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WIKI ANALYSIS
GTX, Inc. (OTCBB: GTXO) has developed and patented an integrated miniaturized 2-Way GPS™ tracking and location technology for consumer products and applications. As the underlying technology provider, the company works with branded license partners including AT&T to deliver these innovative solutions to the consumer in a wide variety of wearable location devices.[1] It's gpVector Personal Location Services (“GPS/PLS") suite delivers remote real-time oversight of loved ones and high-value assets. The company's licensing model and a user friendly format allows it to transparently embed the technology into a wide variety of branded consumer products. In addition to geo spatial location-reporting, which provides peace of mind to caretakers, the company’s scalable gpVector™ technology platform is also designed to deliver new and innovative life style based applications. Some of those are interactive real-time gaming and performance, health / exercise monitoring and geo specific social networking. The miniaturization of the electronics offers a whole new category of portable hosts to deliver a wide range of new people-oriented wearable 2 way GPS/PLS solutions. The company's products are compatible with Smart phone's including Apple's iPhone, Google's G1 Android™ and Research in Motion (RIMM)'s BlackBerry™.[2]
Business Overview
GTX Corp. develops and integrates miniaturized Global Positioning System (GPS) tracking and cellular location technology for consumer products and service applications. The company's Personal Location Services (PLS) platform delivers real-time on demand location awareness and monitoring of high valued assets ranging from children, the wandering elderly, soldiers in the field, athletes in motion, to organ transplants en route. The company's gpVector™ technology is designed to deliver innovative life style applications with the ability to locate in real-time the company's electronic hardware through its customizable internet portal. In addition to basic location reporting capabilities, GTX's customizable portal offers several additional features to subscribers including: Breadcrumbing, Temporary Guardians, and GeoFencing.[3]
GTX is licensing its technology platform into vertical markets in order to deliver turnkey GPS/PLS solutions with unique features for the benefit of end users. GTX partners with companies that through their recognition and expertise, within a vertical market, can best deliver the technology to the end user. This is similar to Intel being the provider of microprocessors to companies such as DELL or IBM.[4]
MyAthlete
The MyAthlete™ tracking device is worn on the racer’s belt and transmits his or her location as gathered by the miniaturized GPS technology onboard via wireless carrier networks every minute they are on the course. Once the location data is received by the GTX Corp location data servers and proprietary processing software, it is transformed into a breadcrumb trail that is displayed on the MyAthlete™ tracking web portal, also powered by GTX Corp, and using a Google Maps format. It can be viewed from any web browser running Microsoft Internet Explorer™, Apple Safari™, Mozilla Firefox™ on PCs, laptops or mobile devices such as the Apple iPhone™. [7]
Company History
GTX shipped its first gpVector™ module units into its first vertical market in Q2 2008 and has begun to realize revenue and sales from its business model. Additional orders have been received.
The company was founded in 2002 and has spent the past six years developing its patent portfolio, building out its technology platform, building out the management team, and positioning itself as a brand in motion. GTX currently has an ongoing IP strategy with 18 patents and patents pending for the manufacture and use of various types of GPS tracking devices, footwear, and GPS monitoring device applications.
The company went public via a reverse merger on March 14, 2008 with GTX Corp., acquiring 100% of Deeas Resources Inc. shares outstanding. As of November 10, 2008, the company had a total of 10 full-time employees.
Recent company milestones include:
- Additional purchase order from MyAthlete™;
- Development of the company's next generation of gpVector™ 2 Way GPS, named H1.5-V;
- The development of military grade gpVector™ 2 Way GPS, named ReCon™;
- Soft launch of the customizable web portal; and
- Entry into mobile application software space.
On October 7, 2008 the company announced that it had completed shipment of its next generation gpVector™ 2 Way GPS to MyAthlete LLC. This was a follow-up order based on the the success of products shipped to MyAthlete earlier in 2008.
The development of the Recon(TM) gpVector™ 2 Way GPS system represents the company's entry into a new vertical maket. The technology, shown to the right, is a military grade device that will allow military commanders to better monitor and communicate with troops in the field. The features include: fast satellite acquisition in rugged conditions, up to 72 hours of battery life, emergency call capabilities, extended battery life tools, an LCD display for SMS communications, and a rugged case for durability. The company is partnering with the Talon Companies for the sale of the Recon™ product. The principals of Talon, Ron Williams (Secret Service- Ret'd) and Col. Stewart Navarre (USMC- Ret'd), both have experience in military and law enforcement sales and will lead the GPS/PLS sales team at Talon.
The company has entered the mobile applications space by creating software that is used in combination with GPS enabled Smart phones such as Research in Motion (RIMM)'s Blackberry™, Apple's iPhone™, and Google's G1 Android™. The software converts the smart phone into a 2 Way GPS device allowing the phone to transfer GPS coordinates back to GTX's customizable web portal. This allows subscribers access, in real-time, to the location of a specific cell phone or hand held device. With GPS/PLS applications that are agnostic with current mobile devices and platforms, GTX is able to provide its location technology and customizable web portal to the worldwide hand held devices market.
The Technology
Each product is programmed with a unique identification number and uses standard cellular frequencies to communicate its location. The product is also programmed with a unique subscriber identification number. This allows the owner to subscribe to the particular service needed. GTX has developed a "carrier-class" architecture to manage the functionality of its proprietary middleware.
The products offer wide network coverage throughout North America utilizing the main GSM networks such as AT&T , Rogers Communications (RCI) and Telefonica SA (TEF). The company has a value added reseller agreement with AT&T and Core Wireless and is in conversations with other major international carriers. In addition, the personal locators will have the ability to roam seamlessly through the AT&T global network in over 214 countries.
GTX's proprietary middleware provides a complete array of back-end services to subscribers. Upon purchase of the product from prospective licensees, selection of a service plan and activation of service, customers establish their personal pass code and configure their account services. A subscriber can have multiple products included on their account, and can set up, customized, individual profiles and user preferences for each product.
The subscriber requests information on their product's location through the internet via the customizable web portal. GTX's middleware automatically contacts the product via the local cellular communications infrastructure, requesting the product's location. The embedded modle utilizes GSM/GPRS technology and transmits on a GSM network. The locator utilizes quad-band GSM technology. The application includes multiple location technologies and multiple reporting technologies.
Breadcrumbing
The subscriber is able to get a report on a series of location events through breadcrumbing. With this feature the user can determine the location history of the user. Parents may want to use this feature to confirm the whereabouts of their child if he or she is in the care of a guardian and has several appointments throughout the day. To utilize this feature, the subscriber predetermines the number of locations he or she wishes to track, as well as the desired time interval between locations (i.e. identify a total of 12 locations, one every 15 minutes). Once all locations are identified, a report will be automatically issued. The subscriber can then request a mapping of the desired location.
Temporary Guardians
Through the customizable portal, subscribers can set-up a temporary guardian which will have access to location features only (no account management functions). Parents may want to use this feature when their child is visiting a relative and they want that person to be able to determine the child's location.
GeoFencing
Subscribers can establish geographic limits for each user that will be programmed in place through the Internet access provided by the GTX licensee to their customers. Once these limits have been programmed in to the account, when the user crosses these boundaries, alerts are sent out to the subscriber over the internet through email or to wireless cellular devices by SMS or text messaging.
Key Markets
Children and Adolescents
Due to the emotional nature of GTX's value proposition, children and adolescents are an important market for GTX's products. The GPS Personal Locator license for children targets prospective licensees currently marketing their existing products to parents of children and teenagers. Children are starting to gain more independence from their parents and are more likely to be "out of the parent's sight" for a variety of reasons (day care, school, playing with friends, etc.). GTX has positioned this service as "complimentary" to parent supervision, not a replacement.[8]
Pet Owners
This market segment utilizes GTX's technology to locate pets that have run away, been stolen or become lost. The pet collar device is attached to a collar or by similar means and will utilize the same location (GPS) and communication (cellular) technologies as the GPS Personal Locator.
Institutional Living
Current technologies used to monitor individuals with movement-restrictions often do not meet the needs of law enforcement officials. For example, household arrest systems that utilize an "RF tether" to monitor an individual's presence in his or her home will alert officials if the person leaves the house, but will not provide information on where the person has gone.[9]. Furthermore, the over-crowding in jails and prisons provides a further incentive to utilize location and tracking products.
High Valued Assets in Motion
GTX's technology supports increased efficiency and security for the courier industry. Courier services transport high valued assets including: human organs, sensitive documents, and expensive items. The company's technology allows the more accurate tracking of items because its miniaturized and always-on design permits the module to stay with the items at all times. Other tracking systems to not provide real-time tracking. Typically RFID technology only reports an items location at a point of entry such as a truck or distribution center. The other key difference is that RFID does not determine where a package is; it only provides updates of when a package was last scanned. Due to low power consumption and miniaturization, GTX's devices can be sent with the item and monitored during the entirety of the trip.
Military and Defense
GTX has developed a version of its PLS product that have been adapted to meet the needs of the military and defense industry. The military version of the product has several modifications in battery life, screen size, and durability. This is a critical market for GTX since the U.S. government's spending budget for 2009 is estimated at $515.4B and worldwide military spending is estimated to be approximately $1.2T.[10]
Competition
Garmin, Ltd
Garmin, Ltd. and its subsidiaries design, develop, manufacture, and market global positioning system (GPS)-enabled products and other navigation, communication, and information products worldwide. It operates in four segments: Automotive/Mobile, Outdoor/Fitness, Marine, and Aviation.
Location Based Technology, Inc.
Location Based Technology, Inc. (OTCBB: LBAS) is a development stage GPS/PLS technology company. LBAS is focused on products for the tracking of people, pets, and luggage. Its main products include the Pocketfinder(R) and the Pocketfinder Pets(TM). As of Q2 2008 LBAS was yet to realize any revenues.[11]
Whereify
Whereify's first offering, the Child Locator Watch was discontinued for failure to meet customer expectations. Whereify's latest offering, Whereifone is based on a small cellular handset. Similar to the Sprint offering they are not a direct competitor to GTX.
Zoombak
Zoombak offers a "one size fits all" GPS solution for the tracking of cars, pets, and persons. Zoombak is not offering an embedded technology or a customizable portal for specific vertical markets and is targeting the same retail market as LBAS.
Spot
Spot's offering is a single product that utilizes GPS technology and satellite communication. Satellite communication is far more expensive that GTX's celler communication technology. Spot's offering is most affective in areas where there is no cellular coverage. This represents a much smaller market as the majority of metropolitan cities have a cellular infrastructure.
Key Trends and Factors
Mobile Phone Adoption in Developing Countries
International Mobile phone adoption is a source of tremendous growth in wireless industry. Penetration rates for the U.S. cell phone market are greater than 75%, and in Western Europe, Japan and Hong Kong penetration has already exceeded 100 % (multiple cell phones per subscriber). Although there is still significant growth to be found in these markets, much of this growth will take the form of selling increasingly sophisticated services (e.g. video, GPS) to existing customers rather than growing the overall number of subscribers.[12]
4G: Impending Technology Split
Though the transition from second to third generation wireless technologies has yet to be completed, developers are already working on the next step, 4G. One of the leading standards paving the way for the development and implementation of 4G technology is WiMax. This technology competes with both of the two major 3G systems, CDMA2000 (EV-DO) and UMTS (W-CDMA), offering speeds upwards of five times as fast as either of the two.[13] At some point, GTXO will have to decide whether or not the company will adopt 4G technology.
The iPhone Craze
The iPhone includes a touch-screen system, wireless Internet browsing capability, and iPod functionality. These advances come at a hefty price--approximately US$ 400--and target the decidedly high-end smart phone market. The popularity of smart phone devices such as the iPhone has a direct impact on the consumer acceptance of GTX's products.
Business Financials
GTX Revenue Recognition
Revenue is recognized when earned. Revenue related to licensing agreements is recognized over the term of the agreement. Revenue for services and products are recognized as the services are rendered and the products are shipped. Revenues recognized during the three and nine months ended September 30, 2008 were received from one customer primarily for sale of approximately 900 gpVector™ Powered Athlete Tracking Systems. Revenues recognized during the three and nine months ended September 30, 2007 were received from one customer in connection with a licensing agreement which was terminated. [14]
March 2008 Financing
On March 13, 2008, concurrent with GTX's reverse merger, the company completed the sale of 2,666,668 units at $0.75 per unit, each unit consisting of one share of common stock and one stock purchase warrant. Each warrant is exercisable into an additional common share at $1.25 per share.[15]
The company received bridge financing of $1,000,000 pursuant to a convertible loan agreement. The $1,000,000 loan plus accrued interest of $30,750 was converted into 1,374,334 units of the Company on the same terms and conditions as the private placement noted above.[16]
May 2008 Financing
In May 2008 the company completed a sale to thirty-two (32) investors of 1,732,000 units of the Company’s securities at a price of $1.00 per unit. Each of the May 2008 Units consists of one common share and one share purchase warrant. Each May 2008 Warrant is exercisable at an exercise price of $1.50 per share for a three-year term. The common stock and common shares underlying the May 2008 Warrants sold in this May 2008 Financing have piggy-back registration rights.[17]
GTX agreed to pay up to 10% cash and 10% warrant coverage as commissions to registered broker-dealers or unregistered finders in connection with the May 2008 Financing. Mr. Matthew Williams, the brother of GTX's Chief Financial Officer, Murray Williams, received $20,300 and 20,300 May 2008 Warrants from GTX Corp for his services as a finder.[18]
Common Stock Warrants
Risk Factors
There are certain risks and uncertainties that could affect operating results and the market price of GTX's common shares. There can be no assurance that GTX will be successful in addressing such risks and uncertainties. Suck risks and uncertainties include but are not limited to the following:
- The need for GTX to keep up with changing mobile technologies;
- GTX's reliance on third parties for component supplies;
- Increasing competition;
- GTX's ability to attract and retain qualified personnel;
- Changes in regulatory framework and timelines related to certification;
- GTX's failure to effectively manage their growth;
- GTX's reliance on intellectual property rights;
- Potential issuance and exercise of warrants and options;
- Market liquidity of GTX's common shares;
- Resale of restricted securities; and
- Potential significant costs associated with operating as a public company and management's requirement to devote substantial time to new compliance initiatives.
References
- ↑ Form 10-Q 11/5/08
- ↑ [1]
- ↑ Vista Partners November Newsletter
- ↑ [2]
- ↑ [3]
- ↑ [4]
- ↑ [5]
- ↑ [6]
- ↑ [7]
- ↑ Military & Defense Data
- ↑ [8]
- ↑ Mobile Phone Adoption in Developing Countries
- ↑ Research in Motion, Impending Technology Split
- ↑ [9]
- ↑ [10]
- ↑ [11]
- ↑ [12]
- ↑ [13]
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