the location of a child and
then augmenting that information with the known whereabouts of registered sex
offenders increases the value of the information and ultimately empowers the
viewer. More and more people use their smart phones to text, e-mail, search the
Internet or listen to music.  Because these devices are becoming
smarter, growing in use and numbers and are proliferating worldwide, they create
the perfect long term environment for developing geo spatial, dynamic in real
time solutions that interact not only with each other but with other widely
adopted platforms and data bases.  This in turn will create value when
intersecting information with location and proximity. Seamlessly adding location
and proximity to a common exchange of text messaging, significantly change the
dynamics of text messaging.




In the
past 18 months the mobile handset market has significantly shifted. The once
dominant handset providers, such as Motorola and Research in Motion (the
manufacturer of the BlackBerry handsets), are losing market share to new players
in this market such as Apple and Google, and social networking sites are
fighting for market share, the once dominant My Space has competition from Face
Book and Twitter.  We believe that our LOCi MobileTM product offering
will benefit from the dynamic market conditions that currently are affecting the
smart phone industry.




CANS
BUSINESS




Our Code
Amber News Service, Inc. (“CANS”) subsidiary is a member of ONA-Online News
Association and RTNDA (Radio Television News Directors Association), the leading
U.S. and Canadian syndicator of online Amber Alerts and the primary content
provider for non amber alert missing persons.  An Amber alert is a
public notification of a child abduction.  On December 5, 2008, we
acquired the assets of Code Amber, LLC, which assets are now held and used by
CANS.  To date CANS has reached an audience of 1.8 billion through its
website tickers and point of display feeds presented by other media outlets,
retail merchants, internet service providers, corporate sponsors, affiliate
partners, federal, state and local agencies and concerned citizens. CANS is
designed to support law enforcement efforts in the recovery of missing persons
across the United States and Canada by directly distributing missing people
notifications to millions of subscribers and viewers. CANS maintains a website
at www.codeamber.com.




Currently
CANS serves the Code Amber ticker to over 500,000 websites and desktops, which
includes hundreds of law enforcement agencies, members of congress and a list of
corporate sponsors. In addition to the pre packaged consumer ticker, Code Amber
provides a commercial news feed to many media outlets and hundreds of additional
corporate and private news and information distribution services. Code Amber has
cultivated relationships with organizations such as CBS, NBC, ABC, MSNBC, CNN,
Google, O’Reilly and Face Book, as well as many smaller broadcasters, all of
which receive information about missing persons from CANS. Enterprises such as
Walgreens display CANS alerts on over 3,000 changeable message signs. AAC
displays alerts on over 20,000 Cisco VOIP display telephones by ZIP code.
Perftech, provides alerts to over 350,000 customers of participating ISP’s in
Illinois, Ohio, Michigan and Indiana. And VeriFone distributes alerts in various
formats to a variety of point of sale credit and debit card devices at retail
locations across the US. The monthly reach of the CANS news stream through its
wide and diverse network reaches an audience of over 21,000,000 and increases to
an even higher level during an alert state. As part of our ongoing effort to
expand our reach we are developing technology to make Code Amber available on
Radio Data Systems  (or RDS, a communications protocol for sending
small amounts of digital information using conventional FM radio broadcasts),
and high definition radio dials, enabling our information to be viewed on car
radios, further expanding our multimedia footprint and reach.


- 12
-


We
acquired and intend to operate the Amber Alert business (i) to raise awareness
of our company’s other technologies for locating persons, and (ii) to create a
new source of revenues.  We believe that the strong media presence of
Amber Alerts gives us a platform to communicate with a large audience having
specific interest in our core business of personal location
solutions.  Persons who access the Amber Alert announcements and
information have an interest in locating and knowing the whereabouts of
important persons (children).  Since the location products offered by
our other two subsidiaries (i.e. our gpVectorTM  and LOCi MobileTM
products) can be used by parents to monitor the whereabouts of their children,
we believe that the Amber Alert platform gives us an opportunity to introduce
our products to users of the Amber Alert system. In addition, the operations of
CANS supplements the GTX brand as a company that provides technology for
monitoring and assisting in the recovery of missing persons.   We
also have structured the operations to become a new revenue
source.  We intend to generate future revenues from sales of
information distributed by CANS and by revenues from sponsors/advertisers who
want to address the target audiences that view the CANS
information.




Our
expansion plans for CANS intersects with our mobile platform strategy. As we
begin to introduce CANS Mobile and LOCi Mobile in calendar year 2009, our
footprint and audience should not only grow but also help expand CANS into a
dynamic, real time, intelligent, geo-location aware, altruistic disseminator of
vital information. Leveraging our relationships and two-way GPS technology, we
plan to introduce our patent pending data augmentation platform that will cross
reference data located at sites such as Face Book, MySpace, Guard a Kid, etc.,
allowing CANS to distribute in real time, including photos, pertinent geo
specific information to web enabled phones.  A subscriber will be able
to view on their phone all relevant data and a picture of a missing person that
was last seen near their current location. Moreover, cell phone cameras and
Geo-Tagged photos captured by participating subscribers will be able to assist
in the information gathering process and hence allow the user to become active
participants in the news as opposed to passive observers of events that affect
our lives. We believe CANS Mobile will become the digital milk carton, giving
every viewer the sum of all known knowledge at the right time and right place,
all at the tip of their fingers. CANS along with LOCi Mobile synthesizes our
mobile platform strategy.




EMPLOYEES AND
CONSULTANTS




As of
December 31, 2008, GTX Corp and its subsidiaries collectively
had  seven (7) employees and seven (7) part-time consultants. The
employees are not represented by a labor union. We believe that the employee
relations are good.   We anticipate that we will hire one or two
key employees in the next six months, with selective and controlled growth
commensurate with significant increases in revenues.  We anticipate
that our subsidiaries will continue to extensively use the services of
independent contractors and consultants to support expansion, customer service,
and business development activities in a robust outsourcing business
model.




ITEM1A:
            RISK
      FACTORS




Investing
in our common stock is highly speculative and involves a high degree of risk.
Any potential investor should carefully consider the risks and uncertainties
described below before purchasing any shares of our common stock.  The
risks described below are those we currently believe may materially affect
us.  If any of them occur, our business, financial condition,
operating results or cash flow could be materially harmed.  As a
result, the trading price of our stock could decline, and you might lose all or
part of your investment. Our business, financial condition and operating
results, or the value of any investment you make in the stock of our Company, or
both, could be adversely affected by any of the factors listed and described
below.  These risks and uncertainties, however, are not the only ones
that we face.  Additional risks and uncertainties not currently known
to us, or that we currently think are immaterial, may also impair our business
operations or the value of your investment.


- 13
-


RISKS
RELATED TO OUR BUSINESS




We
have had operating losses since formation and expect to incur net losses for the
near term.




We
reported net losses of $3,401,000 and $1,328,000 for the fiscal years ended
December 31, 2008 and 2007, respectively.  We received the first order
for our products in September 2008, and we have only generated total revenues of
$450,000 during the past two fiscal years.  Unless our sales increase
substantially in the near future, we anticipate that we will continue to incur
net losses in the near term, and we may never be able to achieve
profitability.  In order to achieve profitable operations we need to
significantly increase our revenues from the sales of product and licensing
fees.   We cannot be certain that our business will ever be
successful or that we will generate significant revenues and become
profitable.




We
have no experience or extensive history of operations or sales.




To date,
we have only introduced one gpVectorTM product that has been sold to a small
number of customers.  Accordingly, our business model has not yet been
tested in the market and we have no operating or sales history on which an
investor can evaluate our operations and prospects.  In addition, our
LOCi MobileTM has not yet been commercially released.  Because of the
limited sales of our products to date, we have no data to support our belief
that our products will be accepted by the market and will be able to sustain our
business.  Our business plan is heavily dependent upon a number of
other products that we have not yet completed and/or commercially
released.  Accordingly, we are unable to accurately forecast the
market acceptance of our existing and future products.  An investment
in our company is highly speculative and no assurance can be given that the
stockholders will realize any return on their investment or that they will not
lose their entire investment.




Speculative
Nature of Business.




The
revenues and profits of an enterprise involved in the location based business
are generally dependent upon many variables.  Our customer appeal
depends upon factors which cannot be reliably ascertained in advance and over
which we have no control, such as unpredictable critic reviews and appeal to the
public.  As with any relatively new business enterprise operating in a
specialized and intensely competitive market, we are subject to many business
risks which include, but are not limited to, unforeseen marketing, promotional
and development expenses, unforeseen negative publicity, competition, product
liability and lack of operating experience.  Many of the risks may be
unforeseeable or beyond our control.  There can be no assurance that
we will successfully implement our business plan in a timely or effective
manner, or generate sufficient interest in our products, or that we will be able
to market and sell enough products and services to generate sufficient revenues
to continue as a going concern.




Our
wireless location products and technology are new and may not be accepted in the
market, which would dramatically alter our financial results.




We have
had only a limited release of one of our planned wireless locator products in
the market. There can be no assurances that consumer demand will meet, or even
approach, our expectations. In addition, our pricing and marketing strategies
may not be successful. Lack of customer demand, a change in marketing strategy
and changes to our pricing models could dramatically alter our financial
results.


- 14
-


In
order for our products to be successful, we need to establish market recognition
quickly, following the introduction of our products




We
believe it is imperative to our success that we obtain significant market share
for our products quickly, before other competitors establish a significant
market share.  We believe that, if a market for products like ours
develops, an early entrant that gains significant market share will dominate the
market, significantly reducing opportunities for competitors.  We have
limited experience conducting marketing campaigns, and we may fail to generate
significant interest.  We cannot be certain that we will be able to
expand our brand and capitalize on the commercial acceptance of our
products.




We
may encounter manufacturing problems for our products, which would adversely
affect our results of operations and financial condition.




Our
GpVectorTMproduct is a new product that we recently introduced.  However,
to date, we have only manufactured a limited number of that
product.  In addition, we are continually enhancing that product and
are designing new products based on our various technologies that we hope to
manufacture and market in the near future. The manufacture of our products
involves complex and precise processes, some of which have subcontracted to
other companies and consultants. To date, we have manufactured a limited
quantity of products and so we do not yet know whether we will encounter any
serious problems in the production of larger quantities of our existing or new
products.  Any significant problems in manufacturing, assembling or
testing our products could delay the sales of our products and have an adverse
impact on our business and prospects. The willingness of manufacturers to make
the product or lack of availability of manufacturing capacity may have an
adverse impact on the availability of our product and on our ability sell our
products, and as a result we may not be able to grow our business as we
expect.  Manufacturing difficulties will harm our ability to compete
and adversely affect our results of operations and financial
condition.




We
may have substantial future cash requirements but no assured financing source to
meet such requirements.




We
currently have sufficient cash and cash equivalents to support our projected
operating needs for the current fiscal year.  However, our business
plan calls for us to continue to improve our products, to create new products,
and to more aggressively market our existing products, all of which will require
us to obtain additional working capital.  To date, we have received
limited revenues from sales of our products and services.  Our
continuing product improvement and new development activities will require a
commitment of additional funds.  Our future capital requirements will
depend on many factors, including continued progress in product enhancements and
new product development programs, the magnitude of these programs, the time and
costs involved in obtaining any required regulatory approvals, the costs
involved in preparing, filing, prosecuting, maintaining and enforcing patents,
successful completion of technological, manufacturing and market requirements,
changes in existing product development relationships, establishing
collaborative arrangements, and the cost of finalizing licensing agreements to
produce licensing revenues.




We do not
know whether additional financing will be available when needed, or on terms
favorable to us or our stockholders – particularly in light of current economic
conditions which has significantly impacted the availability of credit, and
other sources of capital.  We may raise necessary funds through public
or private equity offerings, debt financings or additional corporate
collaboration and licensing arrangements.  To the extent we raise
additional capital by issuing equity securities, our stockholders will
experience dilution.  If we raise funds through debt financings, we
may become subject to restrictive covenants.  To the extent that we
raise additional funds through collaboration and licensing arrangements, we may
be required to relinquish some rights to our technologies or products, or grant
licenses on terms that are not favorable to us.




If
adequate funds are not available, we may be required to delay, scale-back or
eliminate our product enhancement and new product development programs or obtain
funds through collaborative partners or others that may require us to relinquish
rights to certain of our potential products that we would not otherwise
relinquish. There can be no assurance that additional financing will be
available on acceptable terms or at all, if and when required.


- 15
-


We
currently depend upon one manufacturer for some of the components of our
principal products, and if we encounter problems with this manufacturer there is
no assurance that we could obtain products from other manufacturers without
significant disruptions to our business.




We expect
that most of the components and subassemblies of our gpVectorTM module will be
initially manufactured for us by only one manufacturer. Although we could
arrange for other manufacturers to supply these components and subassemblies,
there is no assurance that we could do so without undue cost, expense and
delay.  If our sole manufacturers are unable to provide us with
adequate supplies of high-quality components on a timely and cost-efficient
basis, our operations will be disrupted and our net revenue and profitability
will suffer.  Moreover, if those manufacturers cannot consistently
produce high-quality products that are free of defects, we may experience a high
rate of product returns, which would also reduce our profitability and may harm
our reputation and brand.  Although we believe that we could locate
alternate contract manufacturers, our operations would be impacted until
alternate manufacturers are found.




Our
markets are highly competitive, and our failure to compete successfully would
limit our ability to sell our products, attract and retain customers and grow
our business.




Competition
in the wireless location services market in the U.S. and abroad is intense. The
adoption of new technology in the communications industry likely will intensify
the competition for improved wireless location technologies. The wireless
location services market has historically been dominated by large companies,
such as Siemens AG and LoJack Corporation.  In addition, a number of
other companies such as Trimble Navigation, Verizon, FireFly, Disney, Mattel,
Digital Angel Corporation, Location-Based Technologies, Inc. and WebTech
Wireless Inc. either have announced plans for new products or have commenced
selling products that are similar to our wireless location products, and new
competitors are emerging both in the U.S. and abroad to compete with our
wireless location services products.  Due to the rapidly evolving
markets in which we compete, additional competitors with significant market
presence and financial resources may enter those markets, thereby further
intensifying competition, adversely affecting our sales, and adversely affecting
our business and prospects.




We
expect to rely heavily on a few licensees of our technology.  The loss
of, or a significant reduction in, orders from these major customers could have
a material adverse effect on our financial condition and results of
operations.




Our
current business model assumes that we will license some of our technologies to
only a few companies who will incorporate our technologies into products that
they manufacture and market.  Therefore, our revenues in the next
several years could be heavily dependent on licenses that we may grant to a
limited number of major customers in a few business segments. Accordingly, the
loss of, or a significant reduction in, orders from these major customers could
have a material adverse effect on our financial condition and results of
operations.




We
may not be successful in developing our new products and services.




The
market for telecommunications based products and services is characterized by
rapid technological change, changing customer needs, frequent new product
introductions and evolving industry standards.  These market
characteristics are exacerbated by the emerging nature of this market and the
fact that many companies are expected to introduce continually new and
innovative products and services.  Our success will depend partially
on our ability to introduce new products, services and technologies continually
and on a timely basis and to continue to improve the performance, features and
reliability of our products and services in response to both evolving demands of
prospective customers and competitive products.


- 16
-


There can
be no assurance that any of our new or proposed products or services will
maintain the market acceptance already established.  Our failure to
design, develop, test, market and introduce new and enhanced products,
technologies and services successfully so as to achieve market acceptance could
have a material adverse effect upon our business, operating results and
financial condition.




There can
be no assurance that we will not experience difficulties that could delay or
prevent the successful development, introduction or marketing of new or enhanced
products and services, or that our new products and services will adequately
satisfy the requirements of prospective customers and achieve significant
acceptance by those customers.  Because of certain market
characteristics, including technological change, changing customer needs,
frequent new product and service introductions and evolving industry standards,
the continued introduction of new products and services is
critical.  Delays in the introduction of new products and services may
result in customer dissatisfaction and may delay or cause a loss of
revenue.  There can be no assurance that we will be successful in
developing new products or services or improving existing products and services
that respond to technological changes or evolving industry
standards.




Additionally,
there can be no assurance that we will not experience difficulties that could
delay or prevent the successful development, introduction and marketing of new
or improved products and services, or that our new products and services will
adequately satisfy the requirements of prospective customers and achieve
acceptance by those customers.  In addition, new or enhanced products
and services introduced by us may contain undetected errors that require
significant design modifications.  This could result in a loss of
customer confidence which could adversely affect the use of our products, which
in turn, could have a material adverse effect upon our business, results of
operations or financial condition.  If we are unable to develop and
introduce new or improved products or services in a timely manner in response to
changing market conditions or customer requirements, our business, operating
results and financial condition will be materially adversely
affected.




Our
software products are complex and may contain unknown defects that could result
in numerous adverse consequences, resulting in costly litigation or diverting
management's attention and resources.




Complex
software products such as those associate with our products product often
contain latent errors or defects, particularly when first introduced, or when
new versions or enhancements are released. We have experienced errors and
defects in our most recent release of the software associated with our
GpVectorTM
product, but do not believe these errors will have a material negative effect on
the functionality of the GpVectorTM
product. However, there can be no assurance that, despite testing, additional
defects and errors will not be found in the current version, or in any new
versions or enhancements of this software or any of our products, any of which
could result in damage to our reputation, the loss of sales, a diversion of our
product development resources, and/or a delay in market acceptance, and thereby
materially adversely affecting our business, operating results and financial
condition. Furthermore, there can be no assurance that our products will meet
all of the expectations and demands of our customers. The failure of our
products to perform to customer expectations could give rise to warranty claims.
Any of these claims, even if not meritorious, could result in costly litigation
or divert management's attention and resources. Any product liability insurance
that we may carry could be insufficient to protect us from all liability that
may be imposed under any asserted claims.




Until
recently, our operations have been devoted to research and development and we
have not launched any of our products to a large number of customers, making it
difficult to evaluate our future prospects and results of
operations.




GTX
California, formed in 2002, dedicated its resources to research and development
until recently and has only launched one gpVectorTM product to a limited number
of customers.  Also, we have not yet commercially released our LOCi
MobileTM system.  Accordingly, you should consider our future prospects
in light of the risks and uncertainties experienced by early stage companies in
evolving industries. Some of these risks and uncertainties relate to our ability
to:


- 17
-


·
            offer
      new and innovative products to attract and retain a larger customer
      base;




·
            increase
      awareness of our brand and continue to develop user and customer
      loyalty;




·
            respond
      to competitive market conditions;




·
            manage
      risks associated with intellectual property
  rights;




·
            maintain
      effective control of our costs and
expenses;




·
            raise
      sufficient capital to sustain and expand our
  business;




·
            attract,
      retain and motivate qualified personnel;
and




·
            upgrade
      our technology to support additional research and development of new
      products.




If we are
unsuccessful in addressing any of these risks and uncertainties, our business
may be materially and adversely affected.




Our
sales are uncertain and we can expect fluctuations in revenues and
expenses.




We have
just begun the sales process.  We delivered our first purchase order
in September 2008 with the delivery of approximately 900 gpVectorTM
units.  Any additional revenues that we may generate from this
customer will depend upon our customer’s ability to resell those
gpVectorTM  products that we sold to the customer and other factors
that are outside of our control.  Accordingly, it is uncertain if and
when we will receive future orders from this customer.  Until we enter
into other license agreements that provide us with regular royalties or
subscription revenues, or until we otherwise market our products directly to the
public, our sales will be sporadic and dependent upon sporadic and unpredictable
orders from a limited number of customers. Our revenues and operating results
also will be affected by the timing of order placement, the size of orders and
satisfaction of contractual customer acceptance criteria, as well as order and
shipment delays and deferrals.  Our current and anticipated dependence
on a small number of customers increases the revenue impact of each customer's
actions relative to these factors.




Our
expense levels in the future will be based, in large part, on our expectations
regarding future revenue, and as a result net income for any quarterly period in
which material orders are delayed could vary significantly.  In
addition, our costs and expenses may vary from period to period because of a
variety of factors, including our research and development costs, our
introduction of new products and services, cost increases from third-party
service providers or product manufacturers, production interruptions, the
availability of industry service providers, changes in marketing and sales
expenditures, and competitive pricing pressures.




Fluctuations
in operating results could adversely affect the market price of our common
stock.




Because
our revenues and costs may fluctuate significantly, investors should not rely on
quarter-to-quarter comparisons of our results of operations or the pro forma
financial information as an indication of future performance. It is possible
that, in future periods, results of operations will differ from the estimates of
public market analysts and investors. Such a discrepancy could cause the market
price of our common stock to decline significantly.




There
are risks of international sales and operations.




We
anticipate that revenue from the sale of our products and services may be
derived from customers located outside the United States.  As such, a
portion of our sales and operations could be subject to tariffs and other
import-export barriers, currency exchange risks and exchange controls, foreign
product standards, potentially adverse tax consequences and the possibility of
difficulty in accounts receivable collection.  There can be no
assurance that any of these factors will not have a material effect on our
business, financial condition and results of operations.


- 18
-


Although
we will monitor our exposure to currency fluctuations, there can be no assurance
that exchange rate fluctuations will not have an adverse effect on our results
of operations or financial condition.  In the future, we could be
required to sell our products and services in other currencies, which would make
the management of currency fluctuations more difficult and expose our business
to greater risks in this regard.




Our
products may be subject to numerous foreign government standards and regulations
that are continually being amended.  Although we will endeavor to
satisfy foreign technical and regulatory standards, there can be no assurance
that we will be able to comply with foreign government standards and
regulations, or changes thereto, or that it will be cost effective for us to
redesign our products to comply with such standards or
regulations.  Our inability to design or redesign products to comply
with foreign standards could have a material adverse effect on our business,
financial condition and results of operations.




In
addition to the uncertainty as to our ability to generate revenues from foreign
operations, there are certain risks inherent in doing business internationally,
such as unexpected changes in regulatory requirements, export restrictions,
trade barriers, difficulties in staffing and managing foreign operations, longer
payment cycles, problems in collecting accounts receivable, political
instability, fluctuations in currency exchange rates, software piracy, seasonal
reductions in business activity in certain other parts of the world and
potentially adverse tax consequences, which could adversely impact the success
of our international operations.  There can be no assurance that one
or more of such factors will not have a material adverse effect on our potential
future international operations and, consequently, on our business, operating
results and financial condition.




Because
of the global nature of the telecommunications business, it is possible that the
governments of other states and foreign countries might attempt to regulate our
transmissions or prosecute us for violations of their laws.  There can
be no assurance that violations of local laws will not be alleged or changed by
state or foreign governments, that we might not unintentionally violate such
law, or that such laws will not be modified, or new laws enacted, in the
future.  Any of the foregoing developments could have a material
adverse effect on our business, results of operations, and financial
condition.




If
we fail to develop and maintain an effective system of internal controls, we may
not be able to accurately report our financial results or prevent fraud; as a
result, current and potential stockholders could lose confidence in our
financial reports, which could harm our business and the trading price of our
common stock.




Effective
internal controls are necessary for us to provide reliable financial reports and
effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002
requires us to evaluate and report on our internal controls over financial
reporting and have our independent registered public accounting firm annually
attest to our evaluation, as well as issue their own opinion on our internal
controls over financial reporting. We plan to prepare for compliance with
Section 404 by strengthening, assessing and testing our system of internal
controls to provide the basis for our report. The process of strengthening our
internal controls and complying with Section 404 is expensive and time
consuming.  We cannot be certain that the measures we will undertake
will ensure that we will maintain adequate controls over our financial processes
and reporting in the future. Furthermore, if we are able to rapidly grow our
business, the internal controls that we will need will become more complex, and
significantly more resources will be required to ensure our internal controls
remain effective. Failure to implement required controls, or difficulties
encountered in their implementation, could harm our operating results or cause
us to fail to meet our reporting obligations. If we or our auditors discover a
material weakness in our internal controls, the disclosure of that fact, even if
the weakness is quickly remedied, could diminish investors’ confidence in our
financial statements and harm our stock price. In addition, non-compliance with
Section 404 could subject us to a variety of administrative sanctions, including
the suspension of trading, ineligibility for listing on one of the Nasdaq Stock
Markets or national securities exchanges, and the inability of registered
broker-dealers to make a market in our common stock, which may reduce our stock
price.


- 19
-


If
product liability lawsuits are successfully brought against us, we may incur
substantial damages and demand for the potential products may be eliminated or
reduced.




Faulty
operation of our products could result in product liability
claims.  Regardless of their merit or eventual outcome, product
liability claims may result in:




·
            decreased
      demand for our products or withdrawal of the products from the
      market;




·
            injury
      to our reputation and significant media
  attention;




·
            costs
      of litigation; and




·
            substantial
      monetary awards to plaintiffs.




We have
purchased product liability insurance in the amount of
$2,000,000.  This coverage may not be sufficient to fully protect us
against product liability claims.  We intend to expand our product
liability insurance coverage as sales of our products expand.  Our
inability to obtain sufficient product liability insurance at an acceptable cost
to protect against product liability claims could prevent or limit the
commercialization of our products and expose us to liability in excess of our
coverage.




Our
ability to compete could be jeopardized and our business seriously compromised
if we are unable to protect ourselves from third-party challenges or
infringement of the proprietary aspects of the wireless location products and
technology we develop.




Our
products utilize a variety of proprietary rights that are critical to our
competitive position. Because the technology and intellectual property
associated with our wireless location products are evolving and rapidly
changing, our current intellectual property rights may not adequately protect us
in the future. We rely on a combination of patent, copyright, trademark and
trade secret laws and contractual restrictions to protect the intellectual
property utilized in our products. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy or otherwise obtain
and use our products or technology. In addition, monitoring unauthorized use of
our products is difficult and we cannot be certain the steps we have taken will
prevent unauthorized use of our technology. Also, it is possible that no
additional patents or trademarks will be issued from our currently pending or
future patent or trademark applications. Because legal standards relating to the
validity, enforceability and scope of protection of patent and intellectual
property rights are uncertain and still evolving, the future viability or value
of our intellectual property rights is uncertain. Moreover, effective patent,
trademark, copyright and trade secret protection may not be available in some
countries in which we distribute or anticipate distributing our products.
Furthermore, our competitors may independently develop similar technologies that
limit the value of our intellectual property, design
or  patents.  If competitors are able to use our technology,
our competitive edge would be reduced or eliminated.




In
addition, third parties may at some point claim certain aspects of our business
infringe their intellectual property rights. While we are not currently subject
to nor aware of any such claim, any future claim (with or without merit) could
result in one or more of the following:




·
            Significant
      litigation costs;




·
            Diversion
      of resources, including the attention of
  management;




·
            Our
      agreement to pay certain royalty and/or licensing
  fees;


- 20
-


·
            Cause
      us to redesign those products that use such technology;
  or




·
            Cessation
      of our rights to use, market, or distribute such
    technology.




Any of
these developments could materially and adversely affect our business, results
of operations and financial condition. In the future, we may also need to file
lawsuits to enforce our intellectual property rights, to protect our trade
secrets, or to determine the validity and scope of the proprietary rights of
others. Whether successful or unsuccessful, such litigation could result in
substantial costs and diversion of resources. Such costs and diversion could
materially and adversely affect our business, results of operations and
financial condition.




We
depend on our key personnel to manage our business effectively in a rapidly
changing market.  If we are unable to retain our key employees, our
business, financial condition and results of operations could be
harmed.




Our
future success depends to a significant degree on the skills, efforts and
continued services of our executive officers and other key engineering,
manufacturing, operations, sales, marketing and support personnel who have
critical industry experience and relationships. If we were to lose the services
of one or more of our key executive officers or other key engineering,
manufacturing, operations, sales, marketing and support personnel, we may not be
able to grow our business as we expect, and our ability to compete could be
harmed, adversely affecting our business and prospects.




Our
financial success will depend on continued growth in use of wireless
telecommunications products, as well as the ability of the wireless networks we
plan to use to withstand natural and other disasters.




Our
future success is at least partially dependent upon continued growth in the use
of wireless telecommunications products.  To the extent that we
experience significant growth in the number of users and use, there can be no
assurance that our infrastructure will continue to be able to support the
demands placed upon it by such potential growth or that the performance or
reliability of our system will not be adversely affected by this continued
growth.  If use of our products does not increase, or if our
infrastructure does not effectively support growth that may occur, our business,
operating results and financial condition may be materially and adversely
affected.




Our
systems may fail due to natural disasters, telecommunications failures and other
events, any of which would limit the use of our products.  Fire,
floods, earthquakes, power loss, telecommunications failures, break-ins and
similar events could damage our communications hardware and computer hardware
operations for our products and services and cause interruptions in our
services.  If any of these circumstances were to occur, our business
could be harmed.  Our insurance policies may not adequately compensate
us for any losses that may occur due to any failures of or interruptions in our
systems.




Rapid
technological change in our market and/or changes in customer requirements could
cause our products to become obsolete or require us to redesign our products,
which would have a material adverse affect on our business, operating results
and financial condition.




We expect
that our markets will be characterized by rapid technological change, frequent
new product introductions and enhancements, uncertain product life cycles,
changing customer demands and evolving industry standards, any of which can
render existing products obsolete. We believe that our future success will
depend in large part on our ability to develop new and effective products in a
timely manner and on a cost effective basis. As a result of the complexities
inherent in our product, major new products and product enhancements can require
long development and testing periods, which may result in significant delays in
the general availability of new releases or significant problems in the
implementation of new releases. In addition, if we or our competitors announce
or introduce new products our current or future customers may defer or cancel
purchases of our products, which could materially adversely affect our business,
operating results and financial condition. Our failure to develop successfully,
on a timely and cost effective basis, new products or new product enhancements
that respond to technological change, evolving industry standards or customer
requirements would have a material adverse affect on our business, operating
results and financial condition.


- 21
-


Our
future success will depend upon our ability to enhance our products and
technologies and to develop and introduce new products and technologies that
keep pace with technological developments, respond to evolving customer
requirements and achieve market acceptance.  We may determine that, in
order to remain competitive, it is in its best interests to introduce new
products and technologies and to cease exploitation of our current products and
technologies.  It is doubtful that we would be able to maintain
operations should changes render all of our technologies obsolete or should we
determine that all of our technologies are unexploitable.




Changes
in the government regulation of our wireless location products or wireless
carriers could harm our business.




Our
products, wireless carriers and other components of the communications industry
are subject to domestic government regulation by the Federal Communications
Commission (the “FCC”) and international regulatory bodies. These regulatory
bodies could enact regulations which affect our products or the service
providers which distribute our products, such as limiting the scope of the
service providers' market, capping fees for services provided by them or
imposing communication technology standards which impact our
products.




Failure
to manage growth effectively could adversely affect our business, results of
operations and financial condition.




The
success of our future operating activities will depend upon our ability to
expand our support system to meet the demands of our growing business. Any
failure by our management to effectively anticipate, implement, and manage
changes required to sustain our growth would have a material adverse effect on
our business, financial condition, and results of operations. We cannot assure
you that we will be able to successfully operate acquired businesses, become
profitable in the future, or effectively manage any other change.




RISKS
RELATED TO AN INVESTMENT IN OUR SECURITIES




Since
our common stock is currently quoted on the OTC Bulletin Board for trading, a
stockholder may be unable to sell at or near ask prices or at all if the
stockholder needs to sell his shares to raise money or otherwise desire to
liquidate his shares.




Our
common stock is currently listed for trading on the OTC Bulletin
Board.  Shares listed for trading on the OTC Bulletin Board often are
thinly traded, meaning the number of persons interested in purchasing the shares
at or near ask prices at any given time may be relatively small or
non-existent.  This situation may apply to our shares and is
attributable to a number of factors, including the fact that we are a small
public company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or
influence sales volume.  In addition, even if we came to the attention
of such persons, they tend to be risk-averse and would be reluctant to follow a
company of our size and expanding into a relatively new line of business as we
are in, or purchase or recommend the purchase of our shares until such time as
we became more seasoned and proven.  As a consequence, there may be
periods of several days or more when trading activity in our shares is minimal
or non-existent, as compared to a seasoned issuer which has a large and steady
volume of trading activity that will generally support continuous sales without
an adverse effect on share price.  We cannot give you any assurance
that a broader or more active public trading market for our common stock will
develop or be sustained, or that current trading levels will be
sustained.  Due to these conditions, we can give you no assurance that
you will be able to sell your shares at or near ask prices or at all if you need
money or otherwise desire to liquidate your shares.


- 22
-


You
may have difficulty selling our shares because they are deemed “penny
stocks.”




Our
common stock is currently listed on the OTC Bulletin Board under the symbol
“GTXO”; our stock has been trading only since mid-March 2008.  Since
our common stock is not listed on a national securities exchange, if the trading
price of our common stock remains below $5.00 per share, trading in our common
stock will be subject to the requirements of certain rules promulgated under the
Exchange Act, which require additional disclosure by broker-dealers in
connection with any trades involving a stock defined as a penny stock
(generally, any non-national securities exchange equity security that has a
market price of less than $5.00 per share, subject to certain
exceptions).  The additional burdens imposed upon broker-dealers could
discourage broker-dealers from effecting transactions in our common stock, which
could severely limit the market liquidity of the common stock and the ability of
holders of the common stock to sell their shares.




Stockholders
should be aware that, according to SEC Release No. 34-29093, the market for
penny stocks has suffered in recent years from patterns of fraud and abuse. Such
patterns include (1) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer; (2)
manipulation of prices through pre-arranged matching of purchases and sales and
false and misleading press releases; (3) boiler room practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (4) excessive and undisclosed bid-ask differential and markups by
selling broker-dealers; and (5) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. Our management is aware of the abuses that have
occurred historically in the penny stock market. Although we do not expect to be
in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities. The occurrence of these patterns or practices
could increase the volatility of our share price.




We
do not expect to pay dividends for the foreseeable future, and we may never pay
dividends.  Investors seeking cash dividends should not purchase our
common stock.




We
currently intend to retain any future earnings to support the development of our
business and do not anticipate paying cash dividends in the foreseeable future.
Our payment of any future dividends will be at the discretion of our board of
directors after taking into account various factors, including but not limited
to our financial condition, operating results, cash needs, growth plans and the
terms of any credit agreements that we may be a party to at that time. In
addition, our ability to pay dividends on our common stock may be limited by
Nevada corporate law. Accordingly, investors must rely on sales of their common
stock after price appreciation, which may never occur, as the only way to
realize a return on their investment. Investors seeking cash dividends should
not purchase our common stock.




The
elimination of monetary liability against our directors, officers and employees
under Nevada law and the existence of indemnification rights to our directors,
officers and employees may result in substantial expenditures by us and may
discourage lawsuits against our directors, officers and employees.




Our
Amended and Restated Bylaws contain specific provisions that eliminate the
liability of our directors for monetary damages to our company and stockholders,
and we have given such indemnification to our directors and officers to the
extent provided by Nevada law. We may also have contractual indemnification
obligations under our employment agreements with our officers. The foregoing
indemnification obligations could result in our company incurring substantial
expenditures to cover the cost of settlement or damage awards against directors
and officers, which we may be unable to recoup. These provisions and resultant
costs may also discourage our company from bringing a lawsuit against directors
and officers for breaches of their fiduciary duties, and may similarly
discourage the filing of derivative litigation by our stockholders against our
directors and officers even though such actions, if successful, might otherwise
benefit our company and stockholders.


- 23
-


Exchange
transactions of the type we completed with GTX California in March of 2008 are
often heavily scrutinized by the SEC and we may encounter difficulties or delays
in obtaining future regulatory approvals which would negatively impact our
financial condition and the value and liquidity of your shares of common
stock.




Historically,
the SEC and  Nasdaq have not generally favored transactions in which a
privately-held company merges into, or is acquired by a largely inactive company
with publicly listed stock, and there is a significant risk that we may
encounter difficulties in obtaining the regulatory approvals necessary to
conduct future financing or acquisition transactions, or to eventually achieve a
listing of shares on one of the Nasdaq stock markets or other national
securities exchanges. On June 29, 2005, the SEC adopted rules dealing with
private company mergers into dormant or inactive public companies. As a result,
it is likely that we will be scrutinized carefully by the SEC and possibly by
the Financial Industry Regulatory Authority (“FINRA”) or Nasdaq, which could
result in difficulties or delays in achieving SEC clearance of any future
registration statements or other SEC filings that we may pursue, in attracting
FINRA-member broker-dealers to serve as market-makers in our common stock, or in
achieving admission to one of the Nasdaq stock markets or any other national
securities market. As a consequence, our financial condition and the value and
liquidity of your shares of our common stock may be negatively
impacted.




A
sale of a substantial number of shares of our common stock may cause the price
of our common stock to decline.




Sales of
a substantial number of shares of our common stock in the public market
following this report could harm the market price of our common
stock.  There are approximately 18,000,000 shares of our common stock
potentially becoming available for resale under Rule 144 commencing on March 21,
2009.  As additional shares of our common stock become available for
resale in the public market, the supply of our common stock will increase, which
could decrease the price.    The possibility that
substantial amounts of our common stock may be sold in the public market may
adversely affect prevailing market prices for our common stock and could impair
our ability to raise capital through the sale of our equity
securities.




Past
activities of our company and its affiliates may lead to future liability for
our company.




Prior to
our acquisition of GTX California in 2008, we engaged in businesses unrelated to
our current operations. Although certain previously controlling stockholders of
our company are providing certain indemnifications against any loss, liability,
claim, damage or expense arising out of or based on any breach of or inaccuracy
in any of their representations and warranties made regarding such acquisition,
any liabilities relating to such prior business against which we are not
completely indemnified may have a material adverse effect on our
Company.




ITEM1B.
            UNRESOLVED
      STAFF COMMENTS




None.




ITEM
      2.
            DESCRIPTION
      OF PROPERTIES




Our
executive, administrative and operating offices are located at 117 W 9th Street;
Suite 1214, Los Angeles, California 90015.  Our office space is
approximately 2,000 square feet and consists of administrative work space for a
base rent of $1,025 per month.  The lease expires on December 31,
2009.




Our
Technology Development Center office is located at 366 California Ave., Palo
Alto, California  94306.  Our office space is approximately
1,100 square feet for a base rent of $3,370 per month.  The lease
expires on June 10, 2010.  Beginning March 1, 2009, we are subleasing
approximately 760 square feet of our 1,100 square feet to a third party for
$2,325 per month, on a month-to-month basis.  This sublessee is
currently providing us high-level technology services and intends to continue to
provide such services while subleasing a portion of the
premises.


- 24
-


ITEM
      3.
            LEGAL
      PROCEEDINGS




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




ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS




None.




PART
II




ITEM
      5.
            MARKET
      FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
      EQUITY SECURITIES




Market
Information.  Since the closing of the Exchange Transaction,
our common stock has been traded in the over-the-counter market on the OTC
Bulletin Board under the symbol “GTXO.”  Prior thereto, our common
stock was listed on the OTC Bulletin Board over-the-counter market under the
symbol “DEEA.”




To our
knowledge, there was limited or no trading in our common stock prior to the
Exchange Transaction on March 14, 2008.  Accordingly, the following
table only sets forth the high and low bid information for our common stock for
the periods indicated since the Exchange Transaction.  The following
price information reflects inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions:.




Completion
      of
                        Exchange
                        Transactionthrough
                        December
      31, 2008High
                      
                      
                      LowQuarter
      ended March 31, 2008
                      
                      $
                      1.65
                      
                      
                      $
                      0.95Quarter
      ended June 30, 2008
                      
                      $
                      2.71
                      
                      
                      $
                      1.46Quarter
      ended September 30, 2008
                      
                      $
                      2.42
                      
                      
                      $
                      0.33Quarter
      ended December 31, 2008
                      
                      $
                      0.65
                      
                      
                      $
                      0.11





Record
Holders.  As of March 5, 2009, an aggregate of 39,340,540
shares of our common stock were issued and outstanding and were owned by
approximately 122 holders of record, based on information provided by our
transfer agent.  The foregoing number of record holders does not
include any persons who hold their stock in “street name.”




Recent
Sales of Unregistered Securities.




During
the year ended December 31, 2008, we issued 235,000 shares to a total of 19
employees, vendors and consultants in exchange for services
rendered.  The services were valued at approximately
$254,000.  The foregoing securities were issued without an underwriter
or placement agent in a private transaction in reliance on the exemption from
registration available pursuant to Section 4(2) of the Securities Act of 1933,
as amended.


- 25
-




Re-Purchase
of Equity Securities.




None




Dividends.




None.




Securities Authorized for
Issuance Under Equity Compensation Plans.  On March 14, 2008,
we adopted the 2008 Equity Compensation Plan (the “2008 Plan”) pursuant to which
we are authorized to grant stock options, stock awards and stock appreciation
rights of up to 7,000,000 shares of common stock to our employees, officers,
directors and consultants.  Approximately 2.924 million of the shares
available under the 2008 Plan were still available for issuance as of March 5,
2009.   The 2008 Plan is administered by the Board of Directors
of the Company.  The following table provides information with respect
to outstanding options as of December 31, 2008, pursuant to compensation plans
(including individual compensation arrangements) under which equity securities
are authorized for issuance.




Number of
                        securities to
                        beissued
                        upon exercise
                        ofoutstanding
                        options
                      
                      
                      Weighted-
                        average exercise
                        price of
                        outstanding
                        options
                      
                      
                      Number of securities
                        remaining available
                        for future issuance
                        under equity
                        compensation plans
                        (excluding securities
                        reflected in column
                        (a))(a)
                      
                      
                      (b)
                      
                      
                      (c)Equity
      compensation plans approved by security holders
                      
                      
                      4,563,000
                      
                      
                      $
                      0.74
                      
                      
                      
                      1,894,423Equity
      compensation plans not approved by security holders
                      
                      
                      —
                      
                      
                      
                      —
                      
                      
                      
                      —Total
                      
                      
                      4,563,000
                      
                      
                      $
                      0.74
                      
                      
                      
                      1,894,423





ITEM
      6.
            SELECTED
      FINANCIAL DATA.




Not
applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC
Regulation S-K.




ITEM
      7.
            MANAGEMENT'S
      DISCUSSION AND ANALYSIS AND RESULTS OF
  OPERATIONS




Overview




We
develop and patent integrated miniaturized 2-way GPS tracking and location aware
technology for consumer products and applications. As the underlying technology
provider, the Company works with branded license partners to deliver these
innovative solutions to the consumer in a wide variety of wearable location
devices. Our gpVectorPersonal Location Services suite delivers remote real-time oversight of
loved ones and high-value assets. Our licensing model and a user friendly format
allows us to transparently embed the technology into a wide variety of branded
consumer products.  In addition to geo spatial location-reporting,
which provides peace of mind to caretakers, our scalable gpVectorTM technology
platform is also designed to deliver new and innovative life style based
applications.  Some of those are interactive real-time gaming and
performance, health/exercise monitoring and geo specific social networking. The
miniaturization of the electronics offers a whole new category of portable hosts
to deliver a wide range of new people-oriented wearable 2 way GPS personal
location devices.




On March
4, 2008, GTX Corp entered into a Share Exchange Agreement with Global Trek
Xploration (“GTX California”), the shareholders of GTX California, and Jupili
Investment S.A., pursuant to which GTX Corp acquired all of the outstanding
capital stock of GTX California in exchange for the issuance of 18,000,001
shares of GTX Corp’s common stock to the GTX California shareholders for all of
the issued and outstanding shares of GTX California (the “Exchange
Transaction”).  The Exchange Transaction closed on March 14,
2008.


- 26
-




Although
we acquired GTX California in the Exchange Transaction, for accounting purposes,
the Exchange Agreement was treated as an acquisition of GTX Corp and a
recapitalization of GTX California.  Accordingly, the financial
statements contained in this Annual Report, and the following description of our
results of operations and financial condition, reflect (i) the operations of GTX
California alone prior to the Exchange Transaction, and (ii) the combined
results of this company and all of its three subsidiaries since the Exchange
Transaction.




Immediately
following the closing of the Exchange Transaction, in a private placement we
sold $2,000,000 of our securities to qualified investors (the
“Financing”).  In the Financing, we sold an aggregate total of
2,666,668 units (“Units”) at a price of $0.75 per Unit. Each Unit consists of
one share of common stock and one warrant (“Warrant”) to purchase one share of
common stock. Each Warrant is exercisable into an additional common share for a
period of eighteen (18) months with respect to the first 1,666,668 Warrants
issued and for a period of twelve (12) months with respect to the remaining
1,000,000 Warrants issued at an exercise price of $1.25 per
share.  Eighteen (18) month warrants were issued to six (6) investors
and twelve (12) month warrants were issued to two (2) investors.




At
Closing, pursuant to the Exchange Agreement, we also converted a $1,000,000
bridge loan, plus accrued and unpaid interest, made by Jupili Investment S.A. to
GTX California (“Bridge Loan”) into Units at a conversion price of $0.75 per
Unit, based upon the same terms and conditions as the Financing. Thus,
concurrently with the Exchange Transaction, we also issued 1,374,334 shares of
common stock to Jupili and eighteen (18) month Warrants to purchase an aggregate
of 1,374,334 shares of our common stock to Jupili.




In May
2008 we completed a second private placement (the “Additional Financing”) of
1,732,000 units (“Additional Units”) of our securities.  The
Additional Units were sold at a price of $1.00 per Additional Unit for aggregate
proceeds of $1,732,000. Each Additional Unit consisted of one common share and
one share purchase warrant (“Additional Warrant”).  Each Additional
Warrant is exercisable at an exercise price of $1.50 per share for a three-year
term.




In May
2008, we filed a registration statement to register the re-sale of the shares
sold in the Financing and in the Additional Financing, as well as the shares
issuable upon the exercise of the Warrants and Additional Warrants.




Results
of Operations




The
following discussion should be read in conjunction with our financial statements
and the related notes that appear elsewhere in this Annual Report.




The
following table represents our statement of operations for the years ended
December 31, 2008 and 2007:




Year ended December 31,2008
                        
                        
                        2007$
                        
                        
                        % of
                          Revenues
                        
                        
                        $
                        
                        
                        % of
                          RevenuesRevenues
                        
                        $
                        424,166
                        
                        
                        
                        100
                        %
                        
                        $
                        26,000
                        
                        
                        
                        100
                        %Cost
      of goods sold
                        
                        
                        334,482
                        
                        
                        
                        79
                        %
                        
                        
                        -
                        
                        
                        
                        -
                        %Net
      profit
                        
                        
                        89,684
                        
                        
                        
                        21
                        %
                        
                        
                        26,000
                        
                        
                        
                        100
                        %Operating
      expenses
                        
                        
                        3,478,992
                        
                        
                        
                        820
                        %
                        
                        
                        1,317,747
                        
                        
                        
                        5,068
                        %Loss
      from operations
                        
                        
                        (3,389,308
                        )
                        
                        
                        (799
                        )%
                        
                        
                        (1,291,747
                        )
                        
                        
                        (4,968
                        )%Other
      income (expense)
                        
                        
                        (11,975
                        )
                        
                        
                        (3
                        )%
                        
                        
                        (35,907
                        )
                        
                        
                        (138
                        )%Net
      loss
                        
                        $
                        (3,401,283
                        )
                        
                        
                        (802
                        )%
                        
                        $
                        (1,327,654
                        )
                        
                        
                        (5,106
                        )%




- 27
-





Revenues




Revenues
for the year ended December 31, 2008 consisted primarily of the sale of
approximately 900 gpVectorTM Powered Athlete Tracking Systems, at a price of $239
per unit, to a re-seller, as well as monthly service and licensing fees charged
to the re-seller with respect to the units sold to the re-seller.  We
also recognized some revenues from various design and enhancement services
provided by us to the re-seller to allow our GPS technology to better integrate
into the re-seller’s products.  The re-seller also purchased website
design and functionality services from GTX in anticipation of their launch in
the third quarter of 2008.   We had no active customers in 2007
and the revenue recognized during the year ended December 31, 2007 was received
from one customer in connection with a licensing agreement which has since been
terminated.




Cost of goods
sold




Cost of
goods sold during the year ended December 31, 2008 consisted of (i) the cost of
raw materials utilized in the manufacturing of the 900 gpVectorTM Powered Athlete
Tracking Systems that we sold during the year, (ii) the cost of the design and
enhancement services we provided to allow our GPS technology to better integrate
into the re-seller’s products, and (iii) the cost to provide this customer with
website design and functionality services.




Operating
expenses




Operating
expenses consist of salaries and professional fees, stock based compensation
expense, research and development and general and administrative costs. Total
operating expenses for the year ended December 31, 2008 (“fiscal 2008) increased
by approximately $2,161,000 or 164% as compared to total operating expenses for
the year ended December 31, 2007 (“fiscal 2007). The increase in operating
expenses is primarily attributed to the following:




·
            Stock
      based compensation expense was approximately $1,025,000 for fiscal 2008
      compared to $181,000 for fiscal 2007.  Following the adoption by
      this Company of the 2008 Stock Compensation Plan (the “2008 Plan”), we had
      granted options to purchase a total of 4,913,000 shares of common stock
      during fiscal 2008, resulting in stock based compensation expense of
      approximately $342,000, net of estimated pre-vesting forfeitures, for
      fiscal 2008.  Additionally, we granted a total of 542,577 shares
      of common stock from the 2008 Plan, valued at approximately $432,000
      during the year ended December 31, 2008 to various employees and
      consultants. We also granted stock to employees and consultants (outside
      of the 2008 Plan) for services rendered resulting in stock based
      compensation expense of approximately $254,000 during the year ended
      December 31, 2008. Stock based compensation expense was inconsequential
      during fiscal 2007.




·
            Professional
      fees in fiscal 2008 totaled approximately $758,000 compared to $265,000
      for fiscal 2007.  The increase is primarily due to legal and
      accounting fees related to the Exchange Transaction, the Financing, the
      Additional Financing, the filing of the registration statement in May 2008
      with the SEC, as well the legal fees related to the filing of applications
      for our various patents.  We expect that our professional
      expenses will continue to be significantly higher than they were in fiscal
      2007 due to the costs of being a public company, including the costs we
      expect to incur to comply with the Sarbanes-Oxley Act of
    2002.




- 28
-




·
            Research
      and development fees totaled approximately $372,000 for fiscal 2008
      compared to $240,000 for fiscal 2007.  These fees for both
      fiscal years relate to the continued development of our 2-Way GPSTM
      tracking and location aware
technology.




·
            Salaries
      totaled approximately $949,000 for fiscal 2008, compared to approximately
      $481,000 for fiscal 2007.  The increase in salaries is primarily
      due to the hiring of additional employees during the later part of 2007
      and the first quarter of 2008 in anticipation of the completion of the
      development of certain of our technologies and the commercial release our
      first product, as well as an increase in the salaries of many of our
      existing employees.




Other income
(ixpense)




During
fiscal 2008, we recognized approximately $51,000 of interest income as compared
to approximately $2,000 recognized during fiscal 2007.  This increase
is primarily attributable to our increase in cash and cash equivalents and
certificates of deposit resulting from the Financing and Additional
Financing.




During
fiscal 2008, we reported interest expense of approximately $63,000 as compared
to approximately $38,000 for fiscal 2007.  The increase is primarily
attributed to a $40,000 fee paid in conjunction with the Financing, as well as
interest expense on the $1,000,000 Bridge Loan held by Jupili Investment
S.A..  The Bridge Loan accrued interest at 10% per
annum.  The Bridge Loan was converted into common stock in connection
with the Exchange Transaction in March 2008.




Net loss




During
fiscal 2008, we reported a net loss of approximately $3,401,000 as compared to a
net loss of approximately $1,328,000 for fiscal 2007 due primarily to an
increase in operating expenses as discussed above.




Liquidity
and Capital Resources




To date,
we have financed our operations and met our capital expenditure requirements
primarily from the proceeds received from the sale of shares of our common
stock, personal loans from our stockholders, and the issuance of the Bridge
Loan.  Since our inception, we have raised a total of $3,924,000 from
the sale of common stock.  We received our first revenues from the
sale of our products in September 2008.  We currently anticipate that
we will meet our working capital requirements for the current fiscal year ending
December 31, 2009 from the funds we currently have and from possible future
revenues derived from our products.   As of December 31, 2008, we
had approximately $707,000 in cash and cash equivalents and $1,500,000 in
certificates of deposit with maturities ranging between four and twelve
months.  We believe that our available cash and cash equivalents and
certificates of deposit will be sufficient to fund anticipated levels of
operations for the next twelve months.




Net cash
used in operating activities was approximately $2,362,000 for the year ended
December 31, 2008 compared to approximately $871,000 for the year ended December
31, 2007.  Net cash used in operating activities in fiscal 2008 was
less than the $3,401,000 net loss incurred during that fiscal year due largely
to $1,025,000 of non-cash charges that we incurred for stock based
compensation.  The increase in cash used in operating activities is
primarily attributable to expenses incurred in the development of our products
and technologies and an increase in salaries and professional fees resulting
from the growth of the company.




Net cash
used in investing activities during the year ended December 31, 2008 was
approximately $1,674,000 resulting primarily from the purchase of several
certificates of deposit.  The certificates of deposit are held at
various financial institutions to ensure coverage under the Federal Deposit
Insurance Corporation and mature within six to twelve months from the date of
purchase.  Net cash utilized for investing purposes during the year
ended December 31, 2007 was minor and consisted of the purchase of property and
equipment.


- 29
-




Net cash
provided by financing activities during the years ended December 31, 2008 and
2007 was approximately $4,007,000 and $1,372,000, respectively. The increase in
cash from financing activities is due to the sale of shares of common stock in
fiscal 2008 that resulted in proceeds of $3,732,000, and from $398,800 we
received upon the exercise of stock purchase warrants during fiscal
2008.  In fiscal 2007, we received $1,000,000 from the Bridge Loan,
and $192,000 and $180,000, respectively, from the sale of common stock and the
exercise of warrants.




As a
result of our acquisition of GTX California, we began operating as a GPS
technology company as of March 14, 2008. We are focused on the development of a
personal location device system (GpVectorTM) for licensing out to technology
partners seeking to enable their products with GPS tracking capabilities. We had
our initial launch of the GpVectorTMduring the third calendar
quarter of 2008. Since inception, we have generated significant losses. As of
December 31, 2008, we had an accumulated deficit of approximately
$7,442,000.  As a consolidated entity, we expect to incur continual
losses until sometime in calendar year 2009.




Over the
next six months, we expect to devote approximately $250,000 to continue our
research and development efforts to include all aspects of hardware, software
and interface customization, and website development. In addition, during that
time period we expect to expend approximately $120,000 to develop our sales,
marketing and manufacturing programs associated with the commercialization and
licensing of the GpVectorTMtechnology. We expect to fund general overhead requirements using cash on
hand.




Our
funding requirements will depend on numerous factors, including:




·
            Costs
      involved in the completion of the hardware, software and interface
      customization, and website necessary to commence the commercialization of
      the GpVectorTM;




·
            The
      costs of outsourced manufacturing;




·
            The
      costs of licensing activities, including product marketing and
      advertising; and




·
            Our
      revenues from product sales and the licensing of the GpVectorTMtechnology.




As noted
above, based on budgeted expenditures, we believe that we will have sufficient
liquidity to satisfy our cash requirements for the next twelve months. If our
existing resources prove to be insufficient to satisfy our liquidity
requirements during that timeframe, we will need to raise additional external
funds through the sale of additional equity or debt securities. In any event, as
noted above, we may need to raise additional funds during the next 12 months to
finance the costs of ongoing research and development and related expenses, as
well as sales and marketing expenses. The sale of additional equity securities
will result in additional dilution to our stockholders. Sale of debt securities
could involve substantial operational and financial covenants that might inhibit
our ability to follow our business plan. Additional financing may not be
available in amounts or on terms acceptable to us or at all. If we are unable to
obtain additional financing, we may be required to reduce the scope of, delay or
eliminate some or all of our planned research, development and commercialization
activities, which could harm our financial conditions and operating
results.




Off-Balance Sheet
Arrangements




There are
no off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to
investors.


- 30
-




Inflation




Inflation
and changing prices have had no effect on our net sales and revenues or on our
income from continuing operations over our two most recent fiscal
years.




Critical
Accounting Policies and Estimates




The
financial statements of our company have been prepared in accordance with
generally accepted accounting principles in the United States. Because a precise
determination of many assets and liabilities is dependent upon future events,
the preparation of financial statements for a period necessarily involves the
use of estimates which have been made using careful judgment.




The
financial statements have, in management’s opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below.




We have
identified the following critical accounting policies that are most important to
the portrayal of our financial condition and results of operations and that
require management’s most difficult, subjective or complex judgments, often as a
result of the need to make estimates about the effect of matters that are
inherently uncertain. The following is a review of the more critical accounting
policies and methods used by us:




Revenue
Recognition




The
Company recognizes revenue from product sales when the product is shipped to the
customer and title has transferred. The Company assumes no remaining significant
obligations associated with the product sale other than that related to its
warranty program.  Revenue related to licensing agreements is
recognized over the term of the agreement.  Revenues for services is
recognized as the services are rendered.




Inventory




Inventory
consists of finished units and various components that go into the final product
such as antennas, batteries, control boards, SIM card holders, etc. Inventory is
valued at the lower of cost (first-in, first-out) or net realizable value. The
Company evaluates its inventory for excess and obsolescence on a regular basis.
In preparing the evaluation the Company looks at the expected demand for the
product, as well as changes in technology, in order to determine whether or not
a reserve is necessary to record the inventory at net realizable value. After
performing a review of the inventory as of December 31, 2008, we determined that
the net realizable value is greater than the cost thus inventory is recorded at
cost as of December 31, 2008. If actual market conditions are less favorable
than those projected by management, inventory write-downs may be
required.




Development
Stage Company




During
the three months ended March 31, 2008, the Company no longer met the
qualifications as a development stage company as defined in Financial Accounting
Standards Board Statement No. 7. Accordingly, reporting as a development stage
company is no longer deemed necessary.




Use
of Estimates


The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those
estimates.


- 31
-





Recently
Issued Accounting Standards




In
December 2007, the FASB issued SFAS No. 141R, Business Combinations. SFAS
No. 141R broadens the guidance of SFAS No. 141, extending its applicability to
all transactions and other events in which one entity obtains control over one
or more other businesses. It broadens the fair value measurement and recognition
of assets acquired, liabilities assumed, and interests transferred as a result
of business combinations; and stipulates that acquisition related costs be
expensed rather than included as part of the basis of the acquisition. SFAS No.
141R expands required disclosures to improve the ability to evaluate the nature
and financial effects of business combinations. SFAS No. 141R is effective for
all transactions entered into, on or after January 1, 2009. We believe that the
adoption of this standard will not have a material effect on our consolidated
financial statements.




In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities – an Amendment of FASB Statement No. 133.SFAS No. 161 enhances required disclosures regarding derivative
instruments and hedging activities, including enhanced disclosures regarding how
an entity uses derivative instruments, how derivative instruments and related
hedged items are accounted for under SFAS No. 133 and the impact of derivative
instruments and related hedged items on an entity’s financial position,
financial performance and cash flows. SFAS No. 161 is effective on January 1,
2009. We believe that the adoption of this standard will not have a material
effect on our consolidated financial statements.




In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”.  SFAS No. 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with GAAP for nongovernmental entities. SFAS
No. 162 is effective 60 days following the SEC’s approval of the Public Company
Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present
Fairly in Conformity with Generally Accepted Accounting Principles.” We do not
expect the adoption of this statement to have a material impact on the Company’s
results of operations, financial position or cash flows.




ITEM7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.




Not
applicable to a “smaller reporting company” as defined in Item 10(f)(1) of SEC
Regulation




ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA




The
financial statements required by Item 8 are submitted in a separate section of this report, beginning on F-1, are incorporated herein and
made a part hereof.


- 32
-





ITEM
      9.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE




None.




ITEM9A(T).
            CONTROLS
      AND PROCEDURES




Evaluation
of Disclosure Controls and Procedures




We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the reports that we file with the SEC
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms and that such
information is accumulated and communicated to our management, including our
principal executive and financial officers, as appropriate, to allow for timely
decisions regarding required disclosure. As required by SEC Rule 15d-15(b), we
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive and financial officers, of the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report.  Based
on the foregoing, our principal executive and financial officers concluded that
our disclosure controls and procedures are effective to ensure the information
required to be disclosed in our reports filed or submitted under the Exchange
Act is recorded, processed and reported within the time periods specified in the
SEC’s rules and forms.




Management’s
Report on Internal Control Over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Rule 15d-15(f) under the
Exchange Act, and for assessing the effectiveness of internal control over
financial reporting.


- 33
-




Internal
control over financial reporting is intended to provide reasonable assurance
regarding the reliability of our financial reporting and the preparation of
financial statements for external purposes in accordance with accounting
principles generally accepted in the United States.  Internal control
over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets, (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted
in the United States and that our receipts and expenditures are being made only
in accordance with authorizations of our management and directors, and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisitions, use, or disposition of our assets that could have a
material effect on our financial statements.




Management,
with the participation of our principal executive and financial officers,
conducted an evaluation of the effectiveness of our internal control over
financial reporting, as of December 31, 2008, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).    Based on
that evaluation, management concluded that, as of December 31, 2008, our
internal control over financial reporting was effective.




This
annual report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting.  Management’s report was not subject to attestation by our
independent registered public accounting firm pursuant to temporary rules of the
SEC that permit us to provide only management’s report in this annual
report.




Changes
in Internal Control Over Financial Reporting




There was
no change in our internal control over financial reporting during the most
recent fiscal quarter that materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.




ITEM9B.
            OTHER
      INFORMATION




None.




PART
III




ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE
  GOVERNANCE




Executive Officers and
Directors.  Each of our directors were elected by the
stockholders and serves until his or her successor is elected and
qualified.




The board
of directors currently has no nominating, audit or compensation committee at
this time.




Our chief
executive officer serves pursuant to an employment agreement which terminates
March 14, 2010 subject to the automatic and successive one-year extensions if
not cancelled by either party.  See “Item 10, Executive Compensation –
Employment Agreements.”




The
following table sets forth information regarding our executive officers and
directors.




Name
                          
                          Position Held
                          
                          Age
                          
                          Date First AppointedPatrick
      E. Bertagna
                          
                          President,
      Chief Executive Officer and Chairman of the Board
                          
                          45
                          
                          March
      14, 2008Murray
      Williams
                          
                          Chief
      Financial Officer, Treasurer and Secretary
                          
                          38
                          
                          March
      14, 2008Christopher
      M. Walsh
                          
                          Chief
      Operating Officer
                          
                          59
                          
                          March
      14, 2008Patrick
      Aroff
                          
                          Director
                          
                          46
                          
                          March
      14, 2008Louis
      Rosenbaum
                          
                          Director
                          
                          58
                          
                          March
      14, 2008Jeffrey
      Sharpe
                          
                          Director
                          
                          37
                          
                          April
      7,
2006




- 34
-




Biographical
Information




The
following describes the backgrounds of current executive officers and
directors.  Our Board of Directors has determined that all of our
directors other than Mr. Bertagna are independent directors as defined in the
Nasdaq rules governing members of boards of directors.  With the
exception of Mr. Sharpe, our officers and directors assumed their current
offices with GTX Corp upon the closing of the Exchange Transaction on March 14,
2008.




Mr.
Bertagna is the sole director and the Chief Executive Officer of GTX California,
LOCiMOBILE, Inc. and Code Amber News Service, Inc., and Mr. Williams is the
Chief Financial Officer of each of those subsidiaries.




Patrick
E. Bertagna – Chief Executive Officer, President and Chairman of the
Board




Mr.
Bertagna was the founder of GTX California in September 2002 and has since
served as its Chief Executive Officer, President and Chairman of the Board of
Directors of GTX.  He is co-inventor of the company’s patented GPS
footwear technology.  His career spans over 27 years in building
companies in both technology and consumer branded products.




Mr.
Bertagna began his career in consumer products importing apparel from Europe and
later went on to import and manufacture apparel, accessories and footwear in
over 20 countries. In 1993, Mr. Bertagna transitioned into technology and
founded Barcode World, Inc. a supply chain software company, enabling accurate
tracking of consumer products from design to retail. In June 2002 after selling
this company, Mr. Bertagna combined his two past careers in consumer products
and tracking technology and founded GTX.




Mr.
Bertagna was born in the South of France and is fluent in French and Spanish,
has formed alliances with Fortune 500 companies such as IBM, AT&T, Sports
Authority, Federated Stores, Netscape and GE. He has been a keynote speaker and
has been awarded several patents.




Murray
Williams - Chief Financial Officer, Treasurer and Secretary




Mr.
Williams became the Company’s Chief Financial Officer, Treasurer and Secretary
on March 14, 2008.  From February 15, 2007 until he became our Chief
Financial Officer, Mr. Williams was an independent business and financial
consultant to individuals and development stage companies.   From
June 2005 to February 15, 2007, Mr. Williams was the Chief Financial Officer of
Interactive Television Networks, Inc. ("ITVN"), a public company and a leading
provider of Internet Protocol Television hardware, programming software and
interactive networks. Prior to joining ITVN, from September 2001, Mr. Williams
was a consultant and investor in numerous companies, including
ITVN.  In January 1998, Mr. Williams was one of the founding members
of Buy.com, Inc.  Mr. Williams developed the finance, legal, business
development and human resource departments of Buy.com and last served as its
Senior Vice President of Global Business Development until August
2001.  Prior to joining Buy.com, from January 1993 to January 1998,
Mr. Williams was employed with KPMG Peat Marwick, LLP and last served as a
manager in their assurance practice.  Mr. Williams managed a team of
over 20 professionals specializing in financial services with an emphasis on
public offerings, private financings and mergers/acquisitions. Mr. Williams also
serves on the board of directors of Beyond Commerce, Inc., a public company that
operates a social Web site and an internet advertising business.




Mr.
Williams is a CPA and received degrees in both Accounting and Real Estate from
the University of Wisconsin-Madison.


- 35
-




Christopher
M. Walsh - Chief Operating Officer




Mr. Walsh
began his career with Nike in 1974 and subsequently established and implemented
Nike’s first manufacturing operation in the Far East. In 1989, Mr. Walsh joined
Reebok International as Vice President of Production. In that role he
established the Company's inaugural Asian organization headquartered in Hong
Kong with satellite organizations across Asia, and also played a critical role
on the Reebok Pump Task Force directing the manufacturing initiatives associated
with the unique components of the Pump system. After Reebok, Mr. Walsh moved to
LA Gear in 1992 and, as Chief Operating Officer, became a critical figure in the
turnaround team assembled by LA Gear and was responsible for all research and
development, design, manufacturing, sourcing, quality control, distribution and
logistics.




Upon
leaving LA Gear in 1995, Mr. Walsh founded CW Resources, a Los Angeles based
firm providing design, development, manufacturing and licensing consulting
services to an extensive client base, both domestic and international, within
the footwear, apparel, textile, sporting goods and action sports industries.
Chief among clients served during this period are Ferris Baker Watts, Heeling
Sports, K Swiss, Mission Six, Proctor and Gamble, Etnies, The Parthenon Group,
Quiksilver and VF Corporation. Since January 2005, he has served as an advisor
to GTX California spearheading their Footwear research and development and
Marketing practices.




Mr. Walsh
received a B.S. in Marketing from Boston College in 1973 and previously served
on numerous organizational boards within the footwear and textile industries
including The Two Ten International Footwear Foundation and The Footwear
Distributors and Retail Association.




Patrick
Aroff - Director




Mr. Aroff
served as a member of GTX California’s Board of Directors from October 2007
until March 14, 2008, at which time he became a director of GTX
Corp.  Mr. Aroff has worked and held positions in most every facet of
marketing and advertising, including producing and directing commercials for
television and radio. Mr. Aroff has won numerous awards nationally and
internationally for marketing, design, advertising and art
direction.




After
leaving a successful advertising career of 18 years in June 2003, Mr. Aroff
started a residential and commercial real estate development
company.  In June 2004, Mr. Aroff founded Encore Brands, LLC and
continues to serve as its Chief Executive Officer and a Managing
Member.




Mr. Aroff
received his education at the Art Center College Of Design in Pasadena and has
garnered numerous awards during his career, including: Clio, Belding, New York
Ad Club, Best in the West, Cannes International Ad Festival, and an
OBIE.




Louis
Rosenbaum - Director




Mr.
Rosenbaum served as a member of GTX California’s Board of Directors from
September 2002 until June 2005 and then again from October 2007 until March 14,
2008, at which time he became a director of GTX
Corp.  .  Mr. Rosenbaum was a founder of GTX California and
an early investor in GTX California.




Mr.
Rosenbaum has been the President of Advanced Environmental Services since July
1997.  His  responsibilities at Advanced Environmental
Services encompass supervising all administrative and financial activities,
including all contractual aspects of the business.  Mr. Rosenbaum has
been working in the environmental and waste disposal industry for the past
eighteen years.  He started with Allied Waste Services, a division of
Eastern Environmental (purchased by Waste Management Inc. in 1998) in
1990.


- 36
-




Mr.
Rosenbaum has been a serial entrepreneur.  Mr. Rosenbaum founded and
was President of Elements, a successful clothing manufacturer that produced a
line of upscale women’s clothing in Hong Kong, China, Korea and Italy, from 1978
to 1987.  He has also been active in many civic administration roles
over the years in and around Stinson Beach, California.




Jeffrey
Sharpe - Director




Mr.
Sharpe was the President, Secretary, Treasurer and a director of our company
from its formation on April 7, 2006 until the Exchange Transaction on March 14,
2008, at which time he resigned all positions other than his position as a
member of the Company’s Board of Directors.  Mr. Sharpe co-founded a
privately held health and wellness company, No Excuse Inc., based in Canada, and
his principal occupation over the past five years has been serving as President
and Chief Executive Officer of No Excuse Inc.




Under the
direction of Mr. Sharpe, No Excuse Inc. expanded operations internationally and
grew to approximately $5,000,000 in annual revenues. Mr. Sharpe has also served
on the Advisory Board of several not-for-profit organizations including the
Canadian Cancer Society and Diamond Ball.




Mr.
Sharpe was granted a Bachelor’s in Human Kinetics from the University of British
Columbia in 1995, and he has not previously served as a director or officer for
any public companies.




Family
Relationships




There are
no family relationships among the Company’s directors, executive officers, or
persons nominated or chosen by the Company to become directors or executive
officers.




Code
of Business Conduct and Ethics.




We have
adopted a Code of Business Conduct and Ethics (the “Code”) that applies to our
directors, officers and employees, including our principal executive officer and
principal financial and accounting officer.    A copy of our
code of ethics will be furnished without charge to any person upon written
request.  Requests should be sent to:  Secretary, GTX Corp,
117 W. 9th Street, #1214 Los Angeles, California 90015.




Compliance
with Section 16(a) of the Exchange Act.




Under the
Securities Exchange Act of 1934, as amended, our directors, certain officers,
and any persons holding more than 10% of any class of our equity securities are
required to report their ownership of our equity securities and any changes in
that ownership to the Securities and Exchange Commission and any exchange or
quotation system on which our securities are listed or
quoted.  Specific due dates for these reports have been established
and we are required to report any failure to file such reports on a timely
basis.  Based solely on a review of copies of reports filed with the
SEC, we believe that all persons required to file such reports complied with the
filing requirements applicable to them for the fiscal year ended December 31,
2008,  including subsequent filings on Forms 5, except that Mr. Aroff
and Mr. Williams failed to timely report sales of some securities, and that Ron
Paxson, a beneficial owner of more than 10% of our common stock, failed to
timely file a Form 3 upon his receipt of shares in the Exchange Transaction and
failed to file a Form 4 upon the purchase of units of common stock and warrants
in our May 2008 private placement.




ITEM
      11.
            EXECUTIVE
      COMPENSATION




Summary Compensation
Table.  The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us paid to our
executive officers during the years ending December 31, 2008 and
2007.  GTX Corp acquired GTX California, our primary operating
subsidiary, on March 14, 2008.  The table below sets forth all
compensation to the following officers of GTX Corp in 2007 and 2008 by either
GTX Corp or GTX California.


- 37
-




Summary
Compensation Table




Name
      and
                                        Principal
      Position
                                      
                                      Fiscal
                                        Year
                                        Ended
                                        12/31
                                      
                                      Salary
                                        ($)
                                      
                                      
                                      Bonus
                                        ($)
                                      
                                      
                                      Stock
                                        Awards
                                        ($)
                                      
                                      
                                      Option
                                        Awards
                                        ($)(8)
                                      
                                      
                                      All
      Other
                                        Compensation
                                        ($)
                                      
                                      
                                      Total
                                        ($)Patrick
      Bertagna(1)
                                      
                                      2008
                                      
                                      
                                      118,750
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      152,975
                                      (4)
                                      
                                      
                                      83,940
                                      (4)
                                      
                                      
                                      –
                                      
                                      
                                      
                                      355,6652007
                                      
                                      
                                      67,000
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      
                                      
                                      
                                      
                                      67,000Jeffrey Sharpe(1)
                                      
                                      2008
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –2007
                                      
                                      
                                      12,000
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      12,000Murray Williams(2)
                                      
                                      2008
                                      
                                      
                                      118,750
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      152,975
                                      (5)
                                      
                                      
                                      70,406
                                      (5)
                                      
                                      
                                      –
                                      
                                      
                                      
                                      342,1312007
                                      
                                      
                                      12,000
                                      (7)
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      12,000
                                      (7)Christopher
      Walsh(3)
                                      
                                      2008
                                      
                                      
                                      95,000
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      37,975
                                      (6)
                                      
                                      
                                      70,406
                                      (6)
                                      
                                      
                                      –
                                      
                                      
                                      
                                      203,3812007
                                      
                                      
                                      35,750
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      –
                                      
                                      
                                      
                                      35,750





(1)
            Patrick
      Bertagna became the registrant’s Chief Executive Officer and Chairman of
      the Board on March 14, 2008.  Jeffrey Sharpe was the
      registrant’s President (principal executive officer) and sole Director in
      2007 and in 2008 until the closing of the Exchange Transaction on March
      14, 2008.(2)
            Chief
      Financial Officer and Secretary since the closing of the Exchange
      Transaction on March 14, 2008.(3)
            Chief
      Operating Officer since the closing of the Exchange Transaction on March
      14, 2008.(4)
            150,000
      shares and 900,000 options were granted on March 16, 2008 with a strike
      price of $0.75; 300,000 of the options vested on March 16, 2009 and the
      remaining 600,000 options vest monthly thereafter at a rate of 25,000 per
      month.  2,500 shares and 25,000 options were granted on December
      5, 2008 with a strike price of $0.19 as a holiday bonus; the 25,000
      options vested immediately.  As a bonus for the successful
      completion of over one million dollars of Additional Financing, 40,000
      shares of our common stock were granted on May 12,
2008.(5)
            150,000
      shares and 750,000 options were granted on March 16, 2008 with a strike
      price of $0.75; 250,000 of the options vested on March 16, 2009 and the
      remaining 500,000 options vest monthly thereafter at a rate of 20,833 per
      month.  2,500 shares and 25,000 options were granted on December
      5, 2008 with a strike price of $0.19 as a holiday bonus; the 25,000
      options vested immediately.  As a bonus for the successful
      completion of over one million dollars of Additional Financing, 40,000
      shares of our common stock were granted on May 12,
2008.(6)
            50,000
      shares and 750,000 options were granted on March 16, 2008 with a strike
      price of $0.75; 250,000 of which vested on March 16, 2009 and the
      remaining 500,000 vest monthly thereafter at a rate of 20,833 per
      month.  2,500 shares and 25,000 options were granted on December
      5, 2008 with a strike price of $0.19 as a holiday bonus; the 25,000
      options vested immediately.(7)
            Mr.
      Williams provided part-time consulting services to GTX California in 2007
      before becoming an officer of that company in 2008.(8)
            This
      column represents the dollar amount recognized for financial statement
      reporting purposes for the fair value of stock options granted to the
      named executive, in accordance with SFAS 123R.  Pursuant to SEC
      rules, the amounts shown exclude the impact of estimated forfeitures
      related to service-based vesting conditions.  For additional
      information on the valuation assumptions with respect to the option
      grants, refer to Note __ of our financial statements in this Annual
      Report.  These amounts reflect our accounting expense for these
      awards, and do not correspond to the actual value that will be recognized
      by the named executive from these
awards.




Outstanding Equity
Awards.  The following table sets forth information as of
December 31, 2008 concerning unexercised options, unvested stock and equity
incentive plan awards for the executive officers named in the Summary
Compensation Table.


- 38
-




Outstanding
Equity Awards at Fiscal Year-End




Name
                
                Number
      of
                  Securities
                  Underlying
                  Unexercised
                  Options
      (#)
                  Exercisable
                
                
                Number
      of
                  Securities
                  Underlying
                  Unexercised
                  Options
      (#)
                  Unexercisable
                
                
                Equity
                  Incentive
                  Plan
      Awards:
                  Number
      of
                  Securities
                  Underlying
                  Unexercised
                  Unearned
                  Options
                  (#)
                
                
                Option
                  Exercise
                  Price
                  ($)
                
                Option
                  Expiration
                  Date
                
                
                Number
                  of
      Shares
                  or
      Units
                  of
                  Stock
                  That
                  Have
      NotVested
                  (#)
                
                
                Market
                  Value
      of
                  Sharesor
                  Units
      of
                  StockThat
                  HaveNot
                  Vested
                  ($)
                
                
                Equity
                  Incentive
                  Plan
                  Awards:
                  Number
                  of
                  Unearned
                  Shares,
                  Units
                  or
      Other
                  rights
                  That
      Have
                  Not
      Vested
                  (#)
                
                
                Equity
                  Incentive
                  Plan
                  Awards:
                  Market
                  or
      Payout
                  Value
                  of
                  Unearned
                  Shares,
                  Units
                  or
      Other
                  Rights
                  That
      Have
                  Not
      Vested
                  ($)Patrick
      Bertagna
                
                
                25,000
                (3)
                
                
                —
                
                
                
                —
                
                $
                .19/share
                
                12/5/2011
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                ——
                
                
                
                750,000
                (1)
                
                
                —
                
                $
                .75/share
                
                
                2012-2014
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                ——
                
                
                
                150,000
                (2)
                
                
                —
                
                $
                .75/share
                
                
                2012-2014
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —Murray
      Williams
                
                
                25,000
                (3)
                
                
                —
                
                
                
                —
                
                $
                .19/share
                
                12/5/2011
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —750,000
                (1)
                
                
                —
                
                $
                .75/share
                
                
                2012-2014Christopher
      Walsh
                
                
                25,000
                (3)
                
                
                —
                
                
                
                —
                
                $
                .19/share
                
                12/5/2011
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                ——
                
                
                
                750,000
                (1)
                
                
                —
                
                $
                .75/share
                
                
                2012-2014
                
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                —




(1)
                Each
      officer holds an option to purchase up to 750,000 shares of common stock
      at $0.75 per share.  Options to purchase 250,000 shares each are
      exercisable on March 16, 2009, and the remaining options to purchase
      500,000 vest at a rate of 20,833 each month for the 23 months beginning on
      April 16, 2009 and the remaining 20,841 Options shall vest on March 16,
      2011.  None of these options are presently
      exercisable.  The options expire on the third anniversary of the
      vesting date.(2)
                For
      his services as a member of the board of directors, Patrick Bertagna also
      received an option to purchase up to 150,000 shares of common stock at
      $0.75 per share.  Options to purchase 50,000 shares each are
      exercisable on March 16, 2009, and the remaining options to purchase
      100,000 vest at a rate of 4,167 each month for the 23 months beginning on
      April 16, 2009 and the remaining 4,159 Options shall vest on March 16,
      2011.  None of these options are presently
      exercisable.  The options expire on the third anniversary of the
      vesting date.(3)
                On
      December 5, 2008, each officer received an option to purchase up to 25,000
      shares of common stock at $0.19 per share.  The 25,000 options
      vested on December 5, 2008 and are currently exercisable.  The
      options expire on December 5,
2011.




Long-Term
Incentive Plans




There are
no arrangements or plans in which we provide pension, retirement or similar
benefits for directors or executive officers.




Director
Compensation




We
reimburse our directors for expenses incurred in connection with attending board
meetings.  We did not pay director’s fees or other cash compensation
for services rendered to our directors in the year ended December 31,
2007.




We have
no other formal plan for compensating our directors for their service in their
capacity as directors although such directors are expected to receive options in
the future to purchase common shares as awarded by our Board of Directors or (as
to future options) a compensation committee which may be established in the
future.  Directors are entitled to reimbursement for reasonable travel
and other out-of-pocket expenses incurred in connection with attendance at
meetings of our Board of Directors.  Our Board of Directors may award
special remuneration to any director undertaking any special services on behalf
of our company other than services ordinarily required of a
director.


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-




The
following table summarizes the compensation of each of our directors who is not
also a named executive officer for their service as a director for the fiscal
year ended December 31, 2008.




DIRECTOR
COMPENSATION




Name
                
                Fees
                    Earned
                    or Paid
                    in Cash
                    ($)(1)
                
                
                Stock
                    Awards
                    ($)
                
                
                Option
                    Awards
                    ($)(2)
                
                
                Non-Equity
                    Incentive Plan
                    Compensation
                    ($)
                
                
                Change in
                    Pension Value
                    and
                    Nonqualified
                    Deferred
                    Compensation
                    Earnings
                
                
                All Other
                    Compensation
                    ($)
                
                
                Total
                    ($)Patrick
      Aroff
                
                
                18,000
                
                
                
                -0-
                
                
                
                1,096
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                19,096Louis
      Rosenbaum
                
                
                18,000
                
                
                
                -0-
                
                
                
                1,096
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                19,096Jeffrey
      Sharpe
                
                
                -0-
                
                
                
                -0-
                
                
                
                1,096
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                N/A
                
                
                
                1,096




(1)
            Reflects
      cash compensation earned during the fiscal year ended December 31,
      2008 for special services rendered to the
  company.


(2)
            Reflects
      the fair value calculated using the Black Scholes option pricing model of
      vested options as of December 31,
2008.




Employment
Agreements




The
following are summaries of the employment agreements with the Company’s
executive officers that became effective at the closing of the Exchange
Transaction on March 14, 2008:




Patrick E. Bertagna,
our Chief Executive Officer and President, is employed pursuant to a written
agreement dated as of March 14, 2008.  The agreement is has a term of
two years; provided however, that it is automatically extended for additional
one-year periods unless either party provides written notice to the contrary at
least 60 days prior to the end of the term then in effect.  Mr.
Bertagna receives a base salary of $150,000 per year.  He is entitled
to adjustments to his base salary based on certain performance standards, at the
Company’s discretion, as follows:  (i)  a bonus in an amount
not less than fifteen percent (15%) of  yearly salary, to be paid in
cash or stock, if the Company has an increase in annual revenues and Mr.
Bertagna performs his duties within the time frame budgeted for such duties at
or below the cost budgeted for such duties and (ii) a bonus, to be paid in cash
or stock at the Company’s sole discretion, equal to $12,500 for every one
million of the Company’s outstanding common stock purchase warrants that are
exercised.




As a
signing bonus, Mr. Bertagna was granted 150,000 shares of the Company’s common
stock pursuant to the Company’s 2008 Equity Compensation Plan.  In
addition, he was granted Incentive Stock Options to purchase up to 750,000
shares of our common stock pursuant to the 2008 Equity Compensation
Plan.  These options vest over 36 months with one-third vesting on
March 16, 2009, two-thirds vesting at a rate of 20,833 each month for the 23
months beginning on April 16, 2009 and the remaining 20,841 Options shall vest
on March 16, 2011.




Mr.
Bertagna may also participate in any and all benefits and perquisites as are
generally provided for the benefit of executive employees.  The
agreement terminates on his death, incapacity (after 180 days), resignation or
cause as defined in the agreement.  If he is terminated without cause,
he is entitled to base salary, all bonuses otherwise applicable, and medical
benefits for twelve months.


- 40
-




Murray Williams, our
Chief Financial Officer, Treasurer and Secretary, is employed pursuant to a
written agreement dated as of March 16, 2008.  The agreement has a
term of two years; provided however, that it is automatically extended for
additional one-year periods unless either party provides written notice to the
contrary at least 60 days prior to the end of the term then in
effect.  Mr. Williams receives a base salary of $150,000 per year. He
is entitled to adjustments to his base salary based on certain performance
standards, at the Company’s discretion, as follows:  (i)  a
bonus in an amount not less than fifteen percent (15%) of yearly salary, to be
paid in cash or stock, if the Company has in increase in annual revenues and Mr.
Williams performs his duties within the time frame budgeted for such duties and
at or below the cost budgeted for such duties and (ii) a bonus, to be paid in
cash or stock at the Company’s sole discretion, equal to $12,500 for every one
million of the Company’s outstanding common stock purchase warrants that are
exercised.




As a
signing bonus, Mr. Williams was granted 150,000 shares of the Company’s common
stock pursuant to the Company’s 2008 Equity Compensation Plan.  In
addition, he was granted Incentive Stock Options to purchase up to 750,000
shares of our common stock pursuant to the 2008 Equity Compensation
Plan.  These options vest over 36 months with one-third vesting on
March 16, 2009, two-thirds vesting at a rate of 20,833 each month for the 23
months beginning on April 16, 2009 and the remaining 20,841 Options shall vest
on March 16, 2011.




Mr.
Williams may also participate in any and all benefits and perquisites as are
generally provided for the benefit of executive employees.  The
agreement terminates on his death, incapacity (after 180 days), resignation or
cause as defined in the Agreement.  If he is terminated without cause,
he is entitled to base salary, all bonuses otherwise applicable, and medical
benefits for twelve months.




Christopher M. Walsh,
our Chief Operating Officer, is employed pursuant to a written agreement dated
as of March 14, 2008.  The agreement has a term of two years; provided
however, that it is automatically extended for additional one-year periods
unless either party provides written notice to the contrary at least 60 days
prior to the end of the term then in effect.  Mr. Walsh shall receive
a base salary of $120,000 per year during the first year of employment and
$150,000 per year during the second year of employment. He is entitled to
adjustments to his base salary based on certain performance standards, at the
Company’s discretion, as follows:  (i) a bonus in an amount not to
exceed fifty percent (50%) of  yearly salary, to be paid in cash or
stock, if the Company has in increase in annual revenues and Mr. Walsh performs
his duties within the time frame budgeted for such duties at or below the cost
budgeted for such duties and (ii) a bonus, to be paid in cash or stock at the
Company’s sole discretion, equal to $10,000 for every one million of the
Company’s outstanding common stock purchase warrants that are
exercised.




As a
signing bonus, Mr. Walsh was granted 50,000 shares of the Company’s common stock
pursuant to the Company’s 2008 Equity Compensation Plan.  In addition,
he was granted Incentive Stock Options to purchase up to 750,000 shares of our
common stock pursuant to the 2008 Equity Compensation Plan.  These
options vest over 36 months with one-third vesting on March 16, 2009, two-thirds
vesting at a rate of 20,833 each month for the 23 months beginning on April 16,
2009 and the remaining 20,841 Options shall vest on March 16, 2011.




Mr. Walsh
may also participate in any and all benefits and perquisites as are generally
provided for the benefit of executive employees.  The agreement
terminates on his death, incapacity (after 180 days), resignation or cause as
defined in the Agreement.  If he is terminated without cause, he is
entitled to base salary, all bonuses otherwise applicable, and medical benefits
for twelve months.




2008
Equity Compensation Plan




We have
adopted an equity incentive plan, the 2008 Equity Compensation Plan (the “2008
Plan”), pursuant to which we are authorized to grant options, restricted stock,
unrestricted stock, and stock appreciation rights to purchase up to 7,000,000
shares of common stock to our employees (as such term is defined in the 2008
Plan), officers, directors and consultants.  Awards under the 2008
Plan may consist of stock options (both non-qualified options and options
intended to qualify as “Incentive Stock Options” under Section 422 of the
Internal Revenue Code of 1986, as amended), restricted and unrestricted stock
awards and stock appreciation rights.




- 41
-


The 2008
Plan is administered by our Board of Directors or a committee appointed by the
Board (the “Committee”).  If appointed by the Board, the committee
would consist of at least two members of the Board whose members shall, from
time to time, be appointed by the Board. The Committee has the authority to
interpret the 2008 Plan, to prescribe, amend, and rescind rules and regulations
relating to it, to determine the persons to whom awards will be granted, the
type of award to be granted, the number of awards to be granted, and the terms
and provisions of stock options granted pursuant to the 2008 Plan, including the
vesting thereof, subject to the provisions of the 2008 Plan, and to make all
other determinations necessary or advisable for the administration of the 2008
Plan.




The 2008
Plan provides that the purchase price of each share of common stock subject to
an incentive stock option may not be less than 100% of the fair market value (as
such term is defined in the 2008 Plan) of a share of our common stock on the
date of grant (or not less than 110% of the fair market value in the case of a
grantee holding more than 10% of our outstanding common stock).  The
aggregate fair market value (determined at the time the option is granted) of
the common stock with respect to which incentive stock options are exercisable
for the first time by the employee during any calendar year (under all such
plans of the grantee’s employer corporation and its parent and subsidiary
corporation) shall not exceed $100,000.  No incentive stock option
shall be exercisable later than the tenth anniversary of its grant; provided,
however, that an incentive stock option granted to an employee holding more than
10% of our outstanding common stock shall not be exercisable later than the
fifth anniversary of its grant.




The
Committee shall determine the purchase price of each share of common stock
subject to a non-qualified stock option.  Such purchase price,
however, shall not be less than 100% of the fair market value of the common
stock on the date of grant.  No non-qualified stock option shall be
exercisable later than the tenth anniversary of its grant.




The plan
also permits the grant of stock appreciation rights in connection with the grant
of an incentive stock option or a non-qualified stock option, or unexercised
portion thereof held by the grantee.  The grant price of a stock
appreciation right shall be at least at the fair market value of a share on the
date of grant of the stock appreciation right, and be subject to such terms and
conditions, not inconsistent with the provisions of the 2008 Plan, as shall be
determined by the Committee.  Each stock appreciation right may
include limitations as to the time when such stock appreciation right becomes
exercisable and when it ceases to be exercisable that are more restrictive than
the limitations on the exercise of the stock option to which it
relates.  No stock appreciation right shall be exercisable with
respect to such related stock option or portion thereof unless such stock option
or portion shall itself be exercisable at that time.  A stock
appreciation right shall be exercised only upon surrender of the related stock
option or portion thereof in respect of which the stock appreciation right is
then being exercised.  Upon the exercise of a stock appreciation
right, a grantee shall be entitled to receive an amount equal to the product of
(i) the amount by which the fair market value of a share of common stock on the
date of exercise of the stock appreciation right exceeds the option price per
share specified in the related incentive or non-qualified stock option and (ii)
the number of shares of common stock in respect of which the stock appreciation
right shall have been exercised.  Further, a stock appreciation right
shall be exercisable during the grantee’s lifetime only by the
grantee.




The 2008
Plan also provides us with the ability to grant shares of common stock that are
subject to certain transferability, forfeiture or other
restrictions.  The recipient of restricted stock grants, the type of
restriction, the number of shares of restricted stock granted and other such
provisions shall be determined by the Committee.  The Board, in good
faith and in its sole discretion, shall determine the fair market value with
regards to awards of restricted stock.




The 2008
Plan also provides us with the ability to grant shares of unrestricted
stock.  The Committee shall determine and designate from time to time
those persons who are to be granted unrestricted stock and number of shares of
common stock subject to such grant.  The Board, in good faith and in
its sole discretion, shall determine the fair market value with regards to
awards of unrestricted stock.  The grantee shall hold common stock
issued pursuant to an unrestricted stock award free and clear of all
restrictions, except as otherwise provided in the 2008 Plan.


- 42
-




Unless
otherwise determined by the Committee, awards granted under the 2008 Plan are
not transferable other than by will or by the laws of descent and
distribution.




The 2008
Plan provides that in the event of a merger or change of control, the Committee
may substitute stock options, stock awards and stock appreciation rights of the
acquired company.  Alternatively, the Committee may provide that the
stock options, stock awards and stock appreciation rights shall terminate
following notice by the Committee.




The Board
may, at any time, alter, amend, suspend, discontinue, or terminate the 2008
Plan; provided, however, that such action shall not adversely affect the right
of grantees to stock awards or stock options previously granted and no
amendment, without the approval of the stockholders of the Corporation, shall
increase the maximum number of shares which may be awarded under the 2008 Plan
in the aggregate, materially increase the benefits accruing to grantees under
the 2008 Plan, change the class of employees eligible to receive options under
the 2008 Plan, or materially modify the eligibility requirements for
participation in the 2008 Plan.




ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS




The following table sets forth certain
information as of March 5, 2009, regarding the beneficial ownership of our
common stock by (i) each stockholder known by us to be the beneficial owner of
more than five percent of our common stock, (ii) by each of our executive
officers named in the Summary Compensation Table and our directors and (iii) by
all of our executive officers and directors as a group.  Each of the
persons named in the table has sole voting and investment power with respect to
common stock beneficially owned.  Unless otherwise noted in the table,
the address for each of the persons identified is 117 W 9thStreet; Suite 1214, Los Angeles,
CA  90015.  Beneficial ownership is calculated based upon
39,340,540 shares of common stock issued and outstanding as of March 5,
2009.




Name and Address
                                                                  of Beneficial Owner
                                                                
                                                                Amount and Nature
                                                                  of Beneficial Ownership(1)
                                                                
                                                                Percent
                                                                  of Common StockPatrick
      E. Bertagna(2)
                                                                  CEO
      and Chairman of the Board
                                                                
                                                                3,715,128
      shares
                                                                
                                                                
                                                                9.36
                                                                %Murray
      Williams(3)
                                                                  Chief
      Financial Officer/Secretary
                                                                
                                                                413,333
      shares
                                                                
                                                                
                                                                1.04
                                                                %Christopher
      Walsh(4)
                                                                  Chief
      Operating Officer,
                                                                
                                                                592,669
      shares
                                                                
                                                                
                                                                1.49
                                                                %Louis
      Rosenbaum(5)
                                                                  Director
                                                                
                                                                2,084,332
      shares
                                                                
                                                                
                                                                5.29
                                                                %Patrick
      Aroff(6)
                                                                  Director
                                                                
                                                                531,140
      shares
                                                                
                                                                
                                                                1.35
                                                                %Jeffrey
      Sharpe(7)
                                                                  Director
                                                                
                                                                114,167
      shares
                                                                
                                                                
                                                                .29
                                                                %




- 43
-





Other
      5% Stockholders:Ron
      Paxson (8)
                  30872
      S. Coast Hwy. #191
                  Laguna
      Beach, CA  92651
                
                4,945,758
      shares
                
                
                12.50
                %Ralph
      H. Davis (9)
                  786
      Bolsana Drive
                  Laguna
      Beach, CA  92651
                
                2,719,527
      shares
                
                
                6.91
                %Jupili
      Investment S.A. (10)
                  53rd E
      St., MMG Tower, 16th
      Fl
                  Panama
      City, Republic of Panama
                
                2,748,668
      shares
                
                
                6.75
                %CAT
      Brokerage AG (11)
                  Gutenbergstrasse
      10
                  8027
      Zurich Switzerland
                
                2,730,002
      shares
                
                
                6.70
                %All
      directors and named executive officers as a group (6
    persons)
                
                7,450,769
      shares
                
                
                18.77
                %







(1)
            Under
      Rule 13d-3, a beneficial owner of a security includes any person who,
      directly or indirectly, through any contract, arrangement, understanding,
      relationship, or otherwise has or shares: (i) voting power, which includes
      the power to vote, or to direct the voting of shares; and (ii) investment
      power, which includes the power to dispose or direct the disposition of
      shares. Certain shares may be deemed to be beneficially owned by more than
      one person (if, for example, persons share the power to vote or the power
      to dispose of the shares). In addition, shares are deemed to be
      beneficially owned by a person if the person has the right to acquire the
      shares (for example, upon exercise of an option) within 60 days of the
      date as of which the information is provided. In computing the percentage
      ownership of any person, the amount of shares outstanding is deemed to
      include the amount of shares beneficially owned by such person (and only
      such person) by reason of these acquisition rights. As a result, the
      percentage of outstanding shares of any person as shown in this table does
      not necessarily reflect the person's actual ownership or voting power with
      respect to the number of shares of common stock actually
      outstanding.


(2)
            The
      3,715,128 shares beneficially owned include 3,365,128 shares and 350,000
      stock options, of which: 300,000 vested on March 16, 2009 with a strike
      price of $0.75 per share, 25,000 vest on April 16, 2009 with a strike
      price of $0.75 per share and 25,000 vested on December 5, 2008 with a
      strike price of $0.19 per share.


(3)
            The
      413,333 shares beneficially owned include 117,500 shares and 295,833 stock
      options, of which: 250,000 vested on March 16, 2009 with a strike price of
      $0.75 per share, 20,833 vest on April 16, 2009 with a strike price of
      $0.75 per share and 25,000 vested on December 5, 2008 with a strike price
      of $0.19 per share.


(4)
            The
      592,669 shares beneficially owned include 296,836 shares and 295,833 stock
      options, of which: 250,000 vested on March 16, 2009 with a strike price of
      $0.75 per share, 20,833 vest on April 16, 2009 with a strike price of
      $0.75 per share and 25,000 vested on December 5, 2008 with a strike price
      of $0.19 per share.


(5)
            The
      2,084,332 shares beneficially owned include 2,020,165 shares and 64,167
      stock options, of which: 50,000 vested on March 16, 2009 with a strike
      price of $0.75 per share, 4,167 vest on April 16, 2009 with a strike price
      of $0.75 per share and 10,000 vested on December 5, 2008 with a strike
      price of $0.19 per share.


(6)
            The
      531,140 shares beneficially owned include 466,973 shares and 64,167 stock
      options, of which: 50,000 vested on March 16, 2009 with a strike price of
      $0.75 per share, 4,167 vest on April 16, 2009 with a strike price of $0.75
      per share and 10,000 vested on December 5, 2008 with a strike price of
      $0.19 per share.


(7)
            The
      114,167 shares beneficially owned include 50,000 shares and 64,167 stock
      options, of which: 50,000 vested on March 16, 2009 with a strike price of
      $0.75 per share, 4,167 vest on April 16, 2009 with a strike price of $0.75
      per share and 10,000 vested on December 5, 2008 with a strike price of
      $0.19 per share.


(8)
            The
      4,945,758 shares beneficially owned include 4,105,136 shares and 175,000
      warrants having an exercise price of $1.50 per share owned of record by
      Multi-Media Technology Ventures Ltd; 23,450 warrants having an exercise
      price of $1.50 per share owned of record by Hillside Enterprises, Inc. and
      642,172 shares personally owned by Mr. Paxson.  Mr. Paxson is
      the general partner for Multi Media Technology Ventures
      Ltd.  Mr. Paxson has the sole voting and dispositive power over
      the shares of Multi-Media Technology Ventures Ltd and Hillside
      Enterprises, Inc.


- 44
-





(9)
            Includes
      beneficial ownership of 2,557,604 shares owned of record by Ralph H.
      Davis, Jr. Family Trust.  Mr. Davis is the trustee of the Ralph
      H. Davis, Jr. Family Trust and has the sole voting and dispositive power
      over such shares.


(10)
            Jose
      E. Silva has voting and investment power over the shares registered in the
      name of Jupili Investment S.A.  The 2,748,668 shares
      beneficially owned include 1,374,334 shares and 1,374,334 shares issuable
      upon exercise of warrants.


(11)
            Marcel
      Berchtold has voting and investment power over the shares registered in
      the name of CAT Brokerage AG.  The 2,730,002 shares beneficially
      owned include 1,365,001 shares and 1,365,001 shares issuable upon exercise
      of warrants.





Changes in
Control.  We are not aware of any arrangements which may result
in “changes in control” as that term is defined by the provisions of Item 403 of
Regulation S-B.




ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE




Director
Independence.  Three of our four directors are independent
within the definition of “independence” as defined in the Nasdaq rules governing
members of boards of directors.




Related Party
Transactions.  There have been no related party transactions,
or any other transactions or relationships required to be disclosed pursuant to
Item 404 of Securities and Exchange Commission Regulation S-K.




With
regard to any future related party transaction, we plan to fully disclose any
and all related party transactions in the following manor:




·
            disclosing
      such transactions in reports where
required;




·
            disclosing
      in any and all filings with the SEC, where
  required;




·
            obtaining
      disinterested directors consent;
and




·
            obtaining
      stockholder consent where required.




ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES.




The Audit
Committee has appointed LBB & Associates Ltd., LLP  as our
independent registered public accounting firm for the fiscal year ending
December 31, 2009.  The following table shows the fees that were paid
or accrued by us for audit and other services provided by LBB & Associates
Ltd., LLP  for the 2007 and 2008 fiscal years.




2007
                    
                    
                    2008Audit
      Fees (1)
                    
                    $
                    48,000
                    
                    
                    $
                    60,000Audit-Related
      Fees (2)
                    
                    $
                    -0-
                    
                    
                    $
                    6,600Tax
      Fees (3)
                    
                    
                    -
                    
                    
                    
                    -All
      Other Fees
                    
                    
                    -
                    
                    
                    
                    -Total
                    
                    $
                    48,000
                    
                    
                    $
                    66,600


- 45
-


(1)
              Audit
      fees represent fees for professional services provided in connection with
      the audit of our annual financial statements and the review of our
      financial statements included in our Form 10-Q and 10-QSB quarterly
      reports and services that are normally provided in connection with
      statutory or regulatory filings for the 2007 and 2008 fiscal
      years.


(2)
            Audit-related
      fees represent fees for assurance and related services that are reasonably
      related to the performance of the audit or review of our financial
      statements and not reported above under “Audit
  Fees.”


(3)
            LBB
      & Associates Ltd., LLP does not provide us with tax compliance, tax
      advice or tax planning services.





All audit
related services, tax services and other services rendered by LBB &
Associates Ltd., LLP  were pre-approved by our Board of Directors or
Audit Committee.  The Audit Committee has adopted a pre-approval
policy that provides for the pre-approval of all services performed for us by
LBB & Associates Ltd., LLP   The policy authorizes the Audit
Committee to delegate to one or more of its members pre-approval authority with
respect to permitted services.  Pursuant to this policy, the Board
delegated such authority to the Chairman of the Audit Committee.




ITEM
      15.
            EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES




EXHIBIT
INDEX




The
Company’s financial statements and related notes thereto are listed and included
in this Annual Report beginning on page F-1.   The following
exhibits are filed with, or are incorporated by reference into, this Annual
Report.




Exhibit
      Number
              
              Description2.1
              
              Share
      Exchange Agreement dated March 4, 2008 by and among the Registrant, Global
      Trek Xploration, the stockholders of Global Trek Xploration and Jupili
      Investment S.A. (1)3.1
              
              Articles
      of Incorporation of the Registrant filed with the State of Nevada on April
      7, 2006 (2)3.2
              
              Amended
      and Restated Bylaws of the Registrant(3)10.1
              
              Lease
      Agreement between Bar Code World Inc. and  Patrick E. Bertagna,
      on the one hand, and Anjac Fashion Buildings dated December 27, 2007(4)10.2
              
              Employment
      Agreement between the Registrant and Patrick E. Bertagna dated March 14,
      2008(5)10.3
              
              Employment
      Agreement between the Registrant and Christopher M. Walsh dated March 14,
      2008(6)10.4
              
              Employment
      Agreement between the Registrant and Murray Williams dated March 14,
      2008(7)10.5
              
              Form
      of Subscription Agreement(8)10.6
              
              License
      Agreement between Global Trek Xploration and My Athlete LLC dated
      September 15, 2007(9)10.7
              
              GTX
      Corp 2008 Equity Compensation Plan(10)10.8
              
              Form
      of Securities Purchase Agreement and Warrant Agreement (Additional
      Financing Transaction)(11)10.9
              
              Form
      of Securities Purchase Agreement and Warrant Agreement (Financing
      Transaction) (12)10.10
              
              Lease
      Agreement between Global Trek Xploration and the Mock Family Limited
      Partnership dated June  3, 2008 *10.11
              
              Investment
      Banking Advisory Agreement between Meyers Resources LP and GTX Corp dated
      May 6, 2008 (13)14.1
              
              Code
      of Business Conduct and Ethics(14)17.1
              
              Resignation
      letter of Jeffrey Sharpe dated March 14, 2008(15)21.1
              
              Subsidiaries*23.1
              
              Consent
      of LBB & Associates Ltd., LLP*






* Filed
      herewith.(1)
            Incorporated
      by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8K
      dated March 10, 2008.(2)
            Incorporated
      by reference to Exhibit 3.1 to the Registrant's Registration Statement on
      Form SB-2 as filed December 12, 2006.(3)
            Incorporated
      by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(4)
            Incorporated
      by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.




- 46
-




(5)
            Incorporated
      by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(6)
            Incorporated
      by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(7)
            Incorporated
      by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(8)
            Incorporated
      by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(9)
            Incorporated
      by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(10)
            Incorporated
      by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(11)
            Previously
      filed as part of the Registrant’s Registration Statement on Form S-1 (File
      No. 333-15086) and incorporated herein by reference.(12)
            Incorporated
      by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(13)
            Incorporated
      by reference to Exhibit 10.11 to the Registrant’s Current Report on Form
      8K dated March 20, 2008.(14)
            Incorporated
      by reference to Exhibit 14.1 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(16)
            Incorporated
      by reference to Exhibit 17.1 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.(15)
            Incorporated
      by reference to Exhibit 21.1 to the Registrant’s Current Report on Form 8K
      dated March 20, 2008.31.1
            Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act31.2
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act32
            Section
      1350 Certificate of President and Chief Financial
  Officer




Signatures




In
accordance with Section 13 or 15(d) of the Exchange Act, the company caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.




GTX
      Corp
                (Registrant)Date:
      March 19,  2009
              By:
              /s/ Patrick E. BertagnaPatrick E BertagnaChief Executive Officer





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.




Name
                
                Title
                
                Date/s/ Patrick E. Bertagna
                
                Chief Executive Officer and Director (Principal Executive Officer)
                
                March
      19, 2009/s/ Murray Williams
                
                Chief Financial Officer, Treasurer, Secretary (Principal Accounting Officer)
                
                March
      19, 2009/s/ Jeffrey Sharpe
                
                Director
                
                March
      19, 2009/s/ Patrick Aroff
                
                Director
                
                March
      19, 2009/s/ Louis Rosenbaum
                
                Director
                
                March
      19, 2009


- 47
-




Report of Independent
Registered Public Accounting Firm
 
 To the
Board of Directors of
 GTX
Corp
 (Formerly
Deeas Resources, Inc.)
 Los
Angeles, CA
 
 We have
audited the accompanying consolidated balance sheets of GTX Corp (the “Company”)
as of December 31, 2008 and 2007, and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for each of the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting.  Accordingly, we express no
such opinion.  An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of GTX Corp as of
December 31, 2008 and 2007, and the results of its operations and its cash flows
for each of the years then ended in conformity with accounting principles
generally accepted in the United States of America.
 
 LBB &
Associates Ltd., LLP
 
 Houston,
Texas
 March 6,
2009
 
 F-1
 GTX
CORP
 (Formerly
Deeas Resources, Inc.)
 CONSOLIDATED
BALANCE SHEETS
 
 December 31,2008
                                      
                                      
                                      2007ASSETSCurrent
      assets:Cash
      and cash equivalents
                                      
                                      $
                                      706,873
                                      
                                      
                                      $
                                      735,937Certificates
      of deposit
                                      
                                      
                                      1,500,000
                                      
                                      
                                      
                                      -Accounts
      receivable, net
                                      
                                      
                                      36,630
                                      
                                      
                                      
                                      -Inventory,
      net
                                      
                                      
                                      36,862
                                      
                                      
                                      
                                      15,312Other
      current assets
                                      
                                      
                                      29,408
                                      
                                      
                                      
                                      -Total
      current assets
                                      
                                      
                                      2,309,773
                                      
                                      
                                      
                                      751,249Property
      and equipment, net
                                      
                                      
                                      151,220
                                      
                                      
                                      
                                      11,810Other
      assets
                                      
                                      
                                      19,745
                                      
                                      
                                      
                                      -Total
      assets
                                      
                                      $
                                      2,480,738
                                      
                                      
                                      $
                                      763,059LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
      liabilities:Accounts
      payable and accrued expenses
                                      
                                      $
                                      319,961
                                      
                                      
                                      $
                                      351,849Shareholder
      note payable
                                      
                                      
                                      -
                                      
                                      
                                      
                                      78,385Convertible
      note payable
                                      
                                      
                                      -
                                      
                                      
                                      
                                      1,000,000Total
      current liabilities
                                      
                                      
                                      319,961
                                      
                                      
                                      
                                      1,430,234Total
      liabilities
                                      
                                      
                                      319,961
                                      
                                      
                                      
                                      1,430,234CommitmentsStockholders’
      equity (deficit):Preferred
      stock, $0.001 par value; 10,000,000 shares authorized;no
      shares issued and outstanding
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Common
      stock, $0.001 par value; 2,071,000,000 shares authorized;38,680,540
      and 15,605,879 shares issued and outstanding atDecember
      31, 2008 and  2007, respectively
                                      
                                      
                                      38,680
                                      
                                      
                                      
                                      15,606Additional
      paid-in capital
                                      
                                      
                                      9,564,024
                                      
                                      
                                      
                                      3,357,863Accumulated
      deficit
                                      
                                      
                                      (7,441,927
                                      )
                                      
                                      
                                      (4,040,644
                                      )Total
      stockholders’ equity (deficit)
                                      
                                      
                                      2,160,777
                                      
                                      
                                      
                                      (667,175
                                      )Total
      liabilities and stockholders’ equity (deficit)
                                      
                                      $
                                      2,480,738
                                      
                                      
                                      $
                                      763,059
 
 See
accompanying notes to consolidated financial statements
 
 F-2
 
 GTX
CORP
 (Formerly
Deeas Resources Inc.)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 
 Years Ended December 31,2008
                        
                        
                        2007Revenues
                        
                        $
                        424,166
                        
                        
                        $
                        26,000Cost
      of goods sold
                        
                        
                        334,482
                        
                        
                        
                        -Gross
      margin
                        
                        
                        89,684
                        
                        
                        
                        26,000Operating
      expensesSalaries
      and professional fees
                        
                        
                        2,704,775
                        
                        
                        
                        796,881Research
      and development
                        
                        
                        371,924
                        
                        
                        
                        240,500General
      and administrative
                        
                        
                        402,293
                        
                        
                        
                        280,366Total
      operating expenses
                        
                        
                        3,478,992
                        
                        
                        
                        1,317,747Loss
      from operations
                        
                        
                        (3,389,308
                        )
                        
                        
                        (1,291,747
                        )Other
      income (expense)Interest
      income
                        
                        
                        50,661
                        
                        
                        
                        1,685Interest
      expense
                        
                        
                        (62,636
                        )
                        
                        
                        (37,592
                        )Net
      loss
                        
                        $
                        (3,401,283
                        )
                        
                        $
                        (1,327,654
                        )Weighted
      average number of commonshares
      outstanding - basic and diluted
                        
                        
                        33,778,909
                        
                        
                        
                        15,101,450Net
      loss per share - basic and diluted
                        
                        $
                        (0.10
                        )
                        
                        $
                        (0.09
                        )
 
 See
accompanying notes to consolidated financial statements
 
 F-3
 
 GTX CORP
 (Formerly
Deeas Resources Inc.)
 STATEMENT
OF STOCKHOLDERS' EQUITY (DEFICIT)
 
 Common Stock
                    
                    
                    Additional
                    
                    
                    AccumulatedShares
                    
                    
                    Amount
                    
                    
                    Paid-In Capital
                    
                    
                    Deficit
                    
                    
                    TotalBalance,December
      31, 2006
                    
                    
                    14,766,986
                    
                    
                    $
                    14,768
                    
                    
                    $
                    2,805,973
                    
                    
                    $
                    (2,712,990
                    )
                    
                    $
                    107,751Issuance
      of common stock for cash
                    
                    
                    327,373
                    
                    
                    
                    327
                    
                    
                    
                    191,673
                    
                    
                    
                    -
                    
                    
                    
                    192,000Issuance
      of common stock from exercise of stock warrants
                    
                    
                    426,267
                    
                    
                    
                    426
                    
                    
                    
                    179,574
                    
                    
                    
                    -
                    
                    
                    
                    180,000Issuance
      of common stock for services
                    
                    
                    85,253
                    
                    
                    
                    85
                    
                    
                    
                    49,915
                    
                    
                    
                    -
                    
                    
                    
                    50,000Stock
      warrant compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    130,728
                    
                    
                    
                    -
                    
                    
                    
                    130,728Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1,327,654
                    )
                    
                    
                    (1,327,654
                    )Balance,December
      31, 2007
                    
                    
                    15,605,879
                    
                    
                    
                    15,606
                    
                    
                    
                    3,357,863
                    
                    
                    
                    (4,040,644
                    )
                    
                    
                    (667,175
                    )Issuance
      of common stock for cash from exercise of warrants
                    
                    
                    871,479
                    
                    
                    
                    871
                    
                    
                    
                    397,928
                    
                    
                    
                    -
                    
                    
                    
                    398,799Cashless
      issuance of common stock from exercise of stock warrants
                    
                    
                    1,165,879
                    
                    
                    
                    1,166
                    
                    
                    
                    202
                    
                    
                    
                    -
                    
                    
                    
                    1,368Issuance
      of common stock for payment of accounts payable
                    
                    
                    76,112
                    
                    
                    
                    76
                    
                    
                    
                    33,674
                    
                    
                    
                    -
                    
                    
                    
                    33,750Conversion
      of shareholder note payable and accrued interest into common
      stock
                    
                    
                    280,652
                    
                    
                    
                    281
                    
                    
                    
                    118,230
                    
                    
                    
                    -
                    
                    
                    
                    118,511Issuance
      of common stock in connection with recapitalization
                    
                    
                    13,999,960
                    
                    
                    
                    14,000
                    
                    
                    
                    (14,000
                    )
                    
                    
                    -
                    
                    
                    
                    -Conversion
      of note payable and accrued interest into common stock
                    
                    
                    1,374,334
                    
                    
                    
                    1,374
                    
                    
                    
                    1,029,376
                    
                    
                    
                    -
                    
                    
                    
                    1,030,750Issuance
      of common stock in conjunction with private placement
                    
                    
                    2,666,668
                    
                    
                    
                    2,667
                    
                    
                    
                    1,997,333
                    
                    
                    
                    -
                    
                    
                    
                    2,000,000Stock
      option compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    341,992
                    
                    
                    
                    -
                    
                    
                    
                    341,992Issuance
      of common stock in conjunction with PIPE II, net
                    
                    
                    1,862,000
                    
                    
                    
                    1,862
                    
                    
                    
                    1,606,388
                    
                    
                    
                    -
                    
                    
                    
                    1,608,250Issuance
      of common stock for services
                    
                    
                    777,577
                    
                    
                    
                    777
                    
                    
                    
                    695,038
                    
                    
                    
                    -
                    
                    
                    
                    695,815Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (3,401,283
                    )
                    
                    
                    (3,401,283
                    )Balance,December
      31, 2008
                    
                    
                    38,680,540
                    
                    
                    $
                    38,680
                    
                    
                    $
                    9,564,024
                    
                    
                    $
                    (7,441,927
                    )
                    
                    $
                    2,160,777
 
 See
accompanying notes to consolidated financial statements
 
 F-4
 
 GTX CORP
 (Formerly
Deeas Resources Inc.)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 
 Years Ended December 31,2008
                    
                    
                    2007Cash
      flows from operating activitiesNet
      loss
                    
                    $
                    (3,401,283
                    )
                    
                    $
                    (1,327,654
                    )Adjustments
      to reconcile net loss to net cash used in operating
    activitiesDepreciation
                    
                    
                    34,484
                    
                    
                    
                    2,618Bad
      debt expense
                    
                    
                    26,600
                    
                    
                    
                    -Stock
      based compensation
                    
                    
                    1,025,264
                    
                    
                    
                    180,728Changes
      in operating assets and liabilitiesAccounts
      receivable
                    
                    
                    (63,230
                    )
                    
                    
                    -Inventory
                    
                    
                    (21,550
                    )
                    
                    
                    (15,312
                    )Other
      current and non-current assets
                    
                    
                    (36,611
                    )
                    
                    
                    -Accounts
      payable and accrued expenses
                    
                    
                    74,107
                    
                    
                    
                    289,033Net
      cash used in operating activities
                    
                    
                    (2,362,219
                    )
                    
                    
                    (870,587
                    )Cash
      flows from investing activitiesPurchase
      of certificates of deposit
                    
                    
                    (1,500,000
                    )
                    
                    
                    -Purchase
      of property and equipment
                    
                    
                    (173,894
                    )
                    
                    
                    (10,937
                    )Net
      cash used in investing activities
                    
                    
                    (1,673,894
                    )
                    
                    
                    (10,937
                    )Cash
      flows from financing activitiesProceeds
      from issuance of common stock
                    
                    
                    3,732,000
                    
                    
                    
                    192,000Proceeds
      from issuanace of note payables
                    
                    
                    -
                    
                    
                    
                    1,000,000Proceeds
      from issuance of common stock from exercise of stock
    warrants
                    
                    
                    398,799
                    
                    
                    
                    180,000Commissions
      paid in relation to May 2008 Financing
                    
                    
                    (123,750
                    )
                    
                    
                    -Net
      cash provided by financing activities
                    
                    
                    4,007,049
                    
                    
                    
                    1,372,000Net
      increase (decrease) in cash and cash equivalents
                    
                    
                    (29,064
                    )
                    
                    
                    490,476Cash
      and cash equivalents, beginning of period
                    
                    
                    735,937
                    
                    
                    
                    245,461Cash
      and cash equivalents, end of period
                    
                    $
                    706,873
                    
                    
                    $
                    735,937Supplemental
      disclosure of cash flow information:Income
      taxes paid
                    
                    $
                    -
                    
                    
                    $
                    -Interest
      paid
                    
                    $
                    -
                    
                    
                    $
                    -Supplementary
      disclosure of  noncash financing activities:Issuance
      of common stock for repayment of note payable and accrued
      interest
                    
                    $
                    1,030,750
                    
                    
                    $
                    -Issuance
      of common stock for repayment of shareholder note payable and accrued
      interest
                    
                    $
                    118,511
                    
                    
                    $
                    -Issuance
      of common stock for repayment of accounts payable
                    
                    $
                    33,750
                    
                    
                    $
                    -Issuance
      of common stock for other asset
                    
                    $
                    37,625
                    
                    
                    $
                    -
 
 See
accompanying notes to consolidated financial statements
  F-5
  GTX
CORP
 (Formerly
Deeas Resources Inc.)
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
                  ORGANIZATION AND
      NATURE OF OPERATIONS
 
 GTX Corp
and subsidiaries (the “Company” or “GTX”) develops and integrates miniaturized
Global Positioning System (GPS) tracking and cellular location technology for
consumer products and service applications. Formerly known as Deeas Resources
Inc., GTX owns 100% of the issued and outstanding capital stock of Global Trek
Xploration, acquired on March 14, 2008 in an exchange transaction (hereafter
referred to as the “Exchange Transaction”), and LOCiMOBILE, Inc, incorporated in
the State of Nevada on October 14, 2008.  On September 22, 2008, the
Company dissolved 0758372 B.C. Ltd, a former subsidiary of Deeas Resources
Inc.  Concurrent with the March 14, 2008 Exchange Agreement described
below, the Company changed its name from Deeas Resources Inc. to GTX
Corp.  As of December 31, 2008, all of the Company's operations are
conducted through Global Trek Xploration. Unless the context indicates
otherwise, references herein to “we,” “our,” or the "Company" during periods
prior to March 14, 2008 refer solely to Global Trek Xploration, while references
to “we,” “our,” “GTX” or the "Company" after March 14, 2008 refer to both GTX
Corp and its subsidiaries. All references to "Deeas" refer to Deeas Resources
Inc. on a stand-alone basis prior to March 14, 2008.
 
 On
December 24, 2008, GTX acquired the assets of Code Amber, a web based Amber
Alert system providing web site owners with a JavaScript news feed ticker that
displays active Amber Alerts on their web pages.  The acquisition was
not considered material.
 
 Exchange
Transaction
 On March
4, 2008, Deeas entered into the Share Exchange Agreement, (the “Exchange
Agreement”), with Global Trek Xploration, the shareholders of Global Trek
Xploration (the “Global Trek Shareholders”), and Jupili Investment S.A., a
company incorporated under the laws of the Republic of Panama
(“Jupili”).
 
 Under the
Exchange Agreement, the Company agreed to acquire all of the outstanding capital
stock of Global Trek Xploration, following a 20.71 forward common stock split of
Deeas. The closing of the transactions contemplated by the Exchange Agreement
and the closing of the March 2008 Financing described below occurred on March
14, 2008 (the “Closing” or the “Closing Date”).  Pursuant to the
Exchange Agreement, at the Closing, Deeas issued 18,000,001 post forward split
common shares of Deeas for all of the issued and outstanding shares of Global
Trek Xploration on the basis of 0.8525343 shares of Deeas for every one share of
Global Trek Xploration.  As a result, Global Trek Xploration became a
wholly-owned subsidiary of Deeas.  Concurrent with the Exchange
Transaction, Deeas changed its name to GTX Corp.
 
 As a
result of this Exchange Agreement, the Global Trek Shareholders acquired
approximately 50% of the issued and outstanding common shares of the
Company.  For accounting purposes, the Exchange Transaction was
treated as an acquisition of Deeas and a recapitalization of Global Trek
Xploration.  Global Trek Xploration is the accounting acquirer and the
results of its operations carryover.  Accordingly, the operations of
Deeas are not carried over and have been adjusted to $0.
  F-6
  Concurrent
with the closing of this transaction, the Company cancelled 31,065,000 post
forward split common shares (1,500,000 pre split common shares) which had been
held by the sole director and officer of the Company prior to the Exchange
Transaction, completed a $2,000,000 private placement of units of the Company at
$0.75 per unit (the “March 2008 Financing”) and converted a $1,000,000 Global
Trek Xploration bridge loan and interest into units of the Company at $0.75 per
unit.
 
 Basis of
Presentation
 The
accompanying consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States. The
accompanying consolidated financial statements reflect the accounts of GTX Corp
and its wholly owned subsidiaries. All significant inter-company balances and
transactions have been eliminated.
 
 2.
                  SUMMARY OF SIGNIFICANT
      ACCOUNTING POLICIES
 
 Revenue
Recognition
 The
Company recognizes revenue from product sales when the product is shipped to the
customer and title has transferred. The Company assumes no remaining significant
obligations associated with the product sale other than that related to its
warranty program discussed below.  Revenue related to licensing
agreements is recognized over the term of the agreement.  Revenue for
services is recognized as the services are rendered.
 
 Revenues
recognized during the year ended December 31, 2008 were received from one
customer primarily for the sale of approximately 900 gpVectorTM Powered Athlete
Tracking Systems. The Company’s reliance on this one customer during the year
ended December 31, 2008 makes us vulnerable to the risk of a near-term severe
impact. Revenues recognized during the year ended December 31, 2007 were
received from one customer in connection with a licensing agreement which was
terminated.
 
 Allowance for Doubtful
Accounts
 We extend
credit based on our evaluation of the customer’s financial condition.  We
carry our accounts receivable at net realizable value. We monitor our exposure
to losses on receivables and maintain allowances for potential losses or
adjustments. We determine these allowances by (1) evaluating the aging of our
receivables; and (2) reviewing high-risk customers financial condition. Past due
receivable balances are written off when our internal collection efforts have
been unsuccessful in collecting the amount due.
 
 Shipping and Handling
Costs
 Shipping
and handling costs are included in cost of goods sold in the accompanying
consolidated financial statements.
  F-7
  Product
Warranty
 The
Company provides for estimated warranty costs at the time of sale. The warranty
period is generally for one year from the date the device is
activated.  Defects that occur within this warranty period, under
normal use and care will be repaired or replaced, solely at our discretion, with
no charge for parts or labor.
 
 Use of
Estimates
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those
estimates.
 
 Fair Value
Estimates
 Pursuant
to SFAS No. 107, “Disclosures
About Fair Value of Financial Instruments”, the Company is required to
estimate the fair value of all financial instruments included on its balance
sheet.  The fair value of an asset or liability is the amount at which
it could be exchanged or settled in a current transaction between willing
parties.  The carrying values for cash and cash equivalents, certificates
of deposit, prepaid assets, accounts payable and accrued liabilities approximate
their fair value due to their short maturities.
 
 In
accordance with SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, the Company reviews long-lived assets for
impairment whenever events or changes in circumstances indicate the carrying
amount of an asset may not be fully recoverable. The carrying amount of a
long-lived asset is not recoverable if it exceeds the sum of the undiscounted
cash flows expected to result from the use and eventual disposition of the
asset.  That assessment is based on the carrying amount of the asset
at the date it is tested for recoverability.  An impairment loss is
measured as the amount by which the carrying amount of a long-lived asset
exceeds its fair value.
 
 Reclassifications
 For
comparability, certain prior period amounts have been reclassified, where
appropriate, to conform to the financial statement presentation used in
2008.
 
 Cash and Cash
Equivalents
 Cash
equivalents consist of highly liquid investments with insignificant rate risk
and with original maturities of three months or less at the date of
purchase.   At various times, the Company had deposits in excess
of the Federal Deposit Insurance Corporation limit. The Company has experienced
no losses related to these uninsured amounts.
 
 Certificates of
Deposit
 The
Company’s certificates of deposits have maturity dates ranging from three to
twelve months from the date of issue and are maintained at various financial
institutions in order to ensure coverage under the Federal Deposit Insurance
Corporation.
  F-8
  Inventory
 Inventory
consists of raw materials, work in process and finished goods and is valued at
the lower of cost (first-in, first-out) or net realizable value. The Company
evaluates its inventory for excess and obsolescence on a regular basis. In
preparing the evaluation the Company looks at the expected demand for the
product, as well as changes in technology, in order to determine whether or not
a reserve is necessary to record the inventory at net realizable
value.  After performing a review of the inventory as of December 31,
2008, we determined that the net realizable value is greater than the cost thus
inventory is recorded at cost as of December 31, 2008.
 
 Property and
Equipment
 Property
and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are calculated using the straight-line method over
the estimated two year useful lives of the assets. When property and equipment
are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the respective accounts, and any gain or loss is
included in operations. Expenditures for maintenance and repairs are expensed as
incurred.
 
 Website
Development
 The
Company accounts for the development of its website under the guidance of EITF
00-2, “Accounting for Website Development Costs” (“EITF 00-2”) which provides
that all costs relating to software used to operate a website be accounted for
under AICPA SOP 98-1 “Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use” unless a plan exists or is being developed to market
the software externally.  As such, all costs associated with the
planning of the website are expensed as incurred and the costs to develop the
website are generally capitalized.  Depreciation is calculated using
the straight-line method over the estimated two year useful lives of the
assets.
 
 Software
Development Costs
 Software
development costs include payments made to independent software developers under
development arrangements. Software development costs are capitalized once
technological feasibility of a product is established and it is determined that
such costs should be recoverable against future revenues. For products where
proven technology exists, this may occur early in the development cycle.
Technological feasibility is evaluated on a product-by-product basis. Amounts
related to software development that are not capitalized are charged immediately
to product research and development costs.
 
 Commencing
upon the related product’s release, capitalized software development costs are
amortized to cost of sales based upon the higher of (i) the ratio of
current revenue to total projected revenue or (ii) the straight-line
method. The amortization period is two years from the initial release of the
product. The recoverability of capitalized software development costs is
evaluated based on the expected performance of the specific products for which
the costs relate. The following criteria are used to evaluate expected product
performance: historical performance of comparable products using comparable
technology and orders for the product prior to its release.
  F-9
  Significant
management judgments and estimates are utilized in the assessment of when
technological feasibility is established, as well as in the ongoing assessment
of the recoverability of capitalized costs. If revised forecasted or actual
product sales are less than and/or revised forecasted or actual costs are
greater than the original forecasted amount utilized in the initial
recoverability analysis, the net realizable value may be lower than originally
estimated in any given quarter, which could result in an impairment
charge.
 
 Net Loss Per Common
Share
 Net loss
per common share is computed pursuant to Statement of Financial Accounting
Standards No. 128 “Earnings Per Share” (“SFAS No. 128”).  Basic
net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period. Diluted net loss
per share is computed by dividing net loss by the weighted average number of
shares of common stock and potentially outstanding shares of common stock during
each period. There were no dilutive shares outstanding as of December 31,
2008.
 
 Research and
Development
 Research
and development costs are clearly identified and are expensed as incurred in
accordance with FASB statement No. 2, "Accounting for Research and Development
Costs."  For the years ended December 31, 2008 and 2007, the Company
incurred $371,924, and $240,500 of research and development costs,
respectively.
 
 Income
Taxes
 Prior to
the Exchange Transaction, Global Trek Xploration elected under the Internal
Revenue Code to be an S corporation. In lieu of corporation income taxes,
the shareholders of an S corporation are taxed on their proportionate share of
the company’s taxable income. Therefore, no provision or liability for federal
income taxes is included in the financial statements as of December 31,
2007.
 
 As a
result of the Exchange Transaction, GTX is now considered a C corporation and as
such, the Company began following SFAS No. 109, “Accounting for Income Taxes”
during the year ended December 31, 2008. Under the asset and liability method of
SFAS No. 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. A valuation allowance can be provided for a net deferred tax asset, due
to uncertainty of realization.
  Stock-based
Compensation
 Stock
based compensation expense is recorded in accordance with SFAS 123R (Revised
2004), Share-Based
Payment, for stock and stock options awarded in return for services
rendered. The expense is measured at the grant-date fair value of the award and
recognized as compensation expense on a straight-line basis over the service
period, which is the vesting period. The Company estimates forfeitures that it
expects will occur and records expense based upon the number of awards expected
to vest.
  F-10
  Development Stage
Company
 During
the three months ended March 31, 2008, the Company no longer met the
qualifications as a development stage company as defined in Financial Accounting
Standards Board Statement No. 7.  Accordingly, reporting as a
development stage company is no longer deemed necessary.
 
 Recently
Issued Accounting Pronouncements
 In
December 2007, the FASB issued SFAS No. 141R, Business Combinations. SFAS
No. 141R broadens the guidance of SFAS No. 141, extending its applicability to
all transactions and other events in which one entity obtains control over one
or more other businesses. It broadens the fair value measurement and recognition
of assets acquired, liabilities assumed, and interests transferred as a result
of business combinations; and stipulates that acquisition related costs be
expensed rather than included as part of the basis of the acquisition. SFAS No.
141R expands required disclosures to improve the ability to evaluate the nature
and financial effects of business combinations. SFAS No. 141R is effective for
all transactions entered into, on or after January 1, 2009. We believe that the
adoption of this standard will not have a material effect on our consolidated
financial statements.
 
 In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities – an Amendment of FASB Statement No. 133.SFAS No. 161 enhances required disclosures regarding derivative
instruments and hedging activities, including enhanced disclosures regarding how
an entity uses derivative instruments, how derivative instruments and related
hedged items are accounted for under SFAS No. 133 and the impact of derivative
instruments and related hedged items on an entity’s financial position,
financial performance and cash flows. SFAS No. 161 is effective on January 1,
2009. We believe that the adoption of this standard will not have a material
effect on our consolidated financial statements.
 
 In
May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”.  SFAS No. 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with GAAP for nongovernmental entities. SFAS
No. 162 is effective 60 days following the SEC’s approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles.” We do not expect the adoption of this statement to have a material
impact on the Company’s results of operations, financial position or cash
flows.
 
 3.
                  INVENTORY
 
 The
components of inventory consist of the following:
 
 December
      31,2008
                        
                        
                        2007Raw
      materials
                        
                        $
                        10,455
                        
                        
                        $
                        15,312Work
      in process
                        
                        
                        26,407
                        
                        
                        
                        -Finished
      goods
                        
                        
                        -
                        
                        
                        
                        -Inventory
                        
                        $
                        36,862
                        
                        
                        $
                        15,312
 
 F-11
  4.
                  PROPERTY AND
      EQUIPMENT
 
 Property
and equipment, net, consists of the following:
 
 December
      31,2008
                        
                        
                        2007Computer
      and office equipment
                        
                        $
                        81,407
                        
                        
                        $
                        18,018Software
                        
                        
                        13,749
                        
                        
                        
                        -Website
      development
                        
                        
                        59,896
                        
                        
                        
                        -Software
      development
                        
                        
                        36,860
                        
                        
                        
                        -Less:
      accumulated depreciation
                        
                        
                        (40,692
                        )
                        
                        
                        (6,208
                        )Total
      property and equipment, net
                        
                        $
                        151,220
                        
                        
                        $
                        11,810
 
 Depreciation
expense for the years ended December 31, 2008 and 2007 was $34,484 and $2,618,
respectively.
 
 5.
                  SHAREHOLDER NOTE
      PAYABLE
 
 During
fiscal years 2002 and 2003, a shareholder (also a Director of the Company)
loaned the Company a total of $78,385, bearing interest at 10% per annum, to be
used in developing the Company’s product.  For the years ended
December 31, 2008 and 2007 the Company incurred interest expense of $880 and
$7,838, respectively.  The Shareholder Note Payable plus all accrued
interest of $40,126 was converted into 280,652 shares of common
stock.
 
 6.
                  INCOME
      TAXES
 
 The
provision for refundable Federal income tax consists of the following as of
December 31, 2008:
 Refundable
      Federal income tax calculated at statutory rate of 35%
                        
                        $
                        1,200,000Less:  Stock
      based compensation expense
                        
                        
                        (185,000
                        )Change
      in valuation allowance
                        
                        
                        (1,015,000
                        )Net
      refundable amount
                        
                        $
                        -
 
 The
cumulative tax effect at the expected rate of 35% of significant items
comprising our net deferred tax amount at December 31, 2008 is as
follows:
 
 Deferred
      tax asset attributable to:Net
      operating losses carried forward
                          
                          $
                          1,015,000Less:  Valuation
      allowance
                          
                          
                          (1,015,000
                          )Net
      deferred tax asset
                          
                          $
                          -
  F-12
  The
Company established a full valuation allowance in accordance with the provision
of SFAS No. 109, “Accounting for Income Taxes.” The Company continually reviews
the adequacy of the valuation allowance and recognizes a benefit from income
taxes only when reassessment indicates that it is more likely than not that the
benefits will be realized.
  At
December 31, 2008, the Company had an unused net operating loss carryover
approximating $2,900,000 that is available to offset future taxable income; it
expires beginning in 2028.
  No
provision was made for federal income tax since the Company has net operating
losses.  The provision for income taxes included in the accompanying
financial statements consists of the state minimum tax imposed on
corporations.
  7.
                  EQUITY
  March
2008 Financing
  On March
13, 2008, concurrent with the Exchange Transaction described in Note 1, we
completed the sale of 2,666,668 units at $0.75 per unit, each unit consisting of
one share of common stock and one stock purchase warrant.  Each
warrant is exercisable into an additional common share at $1.25 per
share.
 
 Jupili
provided bridge financing to Global Trek Xploration of $1,000,000 pursuant to a
convertible loan agreement.  The $1,000,000 loan plus accrued interest
of $30,750 was converted into 1,374,334 units of the Company on the same terms
and conditions as the private placement noted above.
 
 The
Company paid Jupili a success fee of 2% of the aggregate amount of the March
2008 Financing and the Bridge Financing of $60,000.
 
 The
issuance of the units in connection with the March 2008 Financing and upon
conversion of the Jupili bridge loan is intended to be exempt from registration
under the Securities Act pursuant to Regulation S. As such, these issued
securities may not be offered or sold in the United States unless they are
registered under the Securities Act, or an exemption from the registration
requirements of the Securities Act is available.
 
 We filed
a Registration Statement on May 12, 2008 with the SEC to register the shares of
common stock and the shares issuable upon exercise of the Warrants issued in the
March 2008 Financing and to register the shares issued upon conversion of the
Jupili bridge loan (the “Registration Statement”).  This Registration
Statement was subsequently amended and filed with the SEC on August 12, 2008.
The Prospectus was filed on August 14, 2008 and Prospectus Supplements were
filed on August 15, 2008 to incorporate the financial information for the period
ended June 30, 2008 and on November 10, 2008 to incorporate the financial
information for the period ended September 30, 2008.
  F-13
  May 2008
Financing
  In May
2008 we completed a private placement (“May 2008 Financing”) of 1,732,000 units
(“May 2008 Units”) of the Company’s securities at a price of $1.00 per
unit.  Each of the May 2008 Units consisted of one common share and
one share purchase warrant (“May 2008 Warrant”).  Each May 2008
Warrant is exercisable at an exercise price of $1.50 per share for a three-year
term.   The common stock and common shares underlying the May
2008 Warrants sold in this May 2008 Financing have piggy-back registration
rights.
  We agreed to pay up to 10%
cash and 10% warrant coverage as commissions to registered broker-dealers or
unregistered finders in connection with the May
2008  Financing.Mr. Matthew Williams, the brother
of our Chief Financial Officer, Murray Williams, received $20,300 and 20,300 May
2008 Warrants from GTX Corp for his services as a finder. We paid an aggregate
of $26,950 and issued 26,950 May 2008 Warrants as commissions to three (3) other
unregistered finders. In addition we paid Meyers Associates LP, a registered
broker-dealer, $76,500 in cash commission and 71,500 May 2008 Warrants for the
May 2008 Financing that they arranged for us. Thus, in total we paid $123,750
and 118,750 May 2008 Warrants to registered broker-dealers or unregistered
finders in connection with the May 2008 Financing.  The commissions are deemed
a cost of capital and have been recorded at fair value as a reduction in
additional paid-in capital in the accompanying consolidated financial
statements.
 
 Common
Stock
 In
conjunction with the Exchange Transaction, all of the issued and outstanding
shares of Global Trek Xploration at March 14, 2008 were exchanged to GTX Corp
common shares on the basis of 0.8525343 common shares of GTX Corp for every one
share of Global Trek Xploration.
  As a
result of the Exchange Transaction and the associated March 2008 Financing, (i)
13,999,960 shares of Deeas Resources common shares were recapitalized into GTX
Corp, (ii) the Jupili bridge loan of $1,000,000 plus accrued interest of $30,750
was converted into 1,374,334 shares of common stock (as part of an
above-described “Unit”) at $0.75 per unit and (iii) 2,666,668 shares of common
stock (as part of an above-described “Unit”) were issued at $0.75 per unit in
the March 2008 Financing.  In addition, as partial consideration for
their work on the Exchange Agreement and the March 2008 Financing, our
attorneys, Richardson & Patel, were issued 80,000 units valued at $0.75 per
unit.
  In addition to the
1,732,000 shares of stock sold to investors in connection with the May 2008
Financing, as a bonus for raising more than $1,000,000 of proceeds in
this financing, Patrick E. Bertagna, our Chief Executive Officer and Chairman,
Murray Williams, our Chief Financial Officer, and Patrick Aroff, a member of our
board of directors, were each issued 40,000 shares of our common stock, and
Louis Rosenbaum, a member of our board of directors, was issued 10,000 shares of
our common stock. The grant-date fair value of these shares was $130,000 and is
recorded as a cost of capital in the accompanying consolidated financial
statements.
  F-14
  During
the year ended December 31, 2008, the Company issued 510,000 shares of common
stock from the 2008 Equity Compensation Plan at values ranging from of $0.65 to
$1.60 per share to various members of management and consultants as compensation
for services rendered, the grant-date fair value of which was estimated at
$408,000.
  During
the year ended December 31, 2008, the Company issued 209,500 shares of common
stock subject to restrictions upon transfer pursuant to Rule 144, as promulgated
under the Securities Act of 1933, as amended, to various member of management,
employees and consultants at values ranging from $0.19 to $1.60 per share as
compensation for services rendered, the grant-date fair value of which was
estimated at $203,930.
  During
May 2008, the Company entered into a one year agreement with a third-party
public relations firm.  The terms of the agreement include the
issuance of 17,500 shares of common stock to be paid to the public relations
firm in 4 equal installments.  The 17,500 shares of common stock have
been issued and are held by the company in escrow to be delivered to the public
relations firm in four equal quarterly installments during the 1-year term of
the agreement.  The fair value of these shares was estimated to be
$37,625 based on the
market price of the securities, as quoted on the OTCBB on the date of
issuance.  During the year ended December 31, 2008, $25,082 has been
expensed in the accompanying consolidated financial
statements.
 
 During
July 2008, the Company entered into an agreement with a third-party consultant
to assist in the development and promotion of the GTX technology.  The
terms of the agreement provide for the issuance of 10,000 shares of common stock
for services rendered from July to December 2008.  The shares are not
to be granted until January 2009.  The fair value of these shares was
estimated to be $3,950 based on the market price
of the securities, as quoted on the OTCBB, over the term of the
agreement.
 
 During
July 2008, the Company’s Board of Directors reserved for issuance a pool of
40,000 shares of “Unrestricted Stock” of the Company under the 2008 Equity
Compensation Plan for grant and issuance to various consultants and/or employees
in lieu of paying them cash for their services (the “Award Pool”).  The Company’s
Board of Directors created a Stock Award Committee that has the authority to
grant and issue awards from the Award Pool.  During August 2008, the
Company engaged a consultant to perform research and development
work.The number of shares the consultant received for each
particular month during the term equaled $12,000 divided by the closing price of
the Company’s common stock on the last day of each month the consultant provided
the services.  As of December 31, 2008,
32,577 shares of common stock valued at $24,000 had been issued to the
consultant.
  During
July 2008, the Company’s Board of Directors reserved for issuance a pool of
35,000 shares of the Company’s common stock (“Restricted Stock Award Pool”) for
grant and issuance to various consultants and/or employees in lieu of paying
them cash for their services.  These shares of common stock are
subject to restrictions upon transfer pursuant to Rule 144, as promulgated under
the Securities Act of 1933, as amended.  The Company’s Board of
Directors created a Stock Award Committee that has the authority to grant and
issue awards from the Restricted Stock Award Pool.  During August
2008, the Company issued 8,000 shares of common stock at $1.60 per share from
the Restricted Stock Award Pool to various consultants as compensation for
services rendered, the grant-date fair value of which was estimated at
$12,800.
  F-15
  Common Stock
Warrants
 Since
inception, the Company has issued numerous warrants to purchase shares of the
Company’s common stock to shareholders, consultants and employees as
compensation for services rendered.  Prior to the Exchange
Transaction, there were 4,721,877 warrants outstanding.  All of the
4,721,877 warrants were exercised prior to the Exchange Transaction in exchange
for 2,394,121 shares of its $.001 par value common stock.  The Company
offered a cashless exercise option to all of the warrant holders that did not
want to pay cash to exercise all of their warrants.  Various warrant
holders opted to accept the cashless exercise option resulting in the exercise
of 3,493,635 warrants.   In addition, 356,763 warrants were
exchanged in consideration for the settlement of $152,000 of indebtedness and
related accrued interest.  Finally, 871,479 warrants were exercised
for cash for proceeds of $398,799.
 
 Of the
2,666,668 warrants sold in connection with March 2008 Financing, 1,000,002 and
1,666,666 are exercisable until March 14, 2009 and September 14, 2009,
respectively.  The fair value of the 2,666,668 warrants was estimated
to be $158,000 using the Black-Scholes option pricing model based on the
following assumptions: expected dividend yield 0%, expected volatility 50%,
risk-free interest rate 2%, and expected life of 12-18 months.
  The fair
value of the 1,374,334 warrants issued to Jupili in connection with the March
2008 Financing was estimated to be $97,000 using the Black-Scholes option
pricing model based on the following assumptions: expected dividend yield 0%,
expected volatility 50%, risk-free interest rate 2%, and expected life of 18
months.
 
 On March
16, 2008, the Company issued 25,000 warrants to purchase 25,000 common shares at
$0.75 per share, to a consultant for services rendered.  The warrants
expire on March 31, 2010.  The fair value of the 25,000 warrants was
estimated to be $5,510 using the Black-Scholes option pricing model based on the
following assumptions: expected dividend yield 0%, expected volatility 50%,
risk-free interest rate 2%, and expected life of 24 months and is recorded as
compensation expense in the accompanying consolidated financial
statements.
 
 The fair
value of the 80,000 warrants issued to our attorneys in conjunction with the
March 2008 Financing units was estimated to be $12,000 using the Black-Scholes
option pricing model based on the following assumptions: expected dividend yield
0%, expected volatility 50%, risk-free interest rate 3.0%, and expected life of
3 years.
 
 The fair
value of the 1,732,000 warrants issued in connection with the sale of the May
2008 Financing units was estimated to be $324,000 using the Black-Scholes option
pricing model based on the following assumptions: expected dividend yield 0%,
expected volatility 43%, risk-free interest rate 2.9%, and expected life of 3
years.
 
 The fair
value of the 118,750 warrants granted as commissions in connection with the May
2008 Financing was estimated to be $22,350 using the Black-Scholes option
pricing model based on the following assumptions: expected dividend yield 0%,
expected volatility 43%, risk-free interest rate 2.9%, and expected life of 3
years.
 
 A summary
of the Company’s warrant activity and related information for the twelve months
ended December 31, 2008 is provided below:
  F-16
 
 Number
      ofExercise
      Price
                                                            
                                                            
                                                            WarrantsOutstanding
      and exercisable at December 31, 2007
                                                            
                                                            $
                                                            0.42
      – 0.59
                                                            
                                                            
                                                            
                                                            4,721,877Warrants
      exercised for cash
                                                            
                                                            
                                                            0.42
      – 0.59
                                                            
                                                            
                                                            
                                                            (871,479
                                                            )Cashless
      exercise of warrants
                                                            
                                                            
                                                            0.00
                                                            
                                                            
                                                            
                                                            (3,493,635
                                                            )Warrants
      exercised as settlement of liabilities
                                                            
                                                            
                                                            0.42
      – 0.59
                                                            
                                                            
                                                            
                                                            (356,763
                                                            )Warrants
      granted
                                                            
                                                            
                                                            0.75
      – 1.50
                                                            
                                                            
                                                            
                                                            5,996,752Outstanding
      and exercisable at December 31, 2008
                                                            
                                                            
                                                            0.75
      - 1.50
                                                            
                                                            
                                                            
                                                            5,996,752
 
 Stock Warrants as of December 31,
      2008Exercise
                                              
                                              Warrants
                                              
                                              Remaining
                                              
                                              WarrantsPrice
                                              
                                              Outstanding
                                              
                                              Life (Years)
                                              
                                              Exercisable$
                                              1.50
                                              
                                              
                                              1,850,750
                                              
                                              2.42
                                              
                                              
                                              1,850,750$
                                              1.25
                                              
                                              
                                              80,000
                                              
                                              2.42
                                              
                                              
                                              80,000$
                                              1.25
                                              
                                              
                                              1,000,002
                                              
                                              0.25
                                              
                                              
                                              1,000,002$
                                              1.25
                                              
                                              
                                              3,041,000
                                              
                                              0.75
                                              
                                              
                                              3,041,000$
                                              0.75
                                              
                                              
                                              25,000
                                              
                                              1.25
                                              
                                              
                                              25,0005,996,752
                                              
                                              
                                              
                                              
                                              5,996,752
 
 Common Stock
Options
 On March
14, 2008, we adopted the 2008 Equity Compensation Plan, the “2008 Plan,”
pursuant to which we are authorized to grant stock options intended to qualify
as Incentive Stock Options, “ISO”, under Section 422 of the Internal Revenue
Code of 1986, as amended, non-qualified options, restricted and unrestricted
stock awards and stock appreciation rights to purchase up to 7,000,000 shares of
common stock to our employees, officers, directors and consultants, with the
exception that ISOs may only be granted to employees of the Company and it’s
subsidiaries, as defined in the 2008 Plan.  The 2008 Plan shall be
administered by a committee consisting of two or more members of the Board of
Directors or if a committee has not been elected, the Board of Directors of the
Company shall serve as the committee.
 
 The
Company recognizes option expense ratably over the vesting
periods.  For the year ended December 31, 2008, the Company recorded
compensation expense related to options granted under the 2008 Plan of
$341,992.
 
 The
fair value of option grants was estimated using the Black-Scholes option-pricing
model with the following assumptions for the year ended December 31,
2008:
 
 Expected
      dividend yield
                        
                        
                        0.00
                        %Risk-free
      interest rate
                        
                        
                        1.5-3.3
                        %Expected
      volatility
                        
                        
                        40-70
                        %Expected
      life (in years)
                        
                        
                        4-6
 
 The
Black-Scholes option-pricing model was developed for use in estimating the fair
value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company’s employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management’s
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock
options.
  F-17
  The Plan
provides for the issuance of a maximum of 7,000,000 shares of which, after
adjusting for estimated pre-vesting forfeitures, approximately 2.9 million were
still available for issuance as of March 13, 2009.
  Stock
option activity under the Plan for the year ended December 31, 2008 is
summarized as follows:
  Shares
                      
                      
                      Weighted
                        Average
                        Exercise Price
                      
                      
                      Weighted
                        Average
                        Remaining
                        Contractual
                        Life (in years)
                      
                      
                      Grant Date
                        Fair ValueOutstanding
      at December 31, 2007
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      -Options
      granted
                      
                      
                      4,913,000
                      
                      
                      $
                      0.80
                      
                      
                      
                      3.77
                      
                      
                      $
                      1,746,024Options
      exercised
                      
                      
                      -
                      
                      
                      $
                      -
                      
                      
                      
                      -Options
      cancelled/forfeited/ expired
                      
                      
                      (350,000
                      )
                      
                      $
                      0.75
                      
                      
                      
                      -
                      
                      
                      
                      (119,663
                      )Outstanding
      at December 31, 2008
                      
                      
                      4,563,000
                      
                      
                      $
                      0.80
                      
                      
                      
                      3.77
                      
                      
                      $
                      1,626,361Vested
      and expected to vest at December 31, 2008 (1)
                      
                      
                      3,433,000
                      
                      
                      $
                      0.74
                      
                      
                      
                      3.77
                      
                      
                      $
                      1,154,407Exercisable
      at December 31, 2008
                      
                      
                      246,922
                      
                      
                      $
                      1.64
                      
                      
                      
                      2.77
                      
                      
                      $
                      65,719
  (1)
                  The
      expected to vest options are the result of applying the pre-vesting
      forfeiture rate assumptions to total outstanding
  options.
 
 As of
December 31, 2008, after adjusting for estimated pre-vested forfeitures, there
was approximately $812,000 of unrecognized compensation cost related to unvested
stock options which is expected to be recognized monthly over approximately 3
years.  The Company intends to issue new shares to satisfy share option
exercises.
 
 F-18
  Share-Based Compensation
Payments
 Total
non-cash compensation expense related to the issuance of stock, warrants, and
options was as follows:
 
 December
      31,2008
                      
                      
                      2007Stock
      compensation
                      
                      $
                      677,762
                      
                      
                      $
                      50,000Warrant
      compensation
                      
                      
                      5,510
                      
                      
                      
                      130,728Options
      compensation
                      
                      
                      341,992
                      
                      
                      
                      -Total
                      
                      $
                      1,025,264
                      
                      
                      $
                      180,728
 
 Additionally,
warrants valued at $22,350 and common stock valued at $130,000 were recorded as
Additional Paid in Capital as a cost of raising capital during the year ended
December 31, 2008.
 
 8.
                  COMMITMENTS
 
 On
December 27, 2007, the Company renegotiated the month to month lease agreement
for office space in Los Angeles, California and entered into a two year lease
agreement.  During September 2008, this agreement was amended to
include an additional office.  Additionally, in June 2008, the Company
entered into a two year lease agreement for office space in Palo Alto,
California and paid the first six months of the lease in advance. Future minimum
lease payments as of December 31, 2008 under these lease agreements are as
follows:
 
 2009
                        
                        $
                        55,8302010
                        
                        
                        21,030$
                        76,860
 
 During
February 2009, GTX sublet a portion of the office space in Palo Alto for $2,325
per month.  The term of the sublease is for the period from March 2009
to December 2009 and can be terminated by the lessee upon 90-days
notification.
 
 On May
16, 2008, the Company entered into an agreement with a public relations firm to
provide quarterly research reports to both the Company and the public (upon
approval by the Company) and to provide market intelligence, as well as feedback
from investor meetings, emails and conversations initiated by the public
relations firm.  In exchange for the services rendered, the public
relations firm was granted 17,500 shares of the Company’s common stock valued at
the closing price on May 7, 2008 of $2.15 per share (see Footnote
#7).  In addition to the shares of common stock, the public relations
firm is paid $2,500 per month.   The agreement will automatically
renew on its one year anniversary unless cancelled at any time, by either
party.
 
 Several
executive members of management have employment agreements which, among other
provisions, provide for the payment of a bonus, as determined by the Board of
Directors, in an amounts ranging from 15% to 50% of the executive’s yearly
compensation, to be paid in cash or stock at the Company’s sole discretion, if
the Company has an increase in year over year revenues and the Executive
performs his duties (i) within the time frame budgeted for such duties and (ii)
at or below the cost budgeted for such duties.
  The
Company has various consulting agreements totaling approximately $50,000 per
month, which can be terminated at will.
  F-19
  9.
                  SUBSEQUENT
      EVENTS
 
 On
February 11, 2009, GTX incorporated Code Amber News Service, Inc. (“CANS”) in
the State of Nevada with 75,000,000 authorized shares of common stock with a par
value of $0.001 per share.  CANS is 100% owned and operated by
GTX.  CANS is a U.S. and Canadian syndicator of all state Amber Alerts
providing website tickers and news feeds to merchants, internet service
providers, affiliate partners, corporate sponsors and local, state and federal
agencies.
 
 Subsequent
to December 31, 2008, 675,000 shares of common stock were granted to employees,
members of our management and consultants at a price equal to the fair market
value of the common stock on the date of issuance and 120,000 options were
granted to consultants at a price equal to the fair market value of the common
stock on the date of grant.
  F-20