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

As used in this Quarterly Report, the terms "GTX Corp", "we", "us", "our", and "the Company" mean GTX Corp and our three wholly-owned subsidiaries.

Operations

We currently conduct our operations through three wholly-owned subsidiaries that operate in various interrelated sectors of the emerging Location-Based Services and Proximity Marketing industry (the emerging industry for localized wireless distribution of advertising associated with a particular place based on the specific location of the person carrying the smartphone). Our subsidiaries are summarized as follows:

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Global Trek Xploration ("GTX California") focuses on hardware and software design and development of GPS monitoring products by offering a GPS and cellular location platform that enables subscribers to track in real time the whereabouts of people, pets or high valued assets. Our GPS device, 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 24x7 location data center ("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 ability to customize, localize and optimize an embedded approach to the tracking and monitoring market. GTX California believes that its ability to customize its products to different form factors for the specific needs of its branded partners sets it apart from its competitors. To date, the Company has created two custom solutions in two separate vertical markets ( the monitoring of seniors and the monitoring of high value assets) and has on-going initiatives to develop and deploy additional custom hardware, software, monitoring and connectivity solutions in other vertical markets.

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LOCiMOBILE, Inc., our mobile application subsidiary, has developed and owns LOCiMOBILEŽ a suite of mobile tracking applications that turn the latest smartphones and tablets such as iPhoneŽ, iPad, Blackberry, Google Android and other GPS enabled handsets into a tracking and location based social networking device which can then be viewed through our Location Data Center tracking portal or on any connected device with internet access. As of May 9, 2012, our 17 Apps have experienced over 1.2 million downloads in 147 countries. There are currently several new Apps in development and scheduled for release in 2012. These include a series of applications that will be geared for the enterprise user, by offering "private label" versions of our popular consumer apps to companies looking for a more personalized and secure method of keeping track of their employees. In addition, our goal is to expand into the proximity marketing business and begin to leverage our global user base. Our roadmap also consists of additional applications for the iPad, other tablets, TV's, and more applications for the iPhone, BlackBerry and Google Android operating systems, all of which are expected to contribute to our user base community, the value of our brand, and revenues from App sales, monthly subscriptions and advertising.

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Code Amber News Service, Inc. ("CANS") is our wholly-owned subsidiary that is the U.S. and Canadian syndicator and content provider of all state Amber Alerts (public notifications of child abductions) and missing person alerts. CANS reaches close to a half a million viewers a day through its widely distributed Code Amber website and desktop tickers, wireless Amber Alerts and Missing Endangered Persons alerts delivered to cell phones and PDAs, support of over 500 local and federal law enforcement agencies and alliance with 6,000 Walgreens stores nationwide. To date, our CANS operations has primarily been used to generate goodwill for our products through its public service announcements.
Our goal is to position CANS to generate revenues from brand licensing, sponsorships, and data feeds. In addition CANS plays a significant part in our overall outreach campaign, primarily used to generate awareness of our GPS products and applications. CANS provides website tickers and news feeds to merchants, internet service providers, affiliate partners, corporate sponsors and local, state and federal agencies.

Additionally, CANS markets and sells the patent pending electronic medical Code Amber Alertag and has recently signed up dozens of online affiliates and channel partners with a current total of 292 affiliates in 61 countries and 25 active fundraising organizations throughout the United States that are selling the Alertag. The Alertag comes with an annual $19.95 subscription based model and compliments the overall GTX business model of providing peace of mind and personal location solutions.

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.

First Quarter of 2012 Compared to First Quarter of 2011


                                            Three Months Ended March 31,
                                           2012                       2011
                                     $      % of Revenues       $      % of Revenues

Revenues                           $219,399          100%     $103,748          100%
Cost of goods sold                  207,264           94%       65,107           63%
Net profit                           12,135            6%       38,141           37%

Salaries and professional fees      288,317          131%      397,134          383%
Research and development              4,757            2%          522            1%
General and administrative           62,551           29%       68,708           66%
Operating expenses                  355,625          162%      466,364          450%

Loss from operations              (343,490)        (156)%    (428,223)        (413)%
Other income (expense), net               -            -%     (41,440)        (40) %
Net loss                         $(343,490)        (156)%   $(469,663)        (453)%

Revenues

Revenues during the first quarter of 2012 increased 112% over the same period in 2011. The increase is primarily due to revenues generated from the shipment of 1,500 of our GPS devices to Aetrex for use in Aetrex's shoes (the "Navistar GPS Shoe"). When the Navistar GPS Shoe is sold by Aetrex to, and activated by the end user, that customer will be required to pay us a monthly service fee, a portion of which will be shared with Aetrex and our customer service provider.
Aetrex initiated a soft launch of the Navistar GPS Shoe in December 2011; however because of slow sales and GPS activations during the initial introductory period of this product, we have not generated material monthly service fees as of March 31, 2012. The increase in GPS device sales is partially offset by a decrease in our smart-phone mobile applications ("Apps") revenues of approximately $37,000 or 97% when comparing the first quarter of 2012 to 2011. A large portion of subscriber downloads in 2012 relate to upgrades by current subscribers, which upgrades are provided free of charge.
Other than the foregoing Aetrex and Apps revenues, during the first quarter of 2012 we also recognized approximately $30,000 of revenue from our hardware product sales, portal software licensing, monthly subscriptions, Code Amber annual news feed subscriptions, points of display sponsorships and the sale of Code Amber Alertags.

Cost of goods sold

The increase in cost of goods sold as a percentage of revenues during the first quarter of 2012 is primarily attributable to the cost of the GPS devices we shipped to Aetrex, as well as costs incurred in generating new business for our portal services. Our gross margins on the GPS devices that we sell is small because we sell those devices in order to obtain the subsequent, high margin, recurring GPS connection and services revenues. During the fiscal quarter ended March 31, 2012, most of our revenues were derived from device sales. Our gross margins are expected to increase as our service revenues increase. Included in cost of goods sold is the depreciation on the capitalized costs of the Apps, which represents approximately 19% of cost of goods sold during the first quarter of 2012.

Salaries and professional fees

Salaries and professional fees during the first quarter of 2012 decreased 27% in comparison to the first quarter of 2011 due to numerous cost cutting efforts, including reductions in staff and management positions. These reductions will remain in place as we maintain a low-overhead approach to operations that will adjust, as operations require.

Research and development

Research and development expense during the first quarter of 2012 increased 811% in comparison to the same 2011 period. We have begun new research and development efforts to bring our GPS devices into the children's shoe market.
We expect our research and development costs to continue to increase and we look for new and innovative areas where our devices can be utilized.

General and administrative

General and administrative expenses consist primarily of corporate administrative costs, depreciation, occupancy costs, insurance and travel and entertainment. General and administrative expenses during the first quarter of 2012 decreased 9% in comparison to the comparable period in 2011 due primarily to reductions in depreciation expense and insurance costs

Other Income (Expense), net

Other income/(expense), net for the first quarter of 2011 is primarily attributable to interest expense and discount amortization related to convertible promissory notes outstanding during that time period. The convertible promissory notes were converted in their entirety during 2011 resulting in the convertible promissory notes being extinguished in full.
Accordingly, no such expenses were incurred during the first quarter of 2012.

Liquidity and Capital Resources

As of March 31, 2012, we had approximately $99,000 of cash and cash equivalents, and a working capital deficit of approximately $275,000 compared to approximately $92,000 of cash and cash equivalents and a working capital deficit of approximately $190,000 as of December 31, 2011.

During the first quarter of 2012, our net loss decreased by 27% to approximately $343,000 compared to a net loss of approximately $ 470,000 for the same 2011 period. Net cash used in operating activities was approximately $130,000 for the first three months of 2012 compared to $108,000 during the same 2011 period.
The increase was primarily due to a reduction in stock based compensation, a decrease in accounts payable and accrued expenses and the shipment of GPS devices to Aetrex during the first quarter of 2012.

Net cash used in investing activities during the three months ended March 31, 2012 and 2011 was approximately $15,000 and $24,000, respectively and consisted primarily of payments for the development of our LOCiMOBILEŽ products, which payments were capitalized.

Net cash provided by financing activities during the three months ended March 31, 2012 and 2011 was approximately $152,000 and $115,000, respectively, and primarily consists of proceeds received from the sale of shares under an equity line of financing (the "Equity Line") that we have established with Dutchess Equity Fund, L.P. (now known as Dutchess Opportunity fund, II, LP). During the first quarter of 2012, we sold 2,115,497 shares of common stock to Dutchess resulting in proceeds of approximately $152,000.

Because revenues from our operations have, to date, have been insufficient to fund our working capital needs, we currently rely on the cash we receive from our financing activities, as well as, the Equity Line with Dutchess to fund our capital expenditures and to support our working capital requirements. Although we anticipate (i) that revenues from the Navistar GPS Shoe that was released at the end of fiscal 2011 will increase substantially in 2012 and (ii) that we will receive additional revenues under our other licenses, the amount and timing of such revenues is unknown. For our internal budgeting purposes, we have assumed that such revenues will not be sufficient to fund all of our planned operating and other expenditure. 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 raise additional capital in order to fund our operations in 2012.

Since we entered into the Investment Agreement with Dutchess in November 2009 in connection with the Equity Line, we have sold to Dutchess 11,359,355 shares of our common stock (at prices ranging from $0.176 - $0.050 per share) for net proceeds of approximately $919,000. The aggregate maximum number of shares that we are entitled to sell to Dutchess during the three year term of the Investment agreement is 12,000,000. We anticipate that we will continue to, from time to time, draw on the Equity Line to provide additional funding, although the amount of such additional funding will be limited since as of May 9, 2012 we can only sell up to approximately 640,000 additional shares under the Equity Line.
Accordingly, the amount of funds we will be able to obtain under the Equity Line is not expected to be sufficient to fund our anticipated working capital deficits.

We are currently a party to two licensing agreements (with Aetrex and MNX) and three international distributor agreements. During 2012, we anticipate that we will generate increased revenues from these licensing agreements and from our current and international distributors. However, we expect to incur continued losses until these and our other revenue initiatives collectively generate substantial revenues. No assurance can be given that our current contractual arrangements and the revenues from the Navistar GPS Shoes, device sales, subscriptions, Alertags, software licensing, or our smart phone or tablet Apps will be sufficient to fund our anticipated working capital needs by the end of calendar year 2012.

In addition to continuing to incur normal operating expenses, we intend to continue our research and development efforts for our various technologies and products, including hardware, software, interface customization, and website development, and we also expect to further develop our sales, marketing and manufacturing programs associated with the commercialization, licensing and sales of our GPS devices and technology, and the commercialization of the LOCiMOBILEŽ applications for GPS enabled handsets.

Our funding requirements will depend on numerous factors, including:

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Costs involved in the completion of the hardware, software, interface customization and website development necessary to continue the commercialization of our products;

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The costs of outsourced manufacturing;

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

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Revenues derived from product sales and the licensing of our technology, the sale of GPS enabled shoes in conjunction with the Aetrex Licensing Agreement, the sales of the LOCiMobileŽ applications for GPS enabled handsets, the sale of Alertags and advertising sales from CANS.

Despite the potential sales of stock via private placements or the exercise of outstanding stock warrants, proceeds from the Equity Line, the use of stock to pay for services and other measures available to preserve cash, we may not have sufficient liquidity to satisfy our cash requirements for the next twelve months. If our actual expenses increase beyond our existing financial resources, we will have to access funding through the sale of additional equity or debt securities. In any event, we expect that unless our sales increase significantly, we will need to raise additional funds during 2012, either through the Equity Line or otherwise. The sale of additional equity securities will result in additional dilution to our existing stockholders. Sale of debt securities could involve substantial operational and financial covenants that might inhibit our ability to follow our business plan. We have not identified the sources for the additional financing that we will require, and there is no assurance that sufficient funding through a financing will be available to us at acceptable terms or at all. Any additional funding that we obtain in a financing is likely to reduce the percentage ownership of the Company held by our existing security-holders. The amount of this dilution may be substantial based on our current stock price, and could increase if the trading price of our common stock declines at the time of any financing from its current levels. We may also attempt to raise funds through corporate collaboration and licensing arrangements. To the extent that we raise additional funds through collaboration and licensing arrangements, we may be required to grant licenses on terms that are not favorable to us. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. If we are unable to obtain the needed additional funding, we may have to further reduce our current level of operations, or may even have to totally discontinue our operations.

Since inception in 2002, we have generated significant losses (as of March 31, 2012, we had an accumulated deficit of approximately $13,057,000), and we currently expect to incur continued losses until our revenue initiatives collectively generate substantial revenues. Depending on our current contractual arrangements, sales from the GPS enabled shoes by Aetrex, and the revenues from additional LOCiMOBILEŽ applications, we currently anticipate that our losses will continue until the end of calendar year 2012. Please see the section entitled "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2011 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, 2011.