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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
one)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For
the quarterly period ended
March 31, 2022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the transition period from __________ to __________
Commission
file number
000-53046
GTX Corp
(Exact
name of registrant as specified in its charter)
Nevada |
|
98-0493446 |
(State
or other jurisdiction of |
|
(I.R.S.
Employer |
incorporation
or organization) |
|
Identification
No.) |
117 W. 9th Street,
Suite 1214,
Los Angeles,
CA,
90015 |
(Address
of principal executive offices) (Zip Code) |
(213)
489-3019 |
(Registrant’s
telephone number, including area code) |
(Former
name, former address and former fiscal year, if changed since last
report.)
Title
of each class registered: |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered: |
None |
|
GTXO |
|
None |
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated 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 |
☐ |
|
Accelerated
filer |
☐ |
Non-accelerated filer |
☐ (Do
not check if a smaller reporting company) |
|
Smaller
reporting company |
☒ |
Emerging
growth company |
☐ |
|
|
|
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and
attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes ☐
No ☒
Indicate
the number of shares outstanding of each of the issuer’s classes of
common stock, as of the latest practicable date:
239,702,479 common shares issued and outstanding as of May
16, 2022.
GTX
CORP AND SUBSIDIARIES
For
the quarter ended March 31, 2022
FORM
10-Q
PART I
ITEM 1. FINANCIAL STATEMENTS
GTX CORP AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
See
accompanying notes to condensed consolidated financial
statements.
GTX CORP AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
See
accompanying notes to condensed consolidated financial
statements.
GTX CORP AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
DEFICIT
Three
Months Ended March 31, 2022 and March 31, 2021
(Unaudited)
For
the Three Months Ended March 31, 2022 (Unaudited)
The
accompanying notes are an integral part of these consolidated
financial statements.
|
|
Series
A
Preferred |
|
|
Series
B
Preferred |
|
|
Series
C
Preferred |
|
|
Common
Shares |
|
|
Additional |
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
Shares |
|
|
|
|
|
Shares |
|
|
|
|
|
Shares |
|
|
|
|
|
Paid-In |
|
|
Accumulated |
|
|
Equity |
|
|
|
Issued |
|
|
Amount |
|
|
Issued |
|
|
Amount |
|
|
Issued |
|
|
Amount |
|
|
Issued |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
(Deficit) |
|
Balance
December 31, 2020 |
|
|
1,000,000 |
|
|
$ |
100 |
|
|
|
250 |
|
|
$ |
1 |
|
|
|
150 |
|
|
$ |
- |
|
|
|
138,032,482 |
|
|
$ |
13,803 |
|
|
$ |
21,059,925 |
|
|
$ |
(24,177,926 |
) |
|
$ |
(3,104,097 |
) |
Issuance
of common stock for services |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,300,000 |
|
|
|
130 |
|
|
|
61,620 |
|
|
|
- |
|
|
|
61,750 |
|
Issuance
of common stock for conversion of debt |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,661,664 |
|
|
|
1,366 |
|
|
|
170,507 |
|
|
|
- |
|
|
|
171,873 |
|
Issuance
of preferred stock for financings |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
425 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
425,000 |
|
|
|
- |
|
|
|
425,000 |
|
Issuance
of common stock for financings |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
250,000 |
|
|
|
25 |
|
|
|
3,250 |
|
|
|
- |
|
|
|
3,275 |
|
Issuance
of common stock for the conversion of warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
22,708,333 |
|
|
|
2,271 |
|
|
|
(2,271 |
) |
|
|
- |
|
|
|
- |
|
Issuance
of common stock for the conversion of warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(150 |
) |
|
|
- |
|
|
|
10,000,002 |
|
|
|
1,000 |
|
|
|
(1,000 |
) |
|
|
- |
|
|
|
- |
|
Shares
issued for conversion of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,736 |
|
|
|
|
|
|
|
131,736 |
|
Deemed
dividend on fair value of warrants & conversion
feature |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
425,000 |
|
|
|
(425,000 |
) |
|
|
- |
|
Inpixon
loan reduction correction |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2,340 |
|
|
|
- |
|
|
|
2,340 |
|
Net
income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(290,427 |
) |
|
|
(290,427 |
) |
Balance
March 31, 2021 |
|
|
1,000,000 |
|
|
$ |
100 |
|
|
|
250 |
|
|
$ |
1 |
|
|
|
425 |
|
|
$ |
- |
|
|
|
185,952,481 |
|
|
$ |
18,595 |
|
|
$ |
22,276,107 |
|
|
$ |
(24,893,353 |
) |
|
$ |
(2,598,550 |
) |
See
accompanying notes to condensed consolidated financial
statements.
GTX CORP AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
See
accompanying notes to condensed consolidated financial
statements.
GTX CORP AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(Unaudited)
1.
ORGANIZATION AND BASIS OF
PRESENTATION
During
the periods covered by these financial statements, GTX Corp and its
subsidiaries (the “Company”, “GTX”, “we”, “us”, and “our”) were
engaged in business operations that design, manufacture and sell
various interrelated and complementary products and services in the
wearable technology and Personal Location Services marketplace. GTX
owns 100% of the issued
and outstanding capital stock of its two subsidiaries - Global Trek
Xploration, Inc. and LOCiMOBILE, Inc.
Global
Trek Xploration, Inc. focuses on the design, manufacturing and
sales distribution of its hardware, software, and connectivity,
Global Positioning System (“GPS”) and Bluetooth Low Energy (“BLE”)
monitoring and tracking platform, which provides real-time tracking
and monitoring of people and high valued assets. Utilizing a
miniature quad-band GPRS transceiver, antenna, circuitry, battery
and inductive charging pad our solutions can be customized and
integrated into numerous products whose location and movement can
be monitored in real time over the Internet through our 24x7
tracking portal or on a web enabled cellular telephone. Our core
products and services are supported by an intellectual property
(“IP”) portfolio of patents, patents pending, registered
trademarks, copyrights, URLs and a library of software source code,
all of which is also managed by Global Trek.
LOCiMOBILE,
Inc., is the Companies digital platform which has been at the
forefront of Smartphone application (“App”) development since 2008.
With a suite of mobile applications that turn the iPhone, iPad,
Android and other GPS enabled handsets into a tracking device which
can be tracked from handset to handset or through our tracking
portal or on any connected device with internet access. LOCiMOBILE
has launched over 20 Apps across multi mobile device operating
systems and continues to launch consumer and enterprise
apps.
Basis of Presentation
The
accompanying unaudited consolidated financial statements of GTX
have been prepared in accordance with accounting principles
generally accepted in the United States for interim financial
information and applicable regulations of the U.S. Securities and
Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States
have been omitted pursuant to such rules and regulations. In the
opinion of management, all adjustments (consisting only of normal
recurring adjustments) considered necessary for a fair statement of
financial position and results of operations have been included.
Our operating results for the three months ended March 31, 2022 are
not necessarily indicative of the results that may be expected for
the year ending December 31, 2022. The accompanying unaudited
consolidated financial statements should be read in conjunction
with our audited consolidated financial statements for the year
ended December 31, 2021, which are included in our Annual Report on
Form 10-K.
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.
Going Concern
The
consolidated financial statements have been prepared on a going
concern basis which assumes the Company will be able to realize its
assets and discharge its liabilities in the normal course of
business for the foreseeable future. The Company has a
stockholders’ deficit of $3,009,406 and negative working
capital of $2,952,685 as of March 31, 2022 and
used cash in operations during the period then ended. The Company
anticipates further losses in the development of its business.
These factors raise substantial doubt about the Company’s ability
to continue as a going concern within one year after the date the
financial statements are issued. The ability of the Company to
continue as a going concern is dependent upon the Company’s ability
to raise additional funds and implement its business plan until
such time as revenues and related cash flows are sufficient to fund
our operations.
The
Company’s independent registered public accounting firm has also
included explanatory language in their opinion accompanying the
Company’s audited financial statements for the year ended December
31, 2021. The Company’s financial statements do not include any
adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classifications of liabilities that may result from the possible
inability of the Company to continue as a going concern.
The
ability to continue as a going concern is dependent upon the
Company generating profitable operations in the future and/or
obtaining the necessary financing to meet its obligations and repay
its liabilities arising from normal business operations when they
come due. The Company’s ability to raise additional capital through
the future issuances of debt or equity is unknown. The ability to
obtain additional financing, the successful development of the
Company’s contemplated plan of operations, or its ability to
achieve profitable operations are necessary for the Company to
continue operations, and there is no assurance that these can be
achieved. The ability to successfully resolve these factors raise
substantial doubt about the Company’s ability to continue as a
going concern. The consolidated financial statements of the Company
do not include any adjustments that may result from the outcome of
these aforementioned uncertainties.
2.
SIGNIFICANT ACCOUNTING
POLICIES
Revenue
Recognition
The
Company recognizes revenue in accordance with ASU 2014-09, Revenue
from Contracts with Customers (Topic 606), (“ASC 606”). The
underlying principle of ASC 606 is to recognize revenue to depict
the transfer of goods or services to customers at the amount
expected to be collected. ASC 606 creates a five-step model that
requires entities to exercise judgment when considering the terms
of contract(s), which include (1) identifying the contract or
agreement with a customer, (2) identifying our performance
obligations in the contract or agreement, (3) determining the
transaction price, (4) allocating the transaction price to the
separate performance obligations, and (5) recognizing revenue as
each performance obligation is satisfied.
The
Company does not have any significant contracts with customers
requiring performance beyond delivery, and contracts with customers
contain no incentives or discounts that could cause revenue to be
allocated or adjusted over time. Shipping and handling activities
are performed before the customer obtains control of the goods and
therefore represent a fulfillment activity rather than a promised
service to the customer. Revenue and costs of sales are recognized
when control of the products transfers to our customer, which
generally occurs upon shipment from our facilities. The Company’s
performance obligations are satisfied at that time.
All
of the Company’s products are offered for sale as finished goods
only, and there are no performance obligations required
post-shipment for customers to derive the expected value from
them.
The
Company does not allow for returns, except for damaged products
when the damage occurred pre-fulfillment. Damaged product returns
have historically been insignificant. Because of this, the
stand-alone nature of our products, and our assessment of
performance obligations and transaction pricing for our sales
contracts, we do not currently maintain a contract asset or
liability balance for obligations. We assess our contracts and the
reasonableness of our conclusions on a quarterly basis.
We
derive our revenues primarily from hardware sales, subscription
services fees, IP licensing and professional services fees.
Hardware includes our SmartSole, Military and other Stand-Alone
Devices. Subscription services revenues consist of fees from
customers accessing our cloud-based software solutions and
subscription or license fees for our platform. Professional
services and other revenues consist primarily of fees from
implementation services, configuration, data services, training and
managed services related to our solutions. IP licensing is related
to our agreement with Inventergy whereby we have partnered in order
to monetize our IP portfolio.
Product sales
At
the inception of each contract, we assess the goods and services
promised in our contracts and identify each distinct performance
obligation. The Company recognizes revenue upon the transfer of
control of promised products or services to the customer in an
amount that depicts the consideration the Company expects to be
entitled to for the related products or services. For the large
majority of the Company’s sales, transfer of control occurs once
product has shipped and title and risk of loss have transferred to
the customer.
Services Income
The
Company’s software solutions are available for use as hosted
application arrangements under subscription fee agreements without
licensing perpetual rights to the software. Subscription fees from
these applications are recognized over time on a ratable basis over
the customer agreement term beginning on the date the Company’s
solution is made available to the customer. Our subscription
contracts are generally one to three months in length. Amounts that
have been invoiced are recorded in accounts receivable and deferred
revenues or revenues, depending on whether the revenue recognition
criteria have been met.
The
majority of our professional services arrangements are recognized
on a time and materials basis. Professional services revenues
recognized on a time and materials basis are measured monthly based
on time incurred and contractually agreed upon rates. Certain
professional services revenues are based on fixed fee arrangements
and revenues are recognized based on the proportional performance
method. In some cases, the terms of our time and materials and
fixed fee arrangements may require that we defer the recognition of
revenue until contractual conditions are met. Data services and
training revenues are generally recognized as the services are
performed.
IP Licensing Revenue
Licensing
revenue recorded by the Company relates exclusively to the
Company’s License and Partnership agreement with Inventergy which
provides for ongoing royalties based on monetization of IP
licenses. The Company recognizes revenue for royalties under ASC
606, which provides revenue recognition constraints by requiring
the recognition of revenue at the later of the following: 1) sale
or usage of the products or 2) satisfaction of the performance
obligations. The Company has satisfied its performance obligations
and therefore recognizes licensing revenue when the sales to which
the license(s) relate are completed. During the periods ended March
31, 2022 and March 31, 2021, the Company did not recognize any
licensing revenue.
Disaggregation of Net Sales
The
following table shows the Company’s disaggregated net sales by
product type:
SCHEDULE OF DISAGGREGATION OF NET
SALES
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
Product sales |
|
$ |
132,681 |
|
|
$ |
172,333 |
|
Service income |
|
|
35,836 |
|
|
|
58,188 |
|
IP and
consulting income |
|
|
- |
|
|
|
- |
|
Total |
|
$ |
168,516 |
|
|
$ |
230,521 |
|
The
following table shows the Company’s disaggregated net sales by
customer type:
|
|
March 31, 2022 |
|
|
March 31, 2021 |
|
B2B |
|
$ |
120,680 |
|
|
$ |
52,009 |
|
B2C |
|
|
47,836 |
|
|
|
177,395 |
|
Military |
|
|
- |
|
|
|
1,117 |
|
IP |
|
|
- |
|
|
|
- |
|
Total |
|
$ |
168,516 |
|
|
$ |
230,521 |
|
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. Our allowance for doubtful accounts was $40,351 as of
March 31, 2022 and as of December 31, 2021. The allowance fully
reserves our accounts receivable balances over 90 days.
Shipping and Handling
Costs
Shipping
and handling costs are included in cost of goods sold in the
accompanying consolidated statements of operations.
Product
Warranty
The Company’s warranty policy
provides repair or replacement of products (excluding GPS Shoe
devices) returned for defects within ninety days of
purchase. The Company’s warranties are of an assurance-type
and come standard with all Company products to cover repair or
replacement should product not perform as expected. Provisions for
estimated expenses related to product warranties are made at the
time products are sold. These estimates are established using
historical information about the nature, frequency and average cost
of warranty claim settlements as well as product manufacturing and
recovery from suppliers. Management actively studies trends of
warranty claims and takes action to improve product quality and
minimize warranty costs. The Company estimates the actual
historical warranty claims coupled with an analysis of unfulfilled
claims to record a liability for specific warranty purposes. As of
March 31, 2022 and 2021, products returned for repair or
replacement have been immaterial. Accordingly, a warranty liability
has not been deemed necessary.
Use of
Estimates
The
preparation of the accompanying unaudited 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. These estimates include, but are not limited
to, estimates related to revenue recognition, allowance for
doubtful accounts, inventory valuation, tangible and intangible
long-term asset valuation, warranty and other obligations and
commitments. Estimates are updated on an ongoing basis and are
evaluated based on historical experience and current circumstances.
Changes in facts and circumstances in the future may give rise to
changes in these estimates which may cause actual results to differ
from current estimates.
Fair Value
Estimates
Pursuant
to the Accounting Standards Codification (“ASC”) No. 820,
“Disclosures About Fair Value of Financial Instruments”, the
Company records its financial assets and liabilities at fair value.
ASC No. 820 provides a framework for measuring fair value,
clarifies the definition of fair value and expands disclosures
regarding fair value measurements. Fair value is defined as the
price that would be received to sell an asset or paid to transfer a
liability (an exit price) in an orderly transaction between market
participants at the reporting date. ASC No. 820 establishes a
three-tier hierarchy, which prioritizes the inputs used in the
valuation methodologies in measuring fair value:
|
Level
1 - |
Inputs
are unadjusted, quoted prices in active markets for identical
assets or liabilities at the measurement date. |
|
|
|
|
Level
2 - |
Inputs
(other than quoted prices included in Level 1) are either directly
or indirectly observable for the asset or liability through
correlation with market data at the measurement date and for the
duration of the asset/liability’s anticipated life. |
|
|
|
|
Level
3 - |
Inputs
reflect management’s best estimate of what market participants
would use in pricing the asset or liability at the measurement
date. Consideration is given to the risk inherent in the valuation
technique and the risk inherent in the inputs to the
model. |
The
carrying values for cash and cash equivalents, accounts receivable,
investment in marketable securities, other current assets, accounts
payable and accrued liabilities approximate their fair value due to
their short maturities. The carrying values of notes payable and
other financing obligations approximate their fair values because
interest rates on these obligations are based on prevailing market
interest rates.
Concentrations
We
currently rely on one manufacturer to supply us with our GPS
SmartSole and one manufacturer to supply us with the GPS device
included in the GPS SmartSole. The loss of either of these
manufacturers could severely impede our ability to manufacture the
GPS SmartSole.
As of March 31, 2022, the Company had three customers representing
approximately 40%, 26% and 13% of sales,
respectively, and four customers representing approximately
15%, 14%, 12% and 10% of total accounts
receivable, respectively (the 26% in sales and
14% in receivables
represents all sales made through our online store and consists of
approximately 2,000 different customers). As of March 31, 2021, the
Company had three customers representing approximately 22%, 13% and 12% of sales,
respectively, and two customers representing approximately
75% and 8% of total accounts
receivable, respectively (of the 75% this represents
all sales made through our online store and consists of
approximately 2,000 different customers).
Stock-based
Compensation
The
Company accounts for share-based awards to employees and
nonemployees directors and consultants in accordance with the
provisions of ASC 718, Compensation—Stock Compensation., and
under the recently issued guidance following FASB’s pronouncement,
ASU 2018-07, Compensation—Stock Compensation (Topic 718):
Improvements to Nonemployee Share-Based Payment Accounting.
Under ASC 718, and applicable updates adopted, share-based awards
are valued at fair value on the date of grant and that fair value
is recognized over the requisite service, or vesting, period. The
Company values its equity awards using the Black-Scholes option
pricing model, and accounts for forfeitures when they
occur.
Marketable
Securities
The
Company’s securities investments that are acquired and held
principally for the purpose of selling them in the near term are
classified as trading securities. Trading securities are recorded
at fair value based on quoted market price (level 1) on the balance
sheet in current assets, with the change in fair value during the
period included in earnings. As of March 31, 2022 and December 31,
2021 the fair value of our investment in marketable securities was
$1,370 and $2,465.
Derivative
Liabilities
Our
derivative instrument liabilities are re-valued at the end of each
reporting period, with changes in the fair value of the derivative
liability recorded as charges or credits to income, in the period
in which the changes occur. For bifurcated conversion options that
are accounted for as derivative instrument liabilities, we
determine the fair value of these instruments using the
Black-Scholes option pricing model. This model requires assumptions
related to the remaining term of the instrument and risk-free rates
of return, our current Common Stock price and expected dividend
yield, and the expected volatility of our Common Stock price over
the life of the option.
At
March 31, 2022 and December 31, 2021, the balance of the derivative
liabilities was $0. It was determined
at December 31, 2020 that the Preferred A shareholders having the
majority vote, can agree to increase the number of authorized
shares, if needed, to settle any convertible debt, and thus the
liability is $0.
Net Loss Per Common
Share
Basic
loss per share is computed by dividing the net loss applicable to
common stockholders by the weighted average number of outstanding
common shares during the period. Shares of restricted stock are
included in the basic weighted average number of common shares
outstanding from the time they vest. Diluted loss per share is
computed by dividing net loss applicable to common stockholders by
the weighted average number of common shares outstanding plus the
number of additional common shares that would have been outstanding
if all dilutive potential common shares had been issued. Shares of
restricted stock are included in the diluted weighted average
number of common shares outstanding from the date they are granted
unless they are antidilutive. Diluted loss per share excludes all
potential common shares if their effect is anti-dilutive. The
following potentially dilutive shares were excluded from the shares
used to calculate diluted earnings per share as their inclusion
would be anti-dilutive:
SCHEDULE OF ANTIDILUTIVE SECURITIES EXCLUDED
FROM CALCULATION OF DILUTED EARNINGS PER SHARE
|
|
2022 |
|
|
2021 |
|
|
|
March
31, |
|
|
|
2022 |
|
|
2021 |
|
Warrants |
|
|
39,250,000 |
|
|
|
40,916,667 |
|
Preferred B shares |
|
|
72,000,000 |
|
|
|
100,000,000 |
|
Preferred C shares |
|
|
25,208,333 |
|
|
|
13,333,333 |
|
Conversion
shares upon conversion of notes |
|
|
32,783,333 |
|
|
|
32,909,131 |
|
Total |
|
|
169,241,667 |
|
|
|
187,159,131 |
|
Segments
The
Company operates in one segment for the manufacture
and distribution of its products. In accordance with the “Segment
Reporting” Topic of the ASC, the Company’s chief operating decision
maker has been identified as the Chief Executive Officer and
President, who reviews operating results to make decisions about
allocating resources and assessing performance for the entire
Company. Existing guidance, which is based on a management approach
to segment reporting, establishes requirements to report selected
segment information quarterly and to report annually entity-wide
disclosures about products and services, major customers, and the
countries in which the entity holds material assets and reports
revenue. All material operating units qualify for aggregation under
“Segment Reporting” due to their similar customer base and
similarities in: economic characteristics; nature of products and
services; and procurement, manufacturing and distribution
processes. Since the Company operates in one segment, all financial
information required by “Segment Reporting” can be found in the
accompanying financial statements.
Recently Issued
Accounting Pronouncements
In
June 2016, the FASB issued ASU No. 2016-13, Credit Losses -
Measurement of Credit Losses on Financial Instruments (“ASC 326”).
The standard significantly changes how entities will measure credit
losses for most financial assets, including accounts and notes
receivables. The standard will replace today’s “incurred loss”
approach with an “expected loss” model, under which companies will
recognize allowances based on expected rather than incurred losses.
Entities will apply the standard’s provisions as a
cumulative-effect adjustment to retained earnings as of the
beginning of the first reporting period in which the guidance is
effective. As small business filer, the standard will be effective
for us for interim and annual reporting periods beginning after
December 15, 2022. The Company is currently assessing the impact of
adopting this standard on the Company’s financial statements and
related disclosures.
Other
recent accounting pronouncements issued by the FASB, its Emerging
Issues Task Force, the American Institute of Certified Public
Accountants, and the Securities and Exchange Commission did not or
are not believed by management to have a material impact on the
Company’s present or future consolidated financial
statements.
3.
INVESTMENT IN MARKETABLE
SECURITIES
The Company’s investments in
marketable securities is comprised of shares of stock of two (2)
entities with ownership percentages of less than 5%. The Company
accounted for these investments pursuant to ASU 320, Investments –
Debt and Equity Securities. As such, these investments were
recorded at their market value as of December 31, 2019, with the
change in fair value being reflected in the statement of
operations. These investments consisted of the
following:
As of
December 31, 2020, the Company owned 42,500 shares of
Inventergy Global, Inc. common stock with a fair value of
$1,275. The
Company was able to obtain observable evidence that the investment
had a market value of $0.02 per share, or an aggregate
value of $850 as of the period ended March
31, 2022. As such, the Company recorded no change in market value
during the three months ended March 31, 2022, in its statement of
operations.
In
June 2019, the Company acquired 22,222
shares of Inpixon’s restricted common stock (after giving effect to
a 1:45 stock
split) valued at $634,000.
As of December 31, 2019, after the sale of 10,889
Inpixon shares, the Company owned 11,333
Inpixon shares with a fair value of $58,374.
During the period ended March 31, 2020, the Company sold 8,500
of its Inpixon shares for total proceeds of $146,201 and
recognized a gain from the sale of these shares of $102,420.
During
the period ended December 31, 2021, the Company sold 834 of its Inpixon shares for total
net proceeds of $1,258. The Company was able
to obtain observable evidence that the remaining 2,000 shares had a market value of
$2,040 as of December 31, 2021, as
such, the Company recorded a loss from the decrease in the fair
value of the shares of $851, resulting in a net loss
from their investment in Inpixon shares during the current period
ended December 31, 2021.
During
the three months ended March 31, 2022, the Company sold 834 shares of its Inpixon shares for
total proceeds of $1,334 and recognized a gain
from the sale of these shares of $1,258.
The
Company was able to obtain observable evidence that the remaining
2,000 shares had a market value of
$520 as of March 31, 2022, as
such, the Company recorded a change in the fair value of the
shares, resulting in a net loss from the investment in Inpixon
shares of $1,520 during the
current period ended March 31, 2022.
4.
INVENTORY
Inventories
consist of the following:
SCHEDULE OF INVENTORY
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
Raw materials |
|
$ |
58,511 |
|
|
$ |
71,936 |
|
Finished
goods |
|
|
25,850 |
|
|
|
25,322 |
|
Total
Inventories |
|
$ |
84,361 |
|
|
$ |
98,258 |
|
5.
PROPERTY AND
EQUIPMENT
Property
and equipment, net, consists of the following:
SCHEDULE OF PROPERTY AND
EQUIPMENT
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
Software |
|
$ |
25,890 |
|
|
$ |
25,890 |
|
Website development |
|
|
91,622 |
|
|
|
91,622 |
|
Software development |
|
|
394,772 |
|
|
|
394,772 |
|
Equipment |
|
|
1,750 |
|
|
|
1,750 |
|
Less:
accumulated depreciation |
|
|
(429,908 |
) |
|
|
(421,573 |
) |
Total
property and equipment, net |
|
$ |
84,126 |
|
|
$ |
92,461 |
|
Depreciation
expense for the period ended March 31, 2022 and 2021 was $8,335 and $1,188, respectively, and is included in
general and administrative expenses.
6.
NOTES & LOANS
PAYABLE
The
following table summarizes the components of our short-term
borrowings:
SUMMARY OF COMPONENTS OF OUR SHORT-TERM
BORROWINGS
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
(a)
Term loan |
|
$ |
63,885 |
|
|
$ |
40,640 |
|
(b) Revolving
line of credit |
|
|
7,000 |
|
|
|
7,000 |
|
(c) CARE
loans |
|
|
9,153 |
|
|
|
74,953 |
|
Total |
|
$ |
80,038 |
|
|
$ |
122,593 |
|
(a)
Term loans
In
2022, the Company entered into an unsecured short-term loan
agreement with a third party for an aggregate principal balance of
$25,000
at an
interest rate of
3%
per
annum, with the interest adjusted to
10% in
the case of a default. The
term loan becomes due on
May 30, 2022.
In
September of 2019, the Company entered into an unsecured term loan
agreement with a third party for an aggregate principal balance of
$50,000
at an
interest rate of
5% per
annum in relation to an Asset Purchase Agreement. The term loan
became due on
December 31, 2020, and
is currently past due. The principal balance outstanding on the
note as of December 31, 2021 was $40,640,
which included $4,806
in
interest and reductions of $9,360 due
to sublet fees for office space. As of March 31, 2022 the principal
balance outstanding on the note was $38,885,
which included $5,322
in
interest and reductions of $11,115
due
to sublet fees for office space.
(b)
Lines
of Credit
The
Company obtained a revolving line of credit agreement with an
accredited investor of $500,000
during 2018. There were three borrowings against the line as of
December 31, 2018 for aggregate borrowings of $65,000
and two borrowing in 2019 for $65,000
for a total of $130,000.
During the period ended December 31, 2020, the Company repaid
$76,000
in principal and all of its accrued interest of $4,204,
resulting in a balance due of $22,000
as of December 31, 2020. During the period ended December 31, 2021,
the Company repaid $10,000
in principal and all of its interest of $560,
as incurred, resulting in a balance due of $7,000
as of March 31, 2022.
The
line bears interest of
8.5%. The line is based upon GTX providing the investor with
purchase orders and use of proceeds, including production of goods
schedules and loan repayment timelines. These loans/drawdowns are
specifically for product, inventory and/or purchase order
financing.
Upon completion of the terms of the Line of Credit, GTX Corp. will
issue to the investor
7,500,000 shares of GTX common stock or $75,000
of GTX common stock, whichever is greater.
The Company also has an unsecured line of credit, guaranteed by its
CEO, with its business bank, Union Bank, whereby funds can be
borrowed at a revolving adjustable rate of 2 points over prime,
currently
5.25%, with a max borrowing amount of $100,000.
The balance at December 31, 2021 and March 31, 2022 was $0,
with $9,180
having been borrowed and paid back in the March 31, 2022
period.
(c)
CARE
Loans
As of
December 31, 2021, the Company has assumed, due to lack of
correspondence, until otherwise received, that twelve months of its
EIDL loan (see Note 8(b)), or $7,083
of
the $150,000
30-year
loan and the entire PPP loan (see Note 8(a)) for $67,870,
should be considered short-term, or due in less than a year. As of
March 31, 2022, the PPP loan was forgiven, and the balance in the
short-term on the EIDL loan was considered to be 22 months or
$9,153.
7.
CONVERTIBLE PROMISSORY
NOTES – PAST DUE
As of
March 31, 2022 and December 31, 2021, the Company had a total of
$758,000 and $758,000, respectively, of
outstanding convertible notes payable, which consisted of the
following:
SCHEDULE OF CONVERTIBLE NOTES
PAYABLE
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
Convertible Notes – with fixed conversion |
|
$ |
758,000 |
|
|
$ |
758,000 |
|
Less: Debt
discount |
|
|
- |
|
|
|
- |
|
Total
convertible notes, net of debt discount |
|
$ |
758,000 |
|
|
$ |
758,000 |
|
|
a) |
Included
in Convertible Notes - with fixed conversion terms, are loans
provided to the Company from various investors These notes carry
simple interest rates ranging from
0% to
14% per annum and with terms ranging from
1 to
2 years. In lieu of the repayment of the principal and
accrued interest, the outstanding amounts are convertible, at the
option of the note holder, generally at any time on or prior to
maturity and automatically under certain conditions, into the
Company’s common shares at $0.015
to $0.30
per share. These notes became due in 2017 and prior, and are
currently past due. |
|
|
|
|
|
At
December 31, 2020, balance of the convertible notes was $713,750.
During the twelve months ended December 21, 2021, we issued
1,616,667 shares of common stock to convert $24,250
of principal of these outstanding convertible notes. The Company
also paid down $8,750
of the principal balance of the convertible notes and the Company’s
executives transferred $70,000
of their outstanding employee notes for cash to a third party,
which lowered the related party notes and increased the convertible
promissory notes by $70,000.
The transferred notes had no change in terms thus
no resulting gain or loss on the extinguishment and
transfer. As per the original terms the notes bear a
10% annual interest rate, gives the holder the right, but
not the obligation to convert up to
50% of the amount advanced and accrued interest into shares,
warrants or options of common or preferred stock of the Company at
$0.01
per share. As of December 31, 2021, and March 31, 2022 $758,000
of these convertible notes are currently past due, with no
associated penalties. |
8.
CARE
Loans
SCHEDULE OF LOANS
PAYABLE
|
|
March 31, 2022 |
|
|
December
31, 2021
|
|
a) PPP loan – short
term |
|
$ |
- |
|
|
$ |
67,870 |
|
b) EIDL loan – short term |
|
|
9,153 |
|
|
|
7,083 |
|
b) EIDL loan –
long term |
|
|
140,847 |
|
|
|
142,917 |
|
Total CARE
loans |
|
$ |
150,000 |
|
|
$ |
217,870 |
|
(a)
Paycheck Protection Program Loan
On
April 30, 2020, the Company executed a note (the “PPP Note”) for
the benefit of MUFG Union Bank, NA (the “Lender”) in the aggregate
amount of $67,870 under the Paycheck
Protection Program (“PPP”) of the Coronavirus Aid, Relief, and
Economic Security Act (“CARES Act”). The PPP is administered by the
U.S. Small Business Administration (the “SBA”). The interest rate
of the loan is 1.00% per annum and accrues on
the unpaid principal balance computed on the basis of the actual
number of days elapsed in a year of 360 days. Commencing seven
months after the effective date of the PPP Note, GTX is required to
pay the Lender equal monthly payments of principal and interest as
required to fully amortize any unforgiven principal balance of the
loan by the two-year anniversary of the effective date of the PPP
Note (the “Maturity Date”). The Maturity Date can be extended to
five years if mutually agreed upon by both the Lender and GTX. The
PPP Note contains customary events of default relating to, among
other things, payment defaults, making materially false or
misleading representations to the SBA or the Lender, or breaching
the terms of the PPP Note. The occurrence of an event of default
may result in the repayment of all amounts outstanding under the
PPP Note, collection of all amounts owing from GTX, or filing suit
and obtaining judgment against GTX. Under the terms of the CARES
Act, PPP loan recipients can apply for and be granted forgiveness
for all or a portion of the loan granted under the PPP. Such
forgiveness will be determined, subject to limitations, based on
the use of loan proceeds for payment of payroll costs and any
payments of mortgage interest, rent, and utilities. Recent
modifications to the PPP by the U.S. Treasury and Congress have
extended the time period for loan forgiveness beyond the original
eight-week period, making it possible for GTX to apply for
forgiveness of its PPP loan. No assurance can be given that GTX
will be successful in obtaining forgiveness of the loan in whole or
in part, as such the Company has moved the PPP Loan into short-term
liabilities, until further instructions are received. The Company
was in compliance with the terms of the PPP loan as of December 31,
2021, and has accrued interest on the loan of $1,160 as of December 31,
2021.
During
the period ended March 31, 2022, the Company received notification
that the loan was forgiven, and as such, $68,870 of principal has been
recognized on the income statement under other income, as of March
31, 2022.
(b)
Economic Injury Disaster Loan
On
June 10, 2020, the Company executed a secured loan with the U.S.
Small Business Administration (SBA) under the Economic Injury
Disaster Loan program in the amount of $150,000. The loan is secured by
all tangible and intangible assets of the Company and payable over
30 years at an interest rate of
3.75% per annum. Installment payments,
including principal and interest, were supposed to start on June
10, 2021, but as of December 31, 2021 there has been no formal
indication on whether this loan will be forgiven and no specific
instructions have been received to-date from the SBA on how to
proceed. As part of the loan, the Company also received an advance
of $10,000 from the SBA. While the
SBA refers to this program as an advance, it was written into law
as a grant. This means that the amount given through this program
does not need to be repaid and has been recognized as Other
Income.
As of
March 31, 2022, the Company calculated that 22 months of the 360
periods on the
30-year
loans should be considered short-term, and as such moved $9,153
to
short-term liabilities, and has accrued interest on the loan of
$10,658
as of
March 31, 2022, or until the Company has received more definitive
correspondence related to any potential forgiveness.
9.
RELATED PARTY
TRANSACTIONS
Convertible
Notes Due to Related Parties
During
the period ended December 31, 2021, the Company relieved the
outstanding payables due to related parties by $200,000 and converted those
amounts into additional notes with an aggregate amount of
$200,000. As the conversion price
embedded in the note agreements was below the trading price of the
common stock on the dates of issuance, a beneficial conversion
feature (BCF) was recognized at the date of issuance. The Company
recognized a debt discount at the date of issuance in the aggregate
amount of $38,000 related to
the intrinsic value of beneficial conversion feature. Additionally,
the Company’s executives transferred $70,000 of their outstanding
employee notes for cash to a third party, which lowered the related
party notes and increased the convertible note balance by
$70,000. The transferred notes had
no change in terms, thus resulting in no gain or loss on the
extinguishment related to the transfer of debt, making the
outstanding balance on the related party notes on December 31, 2021
as $976,546, net of debt discounts.
As of March 31, 2022, the outstanding balance on the convertible
promissory notes was $982,792, net of debt
discounts.
During
2020, management elected to reduce the 10% annual interest rate to
3% because
of the affects COVID-19 had on the U.S. economy. As such, on
December 31, 2020 interest of $249,102 is deferred on the above
notes and included in accrued expenses to related parties. The
other 7% was considered imputed
interest and is included as a separate line item on the equity
statement accordingly.
On
July 1, 2021, the annual interest on the notes was re-established
to 10%, and as such, on
December 31, 2021 the interest of $306,852, and on March 31, 2022 the
interest on the notes was $330,484.
Accrued
wages and costs - In order to preserve cash for other working
capital needs, various officers, members of management, employees
and directors agreed to defer portions of their wages and sometimes
various out-of pocket expenses since 2011. As of March 31, 2022,
and December 31, 2021, the Company owed $421,197 and $391,743, respectively, for such
deferred wages and other expenses owed for other services which are
included in the accrued expenses – related parties on the
accompanying balance sheet.
10.
DERIVATIVE
LIABILITIES
Under
authoritative guidance used by the FASB on determining whether an
instrument (or embedded feature) is indexed to an entity’s own
stock, instruments which do not have fixed settlement provisions
are deemed to be derivative instruments. The Company has issued
certain convertible notes which conversion prices are based on a
future market price. However, since the number of shares to be
issued is not explicitly limited, the Company is unable to conclude
that enough authorized and unissued shares are available to share
settle the conversion option. As a result, the conversion option is
classified as a liability and bifurcated from the debt host and
accounted for as a derivative liability in accordance with ASC 815
and will be re-measured at the end of every reporting period with
the change in value reported in the statement of
operations.
At
March 31, 2022 and December 31, 2021, the balance of the derivative
liabilities was $0. It was determined
at December 31, 2020 that the Preferred A shareholders having the
majority vote, can agree to increase the number of authorized
shares, if needed, to settle any convertible debt, and thus the
liability is $0.
11.
EQUITY
The
Company has 10,000,000 shares
of preferred stock authorized. From this pool the following
preferred shares have been classified as:
Preferred Stock – Series A
During
the year ended December 31, 2018, the Company authorized 1,000,000 of
Series A preferred shares, which shares have voting rights equal to
two-thirds of all the issued and outstanding shares of common
stock, shall be entitled to vote on all matters of the corporation,
and shall have the majority vote of the board of directors. The
subject preferred stock lacks any dividend rights, does not have
liquidation preference, and is not convertible into common stock.
During the year ended December 31, 2018, the Company issued
one million Series A preferred shares
to certain officers and board members. The shares remain
outstanding as of March 31, 2022.
At
December 31, 2020 is was determined that the Preferred A
shareholders having the majority vote, can agree to increase the
number of authorized shares, if needed, to settle any convertible
debt, and thus any derivative liabilities are not necessary to
reserve for this.
Preferred Stock – Series B
During
the year ended December 31, 2019, the Company authorized 10,000 shares of
preferred stock to be designated available for Series B preferred
shares that have a value of $1,000
each and are convertible into common shares at fixed price of
$0.0025. Holders
shall be entitled to receive, and the Company shall pay, dividends
on shares of Series B Preferred Stock equal (on an
as-if-converted-to-Common-Stock basis) to and in the same form as
dividends actually paid on shares of the Common Stock when, as and
if such dividends are paid on shares of the Company’s Common Stock.
No other dividends shall be paid on shares of Series B Preferred
Stock, and they shall have no voting rights and have liquidation
preference. During the year ended December 31, 2019, the Company
issued 150
Series Preferred B shares and 30,000,000 warrants to an accredited
investor for their financings for an aggregate value of $150,000.
During
the period ended December 31, 2020, the Company issued 100
Series B preferred shares and 20,000,000
warrants to an accredited investor for their financings for an
aggregate value of $50,000. The Series B
preferred shares and warrants shall have a fixed conversion price
equal to $0.0025 of common
stock, subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions
of the Common Stock. The warrants are exercisable at a price of
$0.0025 per share
through March 2025. The Company considered the accounting effects
of the existence of the conversion feature of the Series B
Preferred Stock, and the issuance of warrants at the date of
issuance. In accordance with the current accounting standards, the
Company determined that it should account for the fair value of the
conversion feature and relative fair value of the issued warrants
(up to the face amount of the Series B Preferred Stock) as a deemed
dividend of $50,000 and a charge to paid in
capital.
During
the period ended December 31, 2021, the two accredited investors
converted 70 Series B preferred shares into
28,000,000
common shares at the conversion price of $0.0025.
Preferred Stock – Series C
During
the period ended December 31, 2020, the Company authorized
1,000 shares of
preferred stock to be designated available for Series C preferred
shares that have a stated value of $1,000 each and are convertible into
common shares at fixed price of $0.015. Holders shall be entitled to
receive, and the Company shall pay, dividends on shares of Series C
Preferred Stock equal (on an as-if-converted-to-Common-Stock basis)
to and in the same form as dividends actually paid on shares of the
Common Stock when, as and if such dividends are paid on shares of
the Company’s Common Stock. No other dividends shall be paid on
shares of Series C Preferred Stock, and they shall have no voting
rights and have liquidation preference. During the year ended
December 31, 2019, the Company had no Preferred C
shares.
During
the period ended December 31, 2020, the Company issued 150 Series C
preferred shares and 10,000,000
warrants to two accredited investors for their financings for an
aggregate value of $150,000.
During
the period ended December 31, 2021, the Company issued 675
Series C preferred shares and 22,500,000 warrants to an accredited
investor for their financings for an aggregate value of $675,000.
The Series C
preferred shares and warrants shall have a fixed conversion price
equal to $0.004 per share of common stock, subject to adjustment
for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock.
The warrants are exercisable through May 2024. The Company
considered the accounting effects of the existence of the
conversion feature of the Series C Preferred Stock, and the
issuance of warrants at the date of issuance. In accordance with
the current accounting standards, the Company determined that it
should account for the fair value of the conversion feature and
relative fair value of the issued warrants (up to the face amount
of the Series C Preferred Stock) as a deemed dividend of $675,000 and a charge to paid in
capital.
During
the period ended December 31, 2021, the two accredited investors
converted 150 Series C preferred shares into
10,000,000 common
shares at the conversion price of $0.015.
Common Stock
During
the period ending March 31, 2022, the Company issued 4,000,000
shares of its common stock to a firm for services rendered, with a
fair value of $39,600 based
on the quoted market price of the shares at time of
issuance.
During
the period ended March 31, 2022, the Company issued 10,000,000 shares
of common stock with a fair value of $25,000 at the date
grant for the cash conversion of 10,000,000
warrants.
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.
A
summary of the Company’s warrant activity and related information
is provided below (the exercise price and the number of shares of
common stock issuable upon the exercise of outstanding warrants
have been adjusted to reflect a 1-for-75 reverse stock
split.):
SCHEDULE OF WARRANT
ACTIVITY
|
|
Exercise
Price $
|
|
|
Number of Warrants |
|
Outstanding and
exercisable at December 31, 2021 |
|
|
0.0025 –
0.04 |
|
|
|
49,250,000 |
|
Warrants exercised |
|
|
0.0025 |
|
|
|
(10,000,000 |
) |
Warrants granted |
|
|
- |
|
|
|
- |
|
Warrants
expired |
|
|
- |
|
|
|
- |
|
Outstanding and
exercisable at March 31, 2022 |
|
|
0.0025 -
0.04 |
|
|
|
39,250,000 |
|
SCHEDULE OF STOCK WARRANT EXERCISE PRICE
RANGE
Stock Warrants as of March 31, 2022 |
|
Exercise |
|
|
Warrants |
|
|
Remaining |
|
|
Warrants |
|
Price |
|
|
Outstanding |
|
|
Life (Years) |
|
|
Exercisable |
|
$ |
0.0025 |
|
|
|
6,500,000 |
|
|
|
2.89 |
|
|
|
6,500,000 |
|
$ |
0.015 |
|
|
|
10,250,000 |
|
|
|
1.84 |
|
|
|
10,250,000 |
|
$ |
0.04 |
|
|
|
22,500,000 |
|
|
|
2.53 |
|
|
|
22,500,000 |
|
During
the period ended March 31, 2022, the Company issued 10,000,000
shares of common stock with a fair value of $25,000 at the
date grant for the cash conversion of 10,000,000
warrants with a strike price of $0.0025.
The
outstanding and exercisable warrants at March 31, 2022 had an
intrinsic value of approximately $388,575.
Common Stock Options
Under
the Company’s 2008 Equity Compensation Plan (the “2008 Plan”), 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 its subsidiaries, as defined in the
2008 Plan.
The
2008 Plan provides for the issuance of a maximum of 7,000,000
shares, of which, after adjusting for estimated pre-vesting
forfeitures and expired options, approximately
2,235,000 were available for issuance as of March 31,
2022.
No options were granted during the period ending March 31,
2022.
12.
COMMITMENTS &
CONTINGENCIES
Bonuses
The
Company has an employment agreement with its CEO which, among other
provisions, provide for the payment of a bonus, as determined by
the Board of Directors, in 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. No such bonuses
were declared or accrued during the periods ending March 31, 2022
or 2021.
Contingencies
From
time to time, we may be involved in routine legal proceedings, as
well as demands, claims and threatened litigation that arise in the
normal course of our business. The ultimate amount of liability, if
any, for any claims of any type (either alone or in the aggregate)
may materially and adversely affect our financial condition,
results of operations and liquidity. In addition, the ultimate
outcome of any litigation is uncertain. Any outcome, whether
favorable or unfavorable, may materially and adversely affect us
due to legal costs and expenses, diversion of management attention
and other factors. We expense legal costs in the period incurred.
We cannot assure you that additional contingencies of a legal
nature or contingencies having legal aspects will not be asserted
against us in the future, and these matters could relate to prior,
current or future transactions or events. As of March 31, 2022,
there was no pending or threatened litigation against the
Company.
COVID-19
The
Company is subject to risks and uncertainties as a result of the
COVID-19 pandemic. The extent of the impact of the COVID-19
pandemic on the Company’s business is highly uncertain and
difficult to predict, as the responses that the Company, other
businesses and governments are taking continue to evolve.
Furthermore, capital markets and economies worldwide have also been
negatively impacted by the COVID-19 pandemic, and it is possible
that it could cause a local and/or global economic recession.
Policymakers around the globe have responded with fiscal policy
actions to support the healthcare industry and economy as a whole.
The magnitude and overall effectiveness of these actions remain
uncertain.
Due
to COVID-19, we have experienced some changes in our business, that
have been both positive and negative. Specifically, the Company’s
IP licensing business has been negatively impacted by the global
financial slowdown and many courts, judges and law firms are not
working at full capacity, which is creating delays in finalizing
licensing agreements or litigation. We have also experienced a
small percentage of subscriptions being either cancelled or
requested to be put on pause, due to financial hardships. On the
positive side we saw an increase in product sales specifically with
medical supplies and equipment. Overall, our revenues have not been
materially impacted as a whole, however there have been some shifts
with certain revenue streams doing better post COVID and others
doing worse.
The
severity of the impact of the COVID-19 pandemic on the Company’s
business will depend on a number of factors, including, but not
limited to, the duration and severity of the pandemic and the
extent and severity of the impact on the Company’s customers,
service providers and suppliers, all of which are uncertain and
cannot be predicted. As of the date of issuance of Company’s
financial statements, the extent to which the COVID-19 pandemic may
in the future materially impact the Company’s financial condition,
liquidity or results of operations is uncertain.
13.
SUBSEQUENT
EVENTS
On
April 12, 2021, we issued in
restricted common stock to a firm as part of their agreement with a
value of $11,400 on
the date of the agreement.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING
STATEMENTS
This
Quarterly Report on Form 10-Q, including “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” in
Item 2 of Part I of this report include forward-looking statements.
These forward looking statements are based on our management’s
current expectations and beliefs and involve numerous risks and
uncertainties that could cause actual results to differ materially
from expectations. In some cases, you can identify forward-looking
statements by terminology such as “may,” “should,” “expects,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“potential,” “proposed,” “intended,” or “continue” or the negative
of these terms or other comparable terminology. You should read
statements that contain these words carefully, because they discuss
our expectations about our future operating results or our future
financial condition or state other “forward-looking” information.
Many factors could cause our actual results to differ materially
from those projected in these forward-looking statements, including
but not limited to: variability of our revenues and financial
performance; risks associated with product development and
technological changes; the acceptance our products in the
marketplace by existing and potential future customers; general
economic conditions. You should be aware that the occurrence of any
of the events described in this Quarterly Report could
substantially harm our business, results of operations and
financial condition, and that upon the occurrence of any of these
events, the trading price of our securities could decline. Although
we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results,
growth rates, levels of activity, performance or achievements. We
are under no duty to update any of the forward-looking statements
after the date of this Quarterly Report to conform these statements
to actual results.
Introduction
Unless
otherwise noted, the terms “GTX Corp”, the “Company”, “we”, “us”,
and “our” refer to the ongoing business operations of GTX Corp and
our wholly-owned subsidiaries, Global Trek Xploration, and
LOCiMOBILE, Inc.
Organization
and Presentation
During
the periods covered by the accompanying financial statements, GTX
Corp and its subsidiaries were engaged in business operations that
design, manufacture and sell various interrelated and complementary
products and services in the wearable technology and Personal
Location Services marketplace. GTX owns 100% of the issued and
outstanding capital stock of its two subsidiaries - Global Trek
Xploration, Inc. and LOCiMOBILE, Inc.
Global
Trek Xploration is a California corporation which engages in the
business of design, development, manufacturing, and sales of health
and safety wearable technology solutions. Utilizing Global
Positioning Satellite (“GPS”), Cellular, Radio Frequency (“RF”),
Near Field Communications (“NFC”), WiFi, and Bluetooth low energy
(“BLE”) as core technologies for monitoring and tracking assets.
GTX is vertically integrated and provides hardware, software, and
connectivity, delivering a complete end to end location-based
platform that enables subscribers to track in real time the
whereabouts of people, pets, or high valued assets. Our proprietary
GPS devices, which consist of a miniature quad-band General Packet
Radio Service (“GPRS”) transceiver, custom antenna, circuitry,
battery, and inductive charging pad can be customized and
integrated into numerous form factors. The finished products are
then placed or worn so that their location and movement can be
monitored in real time over the Internet through our 24x7 tracking
portal or on a web-enabled cellular telephone.
Many
of our core products and services are supported by an intellectual
property portfolio of patents, patents pending, registered
trademarks, copyrights, URLs and a library of software source code,
all of which is also managed by Global Trek.
LOCiMOBILE,
Inc., is the Company’s digital platform which has been at the
forefront of Smartphone application (“App”) development since 2008.
With a suite of mobile applications that turn the iPhone, iPad,
Android and other GPS enabled handsets into a tracking device which
can be tracked from handset to handset or through our tracking
portal or on any connected device with internet access. LOCiMOBILE
has launched over 20 Apps across multi mobile device operating
systems and continues to launch consumer and enterprise
apps.
Operations
The
Company designs, develops, manufactures, sells, and distributes
health and safety products and services, and other related medical
supplies and equipment, through a global business to business
(“B2B”) and business to consumer (“B2C”) network of resellers,
affiliates, distributors, nonprofit organizations, local, state,
and federal government agencies, police departments, manufacturers
reps and retailers. Offering a variety of electronic and
non-electronic devices and equipment, a proprietary Internet of
things (“IoT”) enterprise monitoring platform and a licensing
subscription business model. The Company provides a complete end to
end solution of hardware, middleware, apps, connectivity,
licensing, and professional services, letting our customers know
where or how someone, or something, is at the touch of a button,
delivering safety, security, and peace of mind in real-time. Except
for our military products and medical protective equipment, all of
our consumer and enterprise tracking products funnel into the GTX
Corp IoT monitoring platform which supports end user customers in
over 35 countries. The Company is also in the business of licensing
intellectual property and monetizing its patent
portfolio.
Overview
As we started seeing an end to COVID on a grand scale and a return
to normal operations and staffing, the Company began mapping out
its 2022 post pandemic course. Early in the quarter we focused on
selling down our remaining PPE inventory under our health &
safety mission, completed our R&D and testing and geared up for
our Cat M1 LTE SmartSole launch. With businesses opening back up
and overall general travel picking back up we saw a 132% increase
in B2B sales and a 34% decrease in net loss. Overall revenues were
down by 27% compared to the previous comparable period and only a
slight 3% increase in expenses. We started to ship SmartSole
preorders near the end of the first quarter and expect our
subscriptions to start ramping back up in the second quarter. We
also saw continued demand for the new 4G SmartSoles with several
thousand units forecasted over the next several months just from
our international distributors. As part of our ongoing fiscally
responsible efforts to enhance our balance sheet, we reduced our
short-term government loans by $68k, and eliminated all of our
variable priced convertible debt, leaving only fixed price
convertible debt above market or low interest rate non-convertible
debt and took on no new debt.
In
early January we had a surge in orders for medical supplies which
enabled us to convert paid for inventory into cash while reducing
our overall supply inventory levels. We also produced and committed
production to close to 500 pairs of SmartSoles, which also enabled
us to convert paid for components into finished product and start
back filling pre orders. We also started working on a new version
of our tracking app and a new ecommerce store on the Shopify
platform, which will enable us to have more capabilities to sell
through social media platforms such as Facebook and Instagram,
along with having better accounting and inventory management
capabilities as we start ramping up domestic sales.
During the first quarter of 2022, we continued to expand or
intellectual property portfolio by being issued two new patents by
the United States Patent and Trademark Office (USPTO). U.S. patent
number 11,272,761 which is now the 4th patent to be
issued in the GPS SmartSole family (the “SmartSole Patent”) and
U.S. patent 11,272,313 which is now the 6th patent to be
issued in the Comm Protocol family (the “Comm Protocol
Patent”).
The SmartSole Patent covers proprietary ways to protect and
manufacture a GPS electronic module, including the inductive
charging unit inside an orthotic insole. The patent has twenty
claims, two of which are independent and an open continuation for
further expansion, which has already been submitted to the
USPTO.
The Comm Protocol Patent also has twenty claims and is significant
for several reasons; first by adding another layer to GTX’s
competitive landscape on device to backend server communications
which is important now but could add even more value in the future
as the Company adds more biometric devices to its platform and
unveils the Longevity Revolution product roadmap, Second, the Comm
Protocol family has been the crown jewel of GTX’s IP licensing
campaign. By adding this new patent with an open ongoing
continuation (also recently filed with the USPTO), it should
enhance the strength and value of the portfolio for future
licensing agreements.
GTX’s growing patent portfolio highlights the commitment the
Company has dedicated over the years to protecting its innovations
in order to position the Company for growth in the future. The
strategy, which was implemented over a decade ago, to file patents
both on the hardware / device side and on the device / server
communication side, while continuing that strategy all along the
product development cycle, should support the increasing value of
this intellectual property asset as the Company expands its
platform from location monitoring to location and remote patient
monitoring (RPM) preventive care.
During the first quarter we began the development of a new wearable
NFC product, designed to provide remote monitor to cognitively and
speech impaired individuals. We have begun testing prototypes and
placed our first production run with our factory. If all goes well
with the testing and the production, we expect to launch this
product both B2C and B2B, sometime before the third quarter 2022.
Until recenty, our NFC product sales have been limited and only
sold direct to consumer (B2C). However, during the first quarter of
2022 we expanded our NFC sales into B2B channels and started
providing NFC chips along with professional services to a startup
company called Endsate. This company designs and manufactures high
end sneakers embedded with NFT and NFC technology that unites the
experience from digital art to physical products, which provides
the ability to wear the sneakers in the metaverse. We have been
providing Endstate with NFC chips, technology and professional
services since December of 2021 leading up to their commercial
rollout in Q1 2022. So far Endstae has ordered close to 700 chips
from us which we began to deliver at the end of the first quarter
and will continue to deliver into the second quarter.
We remain optimistic that COVID-19 pandemic is behind us. However,
we still have some inventory on hand and solid relationships with
our vendors so, in case there is another surge in demand we will be
ready to serve our customers. But based on the current events and
sales trends, our focus now is on ramping up sales of the new
SmartSoles, NFC products, other medical wearable devices, A.I. and
IP licensing rather than PPE sales. Health & Safety, Track
& Trace were the big buzz words that came out of 2021. Everyone
wants to be healthy, live better and longer, and know where someone
or something is and has been. We believe we are in a position to
monetize these trends and keep hearing from many of our B2B
customers and international distributors that they want more
wearable solutions and technology. Hence, why a big part of Q1 was
focused on new product development and making sure that we will
have inventory on hand and in the pipeline to meet the global
demand throughout 2022 and beyond.
Results of Operations
The following discussion should be read in conjunction with our
interim consolidated financial statements and the related notes
that appear elsewhere in this Quarterly Report.
Three Months Ended March 31, 2022 (“Q1 2022”) Compared to the Three
Months Ended March 31, 2021 (“Q1 2021”)
|
|
Three Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
$ |
|
|
% of Revenues |
|
|
$ |
|
|
% of Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
|
132,681 |
|
|
|
79 |
% |
|
|
172,333 |
|
|
|
75 |
% |
Service income |
|
|
35,836 |
|
|
|
21 |
% |
|
|
58,188 |
|
|
|
25 |
% |
IP
royalties |
|
|
- |
|
|
|
0 |
% |
|
|
- |
|
|
|
0 |
% |
Total revenues |
|
|
168,516 |
|
|
|
100 |
% |
|
|
230,521 |
|
|
|
100 |
% |
Cost of products sold |
|
|
87,945 |
|
|
|
52 |
% |
|
|
112,095 |
|
|
|
49 |
% |
Cost of service revenue |
|
|
6,918 |
|
|
|
4 |
% |
|
|
35,068 |
|
|
|
15 |
% |
Cost of
licensing revenue |
|
|
- |
|
|
|
0 |
% |
|
|
- |
|
|
|
0 |
% |
Cost of goods
sold |
|
|
94,862 |
|
|
|
56 |
% |
|
|
147,161 |
|
|
|
64 |
% |
Gross
profit |
|
|
73,653 |
|
|
|
44 |
% |
|
|
83,359 |
|
|
|
36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and benefits |
|
|
123,765 |
|
|
|
73 |
% |
|
|
126,802 |
|
|
|
55 |
% |
Professional fees |
|
|
98,162 |
|
|
|
58 |
% |
|
|
100,170 |
|
|
|
43 |
% |
Sales and marketing expenses |
|
|
10,541 |
|
|
|
6 |
% |
|
|
9,936 |
|
|
|
4 |
% |
General and
administrative |
|
|
61,107 |
|
|
|
36 |
% |
|
|
48,051 |
|
|
|
21 |
% |
Total operating
expenses |
|
|
293,576 |
|
|
|
174 |
% |
|
|
284,959 |
|
|
|
124 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain/(loss) from operations |
|
|
(219,922 |
) |
|
|
-131 |
% |
|
|
(201,600 |
) |
|
|
-87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(expense)/income, net |
|
|
25,538 |
|
|
|
15 |
% |
|
|
(88,829 |
) |
|
|
-39 |
% |
Net
income/(loss) |
|
|
(194,385 |
) |
|
|
-115 |
% |
|
|
(290,429 |
) |
|
|
-126 |
% |
Revenues
Revenues were $168,516 for the three months ended March 31, 2022
compared to $230,521 for the three months ended March 31, 2021,
representing a decrease of 27%, This decrease was primarily driven
from transitioning out of direct-to-consumer PPE sales into our
core B2B business.
During
the period ended March 31, 2022, the Company’s customer base and
revenue streams were comprised of approximately 71.61% B2B
(Wholesale Distributors and Enterprise Institutions), 28.39% B2C
(consumers and government agencies who bought on the behalf of
consumers, through our online ecommerce platform and through
Amazon, Google and iTunes), 0% IP (our monetization campaign from
consulting, licensing and asserting our patents) and 0% Military
and Law Enforcement.
During
the period ended March 31, 2021, the Company’s customer base and
revenue streams were comprised of approximately 22.47% B2B
(Wholesale Distributors and Enterprise Institutions), 77.05% B2C
(consumers and government agencies who bought on the behalf of
consumers, through our online ecommerce platform and through
Amazon, Google and iTunes), 0% IP (our monetization campaign from
consulting, licensing and asserting our patents) and 0.48% Military
and Law Enforcement.
Cost
of goods sold
Cost of goods sold were $94,862 for the three months ended March
31, 2022 compared to $147,161 for the three months ended March 31,
2021, representing a decrease of 36%.This decrease was primarily
due to the shift form COVID related PPE’s with less margins, to the
higher margin 4G SmartSoles. As a result, total gross margin,
increased from 36% in fiscal 2021 to 44% in fiscal 2022.
We
expect our margins to increase once we start ramping up our
subscriptions and licensing and sell more of our proprietary
products like our SmartSoles, where we have no competition. Our
overall gross margin was slightly lower in 2021, predominately
because most of our revenues came from product sales which require
competitive pricing, and that includes shipping charges. In order
to be competitive with the major online retailers (many of them
include free shipping) we had to reduce our shipping charges to be
in line with competitors.
Wages
and benefits
Wages and benefits decreased $3,036, or 2%, in three months ended
March 31, 2022 as compared to three months ended March 31,
2021.This decrease was primarily the result of lower staffing
expenses.
Professional fees
Professional fees consist of costs attributable to consultants and
contractors who primarily spend their time on legal, accounting,
product development, business development, corporate advisory
services and shareholder communications. Such costs decreased
$2,009 or 2% in the three months ended March 31, 2022 as compared
to in the three months ended March 31, 2021. Even though some
professional fees have decreased as more responsibilities were
transferred from outside contractors and consultants to in-house
personnel. Those fees related to investor relations and business
development have increased due to new products lines and the
impending release of the company’s updated SmartSole products.
Sales and marketing expenses
Sales and marketing expenses increased by 6% or $606 in three
months ended March 31, 2022 in comparison to the three months ended
March 31, 2022. This increase was primarily due to the release of
the new 4G SmartSole.
General and administrative
General and administrative costs in three months ended March 31,
2022 increased by $13,065 or 27% in comparison to the three months
ended March 31, 2021, mostly due to increases in depreciation
related to development costs and software expenses.
Other income/(expense), net
Other expense, net decreased 129% or $114,364 in the three months
ended March 31, 2022 compared to the three months ended March 31,
2021. This decrease was primarily as a result of the gain of
$67,870 from the forgiveness of CARE loans and no loss on the
extinguishment of debt as seen in Q1 2021.
Net income/(loss)
Net loss decreased by 33% or $96,042 from Q1 2022 to Q1 2021
primarily as a result of primarily as a result of the gain of
$67,870 from the forgiveness of CARE loans and no loss on the
extinguishment of debt as seen in Q1 2021.
Liquidity and Capital Resources
As of March 31, 2022, we had $44,892 of cash and cash equivalents,
and a working capital deficit of $2,952,685, compared to $138,342
of cash and cash equivalents and a working capital deficit of
$2,829,165 as of December 31, 2021.
During the three months ended March 31, 2022, our net loss was
$194,385 compared to a net loss of $290,427 for the three months
ended March 31, 2021. Net cash used in operating activities in the
three months ended March 31, 2022 and in the three months ended
March 31, 2021 was $118,452 and $76,730, respectively.
Net cash used in investing activities during the three months ended
March 31, 2022 was $0, as compared to net cash used in investing
activities during the three months ended March 31, 2021 which was
$5,222 which consisted of proceeds totaling $1,258 received from
the sale of marketable securities and $6,480 in developments cost
assets.
Net cash provided by financing activities during the three months
ended March 31, 2022 was $25,000 and consisted of $25,000 received
for the conversion of warrants. Net cash used by financing
activities during the three months ended March 31, 2021 was
$413,043 and consisted of $11,957 in upon our lines of credit and a
term loan, and $425,000 received from financings. This represents a
decrease of 88%. This reduction in additional financings is
directly related to the Company not relying on convertible notes
for financings, with no new convertible notes being issued.
Because
revenues from our operations have, to date, been insufficient to
fund our working capital needs, we currently rely on the cash we
receive from our financing activities to fund our growth, capital
expenditures and to support our working capital requirements. The
sale of our products and services is expected to enhance our
liquidity in 2022, although the amount of revenues we receive in
2022 still cannot be estimated.
Until
such time as our products and services can support our working
capital requirement, we expect to continue to generate revenues
from our other licenses, subscriptions, international distributors,
hardware sales, professional services and new customers in the
pipeline. However, the amount of such revenues is unknown and is
not expected to be sufficient to fund our working capital needs.
For our internal budgeting purposes, we have assumed that such
revenues will not be sufficient to fund all of our planned
operating and other expenditures during 2022. In addition, our
actual cash expenditures may exceed our planned expenditures,
particularly if we invest in the development of improved versions
of our existing products and technologies, and if we increase our
marketing expenses. Accordingly, we anticipate that we will have to
continue to raise additional capital in order to fund our
operations in 2022 No assurance can be given that we will be able
to obtain the additional funding we need to continue our
operations.
In
order to continue funding our growth, IP and working capital needs
and new product development costs, during the first quarter of 2022
we continued to draw down on our credit line to fund purchase
orders. However, no assurance can be given that the investor will
provide the funding, if and when requested by us.
Going Concern
The
consolidated financial statements have been prepared on a going
concern basis which assumes the Company will be able to realize its
assets and discharge its liabilities in the normal course of
business for the foreseeable future. The Company has stockholders’
deficit of $3,009,406 and negative working capital of $2,952,685 as
of March 31, 2022 and used cash in operations of $118,452 during
the current period then ended. A significant part of our negative
working capital position at March 31, 2022 consisted of $803,885,
of amounts due to various accredited investors of the Company for
convertible promissory notes, loans and a letter of credit. The
Company anticipates further losses in the development of its
business. Please see the section entitled “Risk Factors” included
in our Annual Report on Form 10-K for the year ended December 31,
2021 for more information regarding risks associated with our
business.
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.
Inflation
We do
not believe our business and operations have been materially
affected by inflation.
Critical
Accounting Policies and Estimates
There
are no material changes to the critical accounting policies and
estimates described in the section entitled “Critical Accounting
Policies and Estimates” under Item 7 in our Annual Report on Form
10-K for the year ended December 31, 2021.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
As a
“smaller reporting company”, we are not required to provide the
information under this Item 3.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation
of Disclosure Controls and Procedures
Our
management is responsible for establishing and maintaining a system
of disclosure controls and procedures (as defined in Rule
13a-15(e)) under the Exchange Act) that is designed to ensure that
information required to be disclosed by the Company in the reports
that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time specified in
the Commission’s rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an
issuer in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the issuer’s management,
including its principal executive officer or officers and principal
financial officer or officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding
required disclosure.
Our
management, including our chief executive officer and chief
financial officer, evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e)
under the Exchange Act) as of the end of the period covered by this
report. There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures. In designing and
evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of
achieving the desired control objectives.
Based
on the evaluation as of December 31, 2021, for the reasons set
forth below, our chief executive officer and chief financial
officer concluded that our disclosure controls and procedures were
effective to provide reasonable assurance that information we are
required to disclose in reports that we file or submit 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 chief executive officer and chief financial officer,
as appropriate, to allow timely decisions regarding required
disclosure.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
These
are not all of the risks associated with the Company and must be
used in conjunction with those disclosed in the most recent
December 31, 2021 10K filing.
The
Company is subject to risks and uncertainties as a result of the
COVID-19 pandemic. The extent of the impact of the COVID-19
pandemic on the Company’s business is highly uncertain and
difficult to predict, as the responses that the Company, other
businesses and governments are taking continue to evolve.
Furthermore, capital markets and economies worldwide have also been
negatively impacted by the COVID-19 pandemic, and it is possible
that it could cause a local and/or global economic recession.
Policymakers around the globe have responded with fiscal policy
actions to support the healthcare industry and economy as a whole.
The magnitude and overall effectiveness of these actions remain
uncertain.
Due
to COVID-19, we have experienced some changes in our business, that
have been both positive and negative. Specifically, the Company’s
IP licensing business has been negatively impacted by the global
financial slowdown and many courts, judges and law firms are not
working at full capacity, which is creating delays in finalizing
licensing agreements or litigation. We have also experienced a
small percentage of subscriptions being either cancelled or
requested to be put on pause, due to financial hardships. On the
positive side we saw an increase in product sales specifically with
medical supplies and equipment. Overall, our revenues have not been
materially impacted as a whole, however there have been some shifts
with certain revenue streams doing better post COVID and others
doing worse.
The
severity of the impact of the COVID-19 pandemic on the Company’s
business will depend on a number of factors, including, but not
limited to, the duration and severity of the pandemic and the
extent and severity of the impact on the Company’s customers,
service providers and suppliers, all of which are uncertain and
cannot be predicted. As of the date of issuance of Company’s
financial statements, the extent to which the COVID-19 pandemic may
in the future materially impact the Company’s financial condition,
liquidity or results of operations is uncertain.
ITEM 2.(a). UNREGISTERED SALES OF EQUITY SECURITIES AND USE
OF PROCEEDS.
On
January 14, 2022, we issued 4,000,000 in common stock to a firm as
part of their agreement.
On
January 21, 2022, an investor converted 10,000,000 of warrants into
10,000,000 shares of common stock at a strike of
$0.0025.
The
issuance of the above shares was exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933, as
amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not
applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
(a)
Exhibits
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
|
GTX
CORP |
|
|
|
Date:
May 16, 2022 |
By: |
/s/
ALEX MCKEAN |
|
|
Alex
McKean, |
|
|
Chief
Financial Officer (Principal Financial Officer) |
Date:
May 16, 2022 |
By: |
/s/
PATRICK BERTAGNA |
|
|
Patrick
Bertagna, |
|
|
Chief
Executive Officer |
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