UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                        ________________________________

                                   FORM 10-QSB

                                   (MARK ONE)

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                            THE SECURITIES AND EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED March 31, 2007

                                       OR

          [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                      SECURITIES AND EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER: 000-30104
                                                ---------

                              GPS INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

                  Nevada                             88-0350120
    -------------------------------           ----------------------
     (State or other jurisdiction of             (I.R.S. Employer
      incorporation or organization)            Identification Number)

           5500 152nd Street, Suite 214
                Surrey, B.C. Canada                    V3S 5J9
    -----------------------------------------        ------------
     (Address of principal executive offices)        (Zip Code)

                                 (604) 576-7442
              (Registrant's telephone number including area code)

     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 [X] No [_].

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. On May 17, 2007,
there were 376,533,966 shares of common stock issued and outstanding.

     Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]

Transitional Small Business Disclosure Format:  Yes [ ] No [X]


<PAGE>

                     GPS INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX

                                                                        PAGE NO.
PART I. FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements (unaudited):
            Consolidated Balance Sheet at March 31, 2007                   F-2
            Consolidated Statements of Operations for the
             three months ended March 31, 2007 and 2006                    F-3
            Consolidated Statements of Cash Flows for the
             three months ended March 31, 2007 and 2006                    F-4
            Notes to Consolidated Financial Statements               F-5 TO F-14

Item 2.    Management's Discussion and Analysis or Plan of Operation      15-27

Item 3.    Controls and Procedures                                          29

PART II. OTHER INFORMATION

Item 1.    Legal Proceedings                                                29

Item 2.    Unregistered Sales of Equity and Use of Proceeds                 29

Item 6.    Exhibits                                                         29

SIGNATURES                                                                  30


                                       1

<PAGE>

ITEM 1. FINANCIAL STATEMENTS



                      GPS INDUSTRIES INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                 March 31, 2007
                                   (Unaudited)


Assets

Current
 Cash                                                            $       45,429
 Accounts receivable                                                  2,609,967
 Inventories                                                          1,764,925
 Prepaid expenses and other current assets                              192,004
                                                                  --------------
  Total current assets                                                4,612,325

Long-term accounts receivable                                           258,122

Property and equipment, net                                              87,864

Patents                                                               1,203,246

Deferred implementation costs                                           135,688
                                                                  --------------
                                                                 $    6,297,245
                                                                  ==============

Liabilities and Stockholders' Deficit

Current liabilities
 Bank indebtedness                                               $    1,951,905
 Deferred Revenue                                                       623,712
 Short term loans                                                     1,269,560
 Short term loan from related party                                   1,572,165
 Accounts payable and accrued liabilities                             5,359,235
 Promissory notes - related parties                                      12,582
                                                                  --------------
                                                                     10,789,159

Liabilities related to discontinued operations
(Chapter 7 proceedings filed in 2002)
Promissory note payable                                               1,274,757
Accounts payable and accrued liabilities                                638,293
Loans payable to related parties                                        258,000
Capital lease obligations ( in default)                                  29,467
                                                                  --------------
                                                                      2,200,517
                                                                  --------------
          Total current liabilities                                  12,989,676
                                                                  --------------

Stockholders' deficit
 5% Convertible Series A Preferred Shares,
    $.001 par value, 15,000,000 authorized,
    Issued and outstanding - None                                             -
 Series B Convertible Preferred Shares,
    $10 par value, 4,000,000
    authorized, 1,874,089 issued and outstanding                     18,740,890
 Class A common stock, $.001 par value,
    1,600,000,000 authorized
    373,833,966 issued and outstanding                                  373,834
 Accumulated other comprehensive income                                 722,295
 Additional paid-in capital                                          55,185,681
 Accumulated deficit                                               ( 81,715,131)
                                                                  --------------
          Total Stockholder's Deficit                               ( 6,692,431)
                                                                  --------------
                                                                 $    6,297,245
                                                                  ==============


See accompanying notes to unaudited consolidated financial statements
                                      F-2

<PAGE>

                      GPS INDUSTRIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                            For the Three Months Ended March 31
                                            -----------------------------------
                                                  2007               2006
                                            ---------------     ---------------
                                               (Unaudited)       (Unaudited)

Revenue                                        $ 2,256,887       $   826,091

Cost of Goods Sold                               1,433,464           433,257

Installation Costs                                 223,259            70,394

                                            ---------------     ---------------
Gross Profit                                       600,164           322,440
                                            ---------------     ---------------

Operating Expenses
 General and Administrative Expenses               944,143           936,763
 Depreciation and amortization                      91,873            84,143
 Sales and marketing                             1,256,981           645,594
 Operations, Engineering and
  Research & Development                           993,163           632,226
                                            ---------------     ---------------
                                                 3,286,160         2,298,726
                                            ---------------     ---------------

Loss Before Other Income (Expense)             ( 2,685,996)      ( 1,976,286)
                                            ---------------     ---------------

Other Income (Expense)
 Finance costs                                    ( 21,635)         ( 54,112)
 Interest expense                                ( 294,161)        ( 999,897)
 Derivative liabilities -
  decrease in fair value                               -           1,262,415
 (Loss)/Gain on foreign exchange                    13,506             ( 290)
 Gain on extinguishment of debt                    108,199            87,950
                                            ---------------     ---------------
                                                 ( 194,091)          296,066
                                            ---------------     ---------------

Net Loss                                     $ ( 2,880,087)  $   ( 1,680,220)
                                            ===============     ===============

Loss per common share -
 basic and diluted                           $     ( 0.01)   $      ( 0.01)
                                            ---------------     ---------------


Weighted average number of common shares
 outstanding -
  basic and diluted                            368,430,929       286,870,323
                                            ===============     ===============


See accompanying notes to unaudited consolidated financial statements
                                      F-3

<PAGE>

                      GPS INDUSTRIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                            For the Three Months Ended March 31
                                            -----------------------------------
                                                2007                 2006
                                            ---------------     ---------------
                                               (Unaudited)       (Unaudited)

Cash Flow From Operating Activities

 Net loss from operations                       $ ( 2,880,087)  $ ( 1,680,220)

 Adjustments to reconcile net loss to
  net cash used in operating activities:
   Depreciation and amortization                       91,873          84,143
   Amortization of deferred compensation               56,316          56,316
   Loss on extinguishment of debt                           -          77,017
   Expenses paid by issuance of stock                       -         115,380
   Expenses paid by issuance of stock options          49,180               -
   Decrease in fair value of derivative liabilities         -     ( 1,262,415)
   Amortization of debt discount                            -         595,867
   Amortization of finance costs                        1,674          87,140

  Changes in operating assets and liabilities:
   Inventories                                      ( 291,380)      ( 380,601)
   Accounts receivable                            ( 1,496,515)        282,687
   Long-term accounts receivable                       15,621        ( 13,288)
   Prepaid expenses and deposits                      196,152        ( 88,459)
   Deferred implementation costs                     ( 19,341)       ( 13,596)
   Accounts payable and accrued liabilities         ( 331,596)        571,847
   Discontinued operations -
    accounts payable and accrued liabilities        ( 108,198)      ( 164,967)
   Deferred Revenue                                   196,338         209,309
                                                 -------------     -------------
Net Cash Used In Operating Activities             ( 4,519,963)    ( 1,523,840)
                                                 -------------     -------------
Cash Flow From Investing Activities
 Purchase of property and equipment                   ( 8,097)       ( 20,272)
 Investment in Optimal Golf Solutions Inc.          ( 806,652)             -
                                                 -------------     -------------
Net Cash Flow Used In Investing Activities          ( 814,749)       ( 20,272)
                                                 -------------     -------------
Cash Flow From Financing Activities
 Subscription receivable                            5,000,000               -
 Proceeds from loans and bank indebtedness          ( 432,414)      1,475,291
 Repayments of loans                              ( 1,383,665)         8,511
                                                 -------------     -------------
Net Cash Flow Provided By Financing Activities      3,183,921       1,483,802
                                                 -------------     -------------

Net Decrease In Cash                              ( 2,150,791)       ( 60,310)

Cash, Beginning Of Period                           2,196,220         131,174
                                                 -------------     -------------

Cash, End Of Period                             $      45,429     $    70,864
                                                 =============     =============

Supplemental disclosure of cash flow
 information:
  Cash paid for interest                        $     294,161     $   404,030
                                                 =============     =============
  Cash paid for taxes                           $        -        $        -
                                                 =============     =============

Non-Cash Investing And Financing Activities
  Common stock issued for investment
   in subsidiary                                $   1,653,329     $        -
                                                 =============     =============


See accompanying notes to unaudited consolidated financial statements
                                      F-4


                <PAGE>


                      GPS Industries, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                   Three months ended March 31, 2007 and 2006
                                  (Unaudited)

1. Organization and Basis of Presentation

     Basis of Presentation - The consolidated  financial  statements include the
operations  of GPS  Industries,  Inc.  and its  wholly-owned  subsidiaries  (the
"Company").  All significant  intercompany  transactions  and balances have been
eliminated in consolidation.

     The interim  consolidated  financial  statements are unaudited,  but in the
opinion of management  of the Company,  contain all  adjustments,  which include
normal recurring adjustments, necessary to present fairly the financial position
at March 31, 2007,  the results of  operations  for the three months ended March
31, 2007 and 2006,  and the cash flows for the three months ended March 31, 2007
and 2006.  The results of  operations  for the three months ended March 31, 2007
are not  necessarily  indicative of the results of operations to be expected for
the full fiscal year ending December 31, 2007.

     Certain information and footnote disclosures normally included in financial
statements  that have been  presented  in  accordance  with  generally  accepted
accounting  principles have been condensed or omitted  pursuant to the rules and
regulations of the Securities  and Exchange  Commission  with respect to interim
financial  statements,  although  management  of the Company  believes  that the
disclosures  contained in these  financial  statements  are adequate to make the
information presented therein not misleading. For further information,  refer to
the  consolidated  financial  statements  and  notes  thereto  included  in  the
Company's  Annual  Report on Form 10-KSB for the fiscal year ended  December 31,
2006, as filed with the Securities and Exchange Commission.

     Business - The Company is a golf course management  technology  company. It
owns the  rights to both a  hand-held  and cart  mounted  product  using  Global
Positioning  Systems  ("GPS")  technology  that it  markets  through  it's sales
offices in the USA, and through  sales  distributors  in the USA, UK and Europe,
Australia,  South Africa and Asia. It's portable  product,  the "Inforemer",  is
connected through a wireless link to golf course management  information systems
that are marketed as part of its golf course suite of products. The Inforemer is
capable of exhibiting  continuously updated  advertising.  The Company currently
generates  most of its revenues  from the sale and  installation  of its GPS and
wireless  products and software  tools.  To a lesser  extent,  it also generates
revenues from licensing to third parties  certain of the patents that it owns on
golf  course  technologies.  The  Company's  business  plan  is to  establish  a
substantial  base of golf course clients (either through the sale of golf course
systems or through  acquisitions of other companies) and to thereafter  generate
recurring  revenues from (i) selling  advertising for exhibition on the Informer
units used at those golf courses,  and (ii) from other revenue  generating  golf
course programs,  such as the Fire At The Flag(TM)  program.  At March 31, 2007,
substantially all of the Company's assets and operations were located in Canada.

     During the three months ended December 31, 2002, the Company's wholly-owned
subsidiary,  Inforetech Golf Technology 2000 Inc., ceased operations and filed a
petition  for relief under  Chapter 7 of the United  States  Bankruptcy  Code on
December 19, 2002, which was subsequently granted (see Note 5).


                                      F-5
<PAGE>

     The Company acquired 100% of the equity of ProShot Golf Inc. ("ProShot") on
January  12,  2001.  ProShot  was a  California-based  company  involved  in the
manufacture,  marketing,  leasing and  installation  of an integrated GPS system
that was  installed  directly on golf courses and provided  golfers with yardage
readings and potential  shot options from any location on a golf course.  During
the three months ended December 31, 2001,  ProShot ceased operations and filed a
petition for relief under Chapter 7 of the United States  Bankruptcy Code on May
31, 2002, which was subsequently granted (see Note 5).

     As  a  result  of  these  Chapter  7  bankruptcy  filings,   the  remaining
liabilities  of  such   discontinued   subsidiaries   have  been  classified  as
liabilities of discontinued operations in the accompanying financial statements.
These  liabilities  are being  written  off in  accordance  with the  statute of
limitations in the jurisdiction in which they were incurred.

     On November  19, 2004 GPS  Industries,  Inc.  purchased  100% of the common
shares of Optimal  Golf  Solutions,  Inc.  ("Optimal"),  the  financial  results
(including  Patent  License Fee  Revenues)  of which are  consolidated  into the
financial statements of GPSI.

2. Going Concern

     The  consolidated  financial  statements have been prepared
assuming that the Company will continue as a going concern,  which  contemplates
the  realization  of assets and the  satisfaction  of  liabilities in the normal
course of business.  The carrying amounts of assets and liabilities presented in
the consolidated financial statements do not purport to represent the realizable
or  settlement  values.  The Company has incurred  significant  losses and had a
working  capital  deficit at March 31, 2007 and December 31, 2006. The continued
commercialization  of the  Company's  technology  is dependent on the  Company's
ability to  successfully  finance its  working  capital  requirements  through a
combination of debt and equity financings, sales of its GPS systems and payments
from distributors and potential  strategic partners.  The Company's  independent
registered certified public accountants,  in their independent  auditors' report
on the consolidated  financial  statements as of and for the year ended December
31,  2006,  have  expressed  substantial  doubt about the  Company's  ability to
continue as a going concern.

     The Company is attempting to restructure its debt obligations and raise new
capital.  To the extent that the Company is unable to  successfully  restructure
its debt obligations and/or obtain the capital necessary to fund its future cash
requirements on a timely basis and under  acceptable  terms and conditions,  the
Company will not have sufficient cash resources to maintain operations,  and may
consider a formal or informal restructuring or reorganization.

     The Company's  liquidity and capital resources were substantially  improved
on December 29, 2006 by the sale of  $15,740,890  of newly  authorized  Series B
Convertible  Preferred Stock (the "Series B Shares") and warrants to Great White
Shark Enterprises,  Inc. ("GWSE") and Leisurecorp LLC and by the concurrent sale
of the Series B Shares to Douglas Wood, one of its  directors,  in exchange for,
and as payment for  $3,000,000 of cash loans he had  previously  made to it. The
$3,000,000 of loans were repaid  through the issuance of 300,000 Series B Shares
and warrants to purchase 49,180,328 shares of common stock to Mr. Wood. Also, on
December 29, 2006 Robert C.  Silzer,  the  Company's  Chief  Executive  Officer,
cancelled  $750,000 of obligations owed to him in exchange for 12,295,082 shares
of common stock and warrants to purchase  3,073,770  shares of common  stock.  A
portion of the cash proceeds of the foregoing  sales of securities  were used to
reduce  indebtedness,  and the balance is being used for working capital to fund
operations.


                                      F-6
<PAGE>

     In connection  with the  foregoing  purchase of Series B Shares by GWSE and
Leisurecorp,  the Company  agreed to give GWSE and  Leisurecorp  each the right,
exercisable until the end of April 2007, to increase their  investment,  or make
an  additional  investment  in the shares of Series B Shares and warrants on the
same  terms  as the  securities  sold to them on  December  29,  2006.  GWSE and
Leisurecorp  timely  exercised the foregoing  option in April 2007 to purchase a
total of  $12,500,000 of additional  shares of Series B Stock and warrants,  and
the closing of the purchase of the  $12,500,000  additional  Series B Shares and
warrants was  consummated  on May 8, 2007.  Leisurecorp  purchased  its Series B
Shares and warrants by delivering a $10,000,000  interest-free  promissory  note
(the "Note") that is secured by the  securities  sold to  Leisurecorp,  and GWSE
purchased its Series B Shares and warrants in exchange for cash ($1,500,000) and
the  cancellation of $1,000,000 of outstanding  indebtedness the Company owed to
GWSE.  Leisurecorp  is required to repay the Note as follows:  $2,000,000  on or
before  June 30,  2007;  $4,000,000  on or  before  October  31,  2007;  and the
remaining  $4,000,000 on or before  December 31, 2007. The Company has agreed to
use approximately  $5.5 million of the future Note payments to repay most of its
currently  outstanding  indebtedness  (other  than trade  accounts  payable  and
accrued operating liabilities incurred in the ordinary course of operations).

3. Summary of Significant Accounting Policies

Revenue Recognition -

     The  Company  recognizes  revenue  only  when  persuasive  evidence  of  an
arrangement  exists,  delivery  has  occurred,  the  sales  price  is  fixed  or
determinable, and collectibility is probable. When other significant obligations
remain after products are delivered, associated revenue is recognized only after
such  obligations  are  fulfilled.  Cost of Goods  Sold  represents  the cost of
physical  equipment  delivered to the customer and  installed on the  customer's
site.  The cost of installing  the  equipment on the  customer's  site,  such as
contract labour, travel and accommodation expenses, are recorded as Installation
Costs.  The cost of developing  the equipment and the software  installed in the
equipment  on the  customer's  site is recorded as an  operating  expense in the
category "Operations, Engineering, Research and Development", all such costs are
expensed as they are incurred.

Use of Estimates -

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

Derivative Liabilities -

     The Company accounts for its liquidated  damages pursuant to Emerging Issue
Task Force ("EITF") 05-04, View C, "The Effect of a Liquidated Damages Clause on
a  Freestanding  Financial  Instrument",   subject  to  EITF  Issue  No.  00-19,
"Accounting  for Derivative  Financial  Instruments  Indexed to, and Potentially
Settled in, a Company's Own Stock".  Pursuant to EITF 05-04,  View C, liquidated
damages  payable in cash or stock are  accounted  for as a separate  derivative,
which  requires a  periodical  valuation  of its fair value and a  corresponding
recognition of liabilities associated with such derivative. The Company accounts
for its embedded conversion features and freestanding  warrants pursuant to SFAS
No. 133, "Accounting for Derivative  Instruments and Hedging Activities",  which
requires  a  periodic   valuation  of  their  fair  value  and  a  corresponding
recognition of liabilities associated with such derivatives.  The recognition of
derivative  liabilities  related to the  issuance  of shares of common  stock is
applied first to the proceeds of such issuance, at the date of issuance, and the
excess of  derivative  liabilities  over the  proceeds  is  recognized  as other
expense in the accompanying  consolidated financial statements.  The recognition
of derivative liabilities related to the issuance of convertible debt is applied
first  to the  proceeds  of such  issuance  as a debt  discount,  at the date of
issuance,  and the  excess  of  derivative  liabilities  over  the  proceeds  is
recognized  as  other  expense  in  the  accompanying   consolidated   financial
statements.  Any  subsequent  increase  or  decrease  in the  fair  value of the
derivative   liabilities  is  recognized  as  other  expense  or  other  income,
respectively.


                                      F-7
<PAGE>

Foreign Currency Translation -

     Assets and liabilities of subsidiaries in foreign  countries are translated
into United  States  dollars  using the  exchange  rate in effect at the balance
sheet date or the  historical  rate, as  applicable.  Results of operations  are
translated using the average  exchange rates  prevailing  throughout the period.
The effects of exchange rate fluctuations on translating foreign currency assets
and  liabilities  into  United  States  dollars are  included  in  stockholders'
deficiency as accumulated  other  comprehensive  income,  while gains and losses
resulting from foreign currency transactions are included in operations.

Net Loss Per Common Share -

     Basic loss per  common  share is  calculated  by  dividing  net loss by the
weighted average number of common shares outstanding during the period.  Diluted
loss per common  share  reflects  the  potential  dilution  that would  occur if
dilutive stock options and warrants were exercised.  These potentially  dilutive
securities  were not  included  in the  calculation  of loss per  share  for the
periods  presented  because the Company  incurred a loss during such periods and
thus their effect would have been anti-dilutive.  Accordingly, basic and diluted
loss per common share is the same for all periods presented.


Stock-Based Compensation -

     The  Company  periodically  issues  shares  of common  stock  for  services
rendered or for  financing  costs.  Such  shares are valued  based on the market
price on the transaction date.

     The Company periodically issues stock options and warrants to employees and
non-employees in non-capital raising transactions for services and for financing
costs.

     The Company  expenses  stock options and warrants  under the  provisions of
Statement of Financial  Accounting  Standards ("SFAS") No. 123(R),  "Share-Based
Payment" (SFAS 123(R)).  Stock-based compensation represents the cost related to
stock-based  awards  granted to  employees  and  others.  The  Company  measures
stock-based  compensation  cost at grant date, based on the estimated fair value
of the award,  and recognizes the cost as expense on a straight-line  basis (net
of  estimated  forfeitures)  over the  requisite  service  period.  The  Company
estimates the fair value of stock options using a Black-Scholes valuation model.
The expense is recorded in the Consolidated Statements of Operations.

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
estimating  the fair value of traded  options that have no vesting  restrictions
and are fully  transferable.  In addition,  option  valuation models require the
input of highly  subjective  assumptions  including  the  expected  stock  price
volatility.

Income Taxes -

     The Company records a valuation allowance to reduce its deferred tax assets
arising from net operating loss  carryforwards to the amount that is more likely
than not to be realized. In the event the Company was to determine that it would
be able to  realize  its  deferred  tax  assets  in the  future in excess of its
recorded  amount,  an adjustment to the deferred tax assets would be credited to
operations  in the period  such  determination  was made.  Likewise,  should the
Company  determine  that it  would  not be able  to  realize  all or part of its
deferred  tax assets in the future,  an  adjustment  to the  deferred tax assets
would be charged to operations in the period such determination was made.


                                      F-8
<PAGE>

Reclassifications -

     Certain   reclassifications  of  items  in  the  prior  period's  financial
statements have been made to conform to the current year's presentation.

Recent Accounting Pronouncements -

     In June 2006,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Financial  Interpretation  (FIN) No. 48,  "Accounting  for Uncertainty in Income
Taxes -- an  Interpretation  of FASB  Statement  No. 109." FIN 48 addresses  the
accounting  for  uncertainty  in  income  taxes  recognized  in an  enterprise's
financial  statements  in  accordance  with  Statement of  Financial  Accounting
Standards  (SFAS) No. 109,  "Accounting  for Income  Taxes."  FIN 48  prescribes
specific criteria for the financial statement recognition and measurement of the
tax effects of a position  taken or  expected to be taken in a tax return.  This
interpretation also provides guidance on de-recognition of previously recognized
tax benefits,  classification of tax liabilities on the balance sheet, recording
interest and penalties on tax underpayments,  accounting in interim periods, and
disclosure requirements.  FIN 48 is effective for fiscal periods beginning after
December 15, 2006. The Company is currently  evaluating the impact,  if any that
the adoption of FIN 48 will have on its financial statements.

     In September  2006,  the FASB issued FASB Statement No. 157. This Statement
defines  fair  value,  establishes  a  framework  for  measuring  fair  value in
generally accepted  accounting  principles (GAAP), and expands disclosures about
fair  value   measurements.   This  Statement  applies  under  other  accounting
pronouncements that require or permit fair value measurements,  the Board having
previously  concluded in those  accounting  pronouncements  that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement  will change  current  practices.  This  Statement  is  effective  for
financial statements for fiscal years beginning after November 15, 2007. Earlier
application is permitted  provided that the reporting  entity has not yet issued
financial  statements for that fiscal year.  Management is currently  evaluating
the impact,  if any,  that the  adoption  of FAS 157 will have on its  financial
statements.

     In December  2006,  the FASB  approved FASB Staff  Position  (FSP) No. EITF
00-19-2,   "Accounting  for  Registration   Payment   Arrangements"  ("FSP  EITF
00-19-2"),  which  specifies  that  the  contingent  obligation  to make  future
payments  or  otherwise  transfer  consideration  under a  registration  payment
arrangement,  whether issued as a separate  agreement or included as a provision
of a financial  instrument or other agreement,  should be separately  recognized
and measured in accordance with SFAS No. 5, "Accounting for Contingencies".  FSP
EITF 00-19-2 also  requires  additional  disclosure  regarding the nature of any
registration payment arrangements,  alternative  settlement methods, the maximum
potential  amount  of  consideration  and the  current  carrying  amount  of the
liability,  if any. The guidance in FSP EITF 00-19-2 amends FASB  Statements No.
133,  "Accounting for Derivative  Instruments and Hedging  Activities",  and No.
150, "Accounting for Certain Financial  Instruments with Characteristics of both
Liabilities and Equity", and FASB Interpretation No. 45, "Guarantor's Accounting
and Disclosure  requirement for  Guarantees,  Including  Indirect  Guarantees of
Indebtedness of Others",  to include scope exceptions for  registration  payment
arrangements. FSP EITF 00-19-2 is effective immediately for registration payment
arrangements and the financial  instruments  subject to those  arrangements that
are entered into or modified subsequent to the issuance date of this FSP, or for
financial  statements issued for fiscal years beginning after December 15, 2006,
and  interim  periods  within  those  fiscal  years,  for  registration  payment
arrangements entered into prior to the issuance date of this FSP. The Company is
currently  evaluating the impact, if any, on the Company's  financial  position,
results of operations or cash flows.


                                      F-9
<PAGE>

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial  Assets and Financial  Liabilities-including  an amendment of FAS 115"
(Statement 159).  Statement 159 allows entities to choose, at specified election
dates, to measure  eligible  financial assets and liabilities at fair value that
are not otherwise required to be measured at fair value. If a company elects the
fair value  option for an  eligible  item,  changes in that item's fair value in
subsequent  reporting periods must be recognized in current earnings.  Statement
159 is effective  for fiscal years  beginning  after  November 15, 2007.  We are
currently  evaluating  the  potential  impact of Statement  159 on our financial
statements. We do not expect the impact will be material.

4. Debt

Bank Indebtedness

     Effective  June 27,  2003,  the Company  obtained a bank line of credit for
$1,485,000  to fund its  operations.  As of March  31,  2007,  the  Company  had
borrowed  approximately  $1,951,805  under  this  line  of  credit.  The  excess
represents the cash float arising from timing differences  between when payments
are issued from this account and when they are presented  for payment.  The line
of credit bears  interest at prime plus 0.5%, is repayable in full on demand and
is secured by a one year standby bank letter of credit for  $1,500,000  that was
provided by a third party, Hansen Inc. This standby letter of credit from Hansen
Inc.  has been  renewed a number of times and is  currently  renewed to July 31,
2007.  As  consideration  for renewing  the standby  bank letter of credit,  the
Company has issued to Hansen Inc.  common  stock  purchase  warrants to purchase
1,500,000 shares of the Company's  common stock,  exercisable at $0.10 per share
(a 15%  discount  to the then  market  price)  for a period of three  years.  In
addition the Company extended 2,000,000 previously issued warrants which expired
in 2006 to expire in 2008 at a price of $0.05.  $75,416, the fair value of these
common stock purchase warrants,  calculated pursuant to the Black-Scholes option
pricing model,  was charged to operations as finance costs for the twelve months
ended  December 31, 2006. The Company also pays a standby LOC fee to Hansen Inc.
of 2% per annum on a quarterly  basis,  amounting  to  approximately  $7,500 per
quarter..

     Effective  March  23,  2004,  the  Company  entered  into  a  Reimbursement
Agreement  with  Douglas J. Wood,  Daniel S. Wood and James  Liken (the  Secured
Party)  to have  them  secure a new  $1,000,000  line of  credit  to be used for
manufacturing  purposes.  The  security  provided  was a Letter of  Credit  from
Citicorp North America Inc. The Company's  bankers,  HSBC Bank Canada,  provided
the  Company  this new line of credit on April 29,  2004  based on the  security
provided,  on which interest at prime plus one half of one percent  interest was
payable. On June 22, 2006 this Letter of Credit was increased to $1,400,000.  As
consideration for the security  provided,  the Company agreed to pay the Secured
Party 15% per annum of the maximum amount outstanding in the month,  payable 50%
in US$ and 50% in common  shares of the  Company,  issued at a 10%  discount  to
market based on the seven day average price prior to each quarter end. Beginning
July 2006 the  consideration was 100% paid in cash. The Company has accrued this
consideration  to February 28, 2007.  Additionally  the Company  agreed to issue
666,667  warrants  to purchase  common  stock of the Company at $0.15 per common
share. The Company also granted the Secured Party a security interest in all the
Company's inventory. This letter of credit, along with its related Reimbursement
Agreement,  was subsequently  renewed until February 28, 2007, at which point it
expired and the line of credit was removed.

Short-Term Loans

     As of March 31, 2007 the Company has $2,841,725  owing on short term notes.
These amounts are repayable on demand and bear  interest at varying  rates.  The
largest of these, amounting to $1,572,165, is from a director and stockholder.


                                      F-10
<PAGE>

Purchase Order Financing

     In January  2006 the Company  entered  into an  agreement  with Great White
Shark  Enterprises to obtain purchase order financing on confirmed sales orders.
As of March 31, 2007 the Company owed $554,560 on this purchase order  financing
line of  credit.  The  Company  pays 18% per annum  interest  for the period the
advance is required.  Additionally  the lender receives  100,000 shares for each
$250,000  advanced.  The balance of $554,560  owing under this financing line at
March 31,  2007 is  included  in the  balance of  $1,269,560  owed on Short Term
Loans.

Liability Associated with Acquisition of Optimal Golf Solutions, Inc.

     On  November  19, 2004 the Company  acquired  100% of the common  shares of
Optimal Golf Solutions,  Inc.  ("Optimal"),  a Texas corporation owned by Darryl
Cornish and Charles Huston ("Optimal  Shareholders"),  for a total of $5,250,000
plus interest of 4.75% on the principal balance  outstanding payable as follows:
$100,000  on  signing a Letter Of Intent on  November  8,  2004,  $1,000,000  on
closing, a stock payment of 9,000,000 restricted common shares of GPSI valued at
$2,250,000  using a minimum price of $.25 per share and a final stock payment of
$1,900,000 representing 7,600,000 common shares of GPSI using a minimum price of
$.25  per  share.  These  shares  could be sold  after  the  effectiveness  of a
registration  statement and in accordance  with a Leakage  Agreement.  The final
purchase  price may vary,  however,  depending  on the  price  that the  Optimal
Shareholders  receive  for the  shares  they  sell.  The  obligation  to pay the
deferred  purchase price was secured by a first security interest in the Optimal
patents as described below.

     The first stock  payment of 9,000,000  shares could be sold (in  accordance
with the  Leakage  Agreement)  over 180  trading  days.  If the  former  Optimal
shareholders  sold their shares and received  less than the target price of $.25
per share,  then the Company was required to issue additional  shares to make up
the difference (or cash under certain conditions).

     The second stock payment was to be issued at a 15% discount to market price
at the  time  of  issuance  and can be  sold  into  the  market  by the  Optimal
Shareholders  over a further  180  trading  days.  On May 28,  2005 the  Company
entered  into a First  Amendment  to Stock  Purchase  Agreement  whereby  it was
granted up to six months of  additional  time to have a  Registration  Statement
declared effective.  As consideration for this extension,  the Company agreed to
pay $100,000 per month until the Registration  Statement was declared effective,
which  would be applied to the balance  owing  which was to be settled  with the
second  stock  payment.  The  Company  paid a total of  $600,000  to the Optimal
Shareholders under this amendment.  However,  because the Registration Statement
was not filed by  September  30,  2005,  the  Company  lost the  benefit  of the
reduction in the balance of the second stock payment and of any amounts realized
from the sales of the first stock payment over $3,250,000 (the "cap"), which was
to reduce the amount to be paid in the second stock payment.

     The  Company  agreed  to use its best  efforts  to file  and  cause to have
effective a Registration  Statement covering the resale of the shares issued. If
the  Registration  Statement was not effective by June 30, 2005, the Company was
obliged to pay cash of $2,250,000 plus interest over eight monthly  installments
of $250,000 each starting June 1, 2005. In that case, the first stock payment of
shares would be returned to the Company. If the Registration  Statement were not
effective  by  September  30,  2005,  then it would also pay cash to the Optimal
Shareholders  (in lieu of a second stock payment) of $1,900,000 plus interest in
eight monthly payments of $237,500 commencing on October 1, 2005.

     Because  the  Company  did not have  the  Registration  Statement  filed by
September  30, 2005,  it agreed to register the resale of the  9,000,000  shares
issued for the first stock payment and an additional  31,000,000 shares to cover
the shares issuable for the second stock payment and the additional  shares that
must be issued to cover  decrease in the market  price of its common stock which
had a closing bid price of $0.065 on December  31, 2005.  The Company  filed the
SB2 Registration  Statement covering these shares on October 20, 2005 and it was
declared effective by the SEC on December 7, 2005.

     Upon receipt of the first  $727,000 of net proceeds from the sale of shares
issued to the Optimal  Shareholders  for the second stock  payment,  this amount
will be forwarded to the Company's attorney to be held in escrow for a period of
18 months from  closing to  partially  secure the  shareholders  indemnification
obligations to GPSI under the Agreement.


                                      F-11
<PAGE>

     The trading period for the first stock payment  expired on August 22, 2006.
Based upon the  receipts  from the sale of the first  stock  payment  during the
trading period the Company had a liability to the Optimal  Shareholders  for the
balance of the first stock payment of approximately  $1.65 million at that date.
The Company also has a liability to issue approximately 30,400,000 shares to the
Optimal Shareholders to fund the second stock payment liability of approximately
$1.65  million.  Subsequent  to August 22,  2006 the  Company  paid the  Optimal
Shareholders $300,000 of the liability under the first stock payment and they in
turn agreed to sell the  remaining  balance of the unsold shares they still held
from the first stock payment and to apply the proceeds against the liability for
the balance due. These  subsequent  sales reduced the remaining  liability under
the first stock  payment to $806,852  which was paid in January 2007. On January
16, 2007 the Company issued  30,392,082 shares to satisfy the liability to issue
shares for the second stock payment.  Full  satisfaction  of this liability will
depend on the Optimal  Shareholders  receiving sufficient funds from the sale of
the second stock  payment  shares to pay down the  remaining  liability in full.
Based on the market price of the Company's stock at March 31, 2007 the remaining
liability  would be satisfied in full from the sale of the shares issued for the
second stock payment.

     Optimal was primarily  engaged in the business of holding patents  relating
to GPS technology for the golf industry.  Optimal held an important U.S.  patent
no.  5,364,093  which  was  issued  on  November  15,  1994 for a Golf  Distance
Measuring System and Method. They also owned U.S. Patent No. 5,751,244 which was
for the Method and Apparatus for Calibration of a GPS Receiver. Optimal had also
made a Canadian  patent  application no 2,134,737  entitled Method and Apparatus
for Message  Display on a Golf Course.  The 093 Patent has been  licensed to six
companies,  of which two  currently  pay  annual  licensing  fees.  All  license
payments received were required to be forwarded to Great White Shark Enterprises
until their loan in the amount of  $3,000,000,  plus  interest  owing of 10% per
annum,  was fully  repaid.  This  loan was  converted  to  Series B  Convertible
Preferred  Shares on December 29, 2006.  Great White Shark is entitled to 20% of
all patent license  payments  received  through December 31, 2008, at which time
their share of these fees will be increased to 40% for the remaining life of the
patents.  The Company has accrued this  liability to March 31, 2007. The Company
expects to license  the 093 Patent on a  non-exclusive  basis to other GPS based
golf system providers.

Other Debt Related Activity

Derivative Liabilities

     During the year ended December 31, 2005, the Company recognized  derivative
liabilities of approximately $9.5 million pursuant to the issuance of $3,720,000
in  Secured  Convertible  Notes  ("the  Notes")  and  the  granting  of  certain
registration  rights which provided for liquidated damages and a default premium
in the event of failure to timely  register or deliver the shares in  connection
with the  issuance of the Notes and the related  Warrants.  The  recognition  of
these derivative  liabilities is more fully described in the 10-KSB for the year
ended December 31, 2005.

     The fair value of the derivative  liabilities recorded at December 31, 2005
amounted to $9,460,366.  The fair value of the  derivative  liabilities at March
31,  2006  amounted  to  $8,197,951.  The  decrease  in the  fair  value  of the
derivatives  in the period  amounting to $1,262,415 was recorded as other income
for the period.  The Company repaid the Notes in November 2006 which  eliminated
the derivative  liabilities.  Accordingly  there is no income or expense arising
from the fair value of the derivative  liabilities in the period ended March 31,
2007.


                                      F-12
<PAGE>

5. Liabilities Related to Discontinued Operations

     As a result of the bankruptcy of Inforetech  Golf  Technology 2000 Inc. the
Company has recorded  accounts payable and accrued  liabilities of $338,207 with
respect  to this  discontinued  operation,  which are  included  in  liabilities
related to  discontinued  operations in the  accompanying  consolidated  balance
sheet.

     As a result of the  Proshot  acquisition  and  subsequent  bankruptcy,  the
Company has recorded  loans payable to related  parties of $258,000,  promissory
notes payable of  $1,274,757,  capital leases in default of $29,467 and accounts
payable and accrued  liabilities of $300,086.  All such liabilities are included
in  liabilities   related  to  discontinued   operations  in  the   accompanying
consolidated balance sheet.

     In  accordance  with GAAP the amounts  are  recorded on the books until the
relevant  statutes of  limitations  expire,  at which point they will be written
off.

     During the three  months ended March 31, 2007 and 2006,  the Company  wrote
off trade debts arising from discontinued  operations  amounting to $108,199 and
$87,950  respectively.  This was based upon management's  belief that these debt
holders  rights have expired  under the statutes of  limitations  in the various
States in which the debt holders reside.

6. Legal Proceedings

     On  February 5, 2007 David  Stratton,  a former  employee,  filed a lawsuit
against the Company in the Supreme Court of British Columbia, Vancouver, Canada.
Mr.  Stratton  entered into a written  employment  agreement with the Company on
June 12,  2006  pursuant  to which the  Company  employed  Mr.  Stratton as Vice
President, Sales. The employment agreement had a three-year term, renewable each
year.  Under the employment,  Mr. Stratton was entitled to an annual base salary
of CDN $150,000,  options to purchase up to 1,500,000  shares of common stock at
an  exercise  price of $0.05 per share,  a signing  bonus of  300,000  shares of
common stock,  certain  bonuses  (including  bonuses based on gross sales),  and
sales  commissions.   On  November  8,  2006,  Mr.  Stratton's   employment  was
terminated.  Mr.  Stratton has set forth his claims in the  Statement of Claims,
which claims principally  consist of the following:  (i) a judgment equal to the
amount of his base salary  that he would have  earned,  (ii) the  signing  bonus
stock options referred to in the employment agreement, (iii) the 300,000 signing
bonus shares, (iv) special damages and punitive damages, and (v) legal fees. The
Company  has filed a  statement  of defense  denying  the claims and  intends to
vigorously defend this lawsuit.

     The Company may occasionally become subject to legal proceedings and claims
that arise in the ordinary course of business.  It is impossible to predict with
any certainty the outcome of any disputes that may arise, and the Company cannot
predict  whether  any  liability  arising  from  claims and  litigation  will be
material  in  relation  to the  consolidated  financial  position  or results of
operations.


                                      F-13
<PAGE>

7. Capital Stock Transactions

     On January 16, 2007 the Company  issued  30,392,082  shares of common stock
valued at  $1,653,329  under the terms of a contract for the purchase of certain
patents.

     All  such  securities  were  issued  pursuant  to  an  exemption  from  the
registration  requirements  of the  Securities  Act of 1933,  as amended,  under
Section 4 (2) and regulation D.











                                      F-14
<PAGE>
ITEM 2. Management's Discussion and Analysis or Plan of Operation

         The following discussion and analysis should be read in conjunction
with the consolidated financial statements and accompanying notes filed as part
of this report.

Forward-Looking Statements

         The following Management's Discussion and Analysis of Financial
Condition and Results of Operations, as well as information contained elsewhere
in this report, contain statements that constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, and Section 21E
of the Securities Exchange Act of 1934. These statements include statements
regarding the intent, belief or current expectations of us, our directors or our
officers with respect to, among other things: anticipated financial or operating
results, financial projections, business prospects, future product performance
and other matters that are not historical facts. The success of our business
operations is dependent on factors such as the impact of competitive products,
product development, commercialization and technology difficulties, the results
of financing efforts and the effectiveness of our marketing strategies, general
competitive and economic conditions. Forward-looking statements are not
guarantees of future performance and involve risks and uncertainties. Actual
results may differ materially from those projected in the forward-looking
statements as a result of various factors.

Introductory Comment

         Throughout this Quarterly Report on Form 10-QSB, the terms "we," "us,"
"our," and "our company" refer to GPS Industries, Inc., a Nevada corporation,
and, unless the context indicates otherwise, also includes our subsidiaries.

Overview

         We are a golf course management technology company. We own the rights
to both a hand-held and cart mounted product using Global Positioning Systems
("GPS") technology that we market through our sales offices in the USA, and
through sales distributors in the USA, UK and Europe, Australia, South Africa
and Asia. Our portable product, the "Inforemer", is connected through a wireless
link to golf course management information systems that are marketed as part of
our golf course suite of products. The Inforemer is capable of exhibiting
continuously updated advertising. We currently generate most of our revenues
from the sale and installation of our GPS and wireless products and software
tools. To a lesser extent, we also generate revenues from licensing to third
parties certain of the patents that we own on our golf course technologies. Our
business plan is to establish a substantial base of golf course clients (either
through the sale of our golf course systems or through acquisitions of other
companies) and to thereafter generated recurring revenues from (i) selling
advertising for exhibition on the Informer units used at those golf courses, and
(ii) from our other revenue generating golf course programs, such as our Fire At
The Flag(TM) program.

Critical Accounting Policies

         Management's discussion and analysis of our financial condition and
results of operations are based on our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosures of
contingent assets and liabilities. On an ongoing basis, management evaluates its
estimates, including those related to impairment of long-lived assets, including
finite lived intangible assets, accrued liabilities and certain expenses. We
base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ materially from these estimates under different assumptions or
conditions.

         Our significant accounting policies are summarized in Note 3 of our
consolidated financial statements for the period ended March 31, 2007.


                                       15
<PAGE>

Results of Operations

Comparison of Three Months Ended -
March 31, 2007 vs.Three Months Ended March 31, 2006

     Revenue - Revenue  during both the three month  period ended March 31, 2006
(the "2006 fiscal quarter") and the three month period ended March 31, 2007 (the
"2007 fiscal  quarter") were comprised of (i) sales generated from our Inforemer
product,  (ii) service  contract fees we received in connection with the sale of
the  Inforemer,  and (iii) patent  license fees  received by us and Optimal Golf
Solutions,  Inc., one of our  subsidiaries,  for the right to use certain of our
patented technologies. For the 2007 fiscal quarter, we recorded total revenue of
$2,257,000,  compared to  $826,000  during the 2006  fiscal  quarter.  This 173%
increase in revenue is primarily  attributable  to a 200% increase in the number
of sales and installations of our Inforemer products and related golf management
system.  The increase in sales reflects  increased  marketing and sales efforts,
the  growing  reputation  of our  system  and  our  changed  pricing  and  sales
structure.  During 2006,  we instituted a two-tiered  pricing  structure for our
golf course  sales,  which  structure  was not in effect  during the 2006 fiscal
quarter.  The new price structure offers  purchasers of our products the ability
to purchase our golf course management package at a discounted price in exchange
for granting us the right to provide  advertising on the Inforemer units used at
their golf course and the right to operate our Fire At The  Flag(TM)  program at
their golf course (we refer to this  discounted  price sales  program as our ACE
program).  Although  we  generate  less  revenue  from each  sale  under the ACE
program,  it is our goal to generate  longer term recurring  revenues from these
sales by selling advertising for those Inforemer units and by operating the Fire
At The Flag(TM)  program at those courses.  We are still  implementing  both the
advertising and Fire At The Flag(TM) program and have not yet generated material
revenues  from  these  sources.  However,  our plan is to make  these  recurring
revenues a material portion of our future revenues.  Approximately two-thirds of
the sales during the 2007 fiscal quarter were sales under the ACE program at the
discounted price.  These discounted sales reduced our current sales revenues and
decreased our gross  margins,  but are expected to provide longer term financial
returns.  In the 2007  fiscal  quarter we also  realized  $198,500 of revenue of
license  payments,  in the 2006 fiscal  quarter we received  $146,000 in license
payments.  We currently  anticipate that revenues will increase in the remaining
periods of current fiscal year ending  December 31, 2007 compared to last fiscal
year as a result of our prior marketing  efforts that are generating an increase
in  Inforemer  orders  and as a result  of our new  advertising  and Fire At The
Flag(TM) program initiatives.

     Cost of Goods Sold - Cost of goods sold  represents the cost we pay for our
Inforemer  products.  Cost of  goods  sold  for  each  Inforemer  unit  remained
substantially  the same in the 2007 fiscal  quarter  compared to the 2006 fiscal
quarter.  However,  because  two-thirds  of our sales were under our  discounted
price ACE program  (and the sales  price of each  Inforemer  unit was  therefore
less), as a percentage of revenues cost of goods sold increased from 52% to 64%.
We  currently  anticipate  that our cost of  manufacturing  the  Inforemer  will
improve in the current fiscal year due to our anticipated  increase in sales and
our improved  financial  condition,  which will allow us to obtain  better terms
from our vendors.

         Installation Costs - These costs represent our cost of delivering and
installing our equipment at our customers' sites and costs of third party
services we incur in the installation of systems that we sell to our customers.
Since we install our system in various countries, we often need the assistance
of local licensed trades to install those systems. We are improving our
installation procedures and believe that we have lowered both our in-house and
our third party installation costs in the 2007 fiscal quarter compared to the
2006 fiscal quarter. However, because two-thirds of our sales were at a lower
price than last year because those clients elected to purchase our Inforemer
package under our ACE program, as a percentage of sales, installation costs
increased.

         General and Administrative Expenses - General and administrative
expenses increased by $7,000 in the 2007 fiscal quarter compared to the 2006
fiscal quarter. General and administrative expenses increased as the result of
increases in personnel, professional fees and also the costs of the financing
initiatives undertaken in 2006. These increases were partially offset by
reductions in third party consulting fees and non-cash, stock compensation.

         Depreciation and Amortization - Depreciation and amortization increased
by $8,000 or 9% in the 2007 fiscal quarter compared to the 2006 fiscal quarter
as a result of an increase in the equipment being depreciated. Our patents are
being amortized over the remaining life of the patents.

                                       16
<PAGE>

         Selling and Marketing Expenses - Selling and marketing expenses
increased by 95% to $1,257,000 in the 2007 fiscal quarter compared to $646,000
in the 2006 fiscal quarter. The increase was attributable to a general increase
in sales activities, including in particular an increase in attendance at trade
shows. We also have increased our advertising and our expenditures on marketing
materials. Our sales commissions also increased in the 2007 fiscal quarter, as
sales increased over the prior year.

         Operations, Engineering, Research & Development Expenses - Operations,
engineering, research and development expenses in the 2007 fiscal quarter
increased by $361,000 (or 57%) over the 2006 fiscal quarter. Major factors in
this increase were the engineering and continuing development cost of the
Inforemer product, which included increased costs in personnel, consultants and
computer software development. Service costs as a result of the increased number
of Inforemer systems installed also increased. We are currently completing major
improvements in the functionality of our Inforemer, including upgrading the
computing power of our Inforemer units, the visual appearance of the units, the
ability of the units to stream video and play sound, and the ability to remotely
accept charge card payments. These improvements are expected to enhance the
advertising that can be exhibited on the Inforemer units and, thereby, to
increase the amount of advertising we will be able to sell for exhibition on
those units.

         Loss from Operations - Despite a $278,000 increase in gross profits in
the 2007 fiscal quarter to $600,000, our loss from operations increased by
$710,000 in the 2007 fiscal quarter over the loss from operations in the 2006
fiscal quarter. The increase in loss from operations in the 2007 fiscal quarter
was due primarily to the lower gross margins as a result of the lower sales
price of our products under our newly instituted ACE program. The $611,000
increase in sales and marketing and the $361,000 increase in Operations,
Engineering and Research & Development also contributed to the increased loss.
We currently anticipate that our revenues will increase in the fiscal year ended
December 31, 2007 and that our engineering and research and development costs
will, by the end of the year, decrease, thereby improving our results of
operations.

         Finance Costs - Finance costs represent expenses recognized related to
warrants we have issued. The value of the warrants is recorded as a discount on
the debt financing raised or as a deferred financing cost and is amortized over
the term of the respective debt or term of service. Financing costs also include
fees paid to a provider of a Line of Credit to the company. Finance costs
decreased in the 2007 fiscal quarter as a result of a reduction in financing
costs (including warrants issued) in the current fiscal quarter.

         Interest Expense - Interest expense decreased by 71% or $706,000 in the
2007 fiscal quarter compared to the 2006 fiscal quarter as a result of a
decrease in the amount interest-bearing debt that we were carrying during the
2007 fiscal quarter. In September 2005, we issued $3,720,000 of Callable Secured
Convertible Notes (the "Callable Notes") that bore interest at a rate of 8% per
annum. The Callable Notes created a derivative liability, which in turn created
a debt discount of $3,720,000, or 100% against the Callable Notes. This debt
discount was amortized over the term of the loan and also against any interim
conversions of the Callable Notes. This amortization amounted to $595,867 in the
2006 fiscal quarter, which was included in interest expense. We repaid the
Callable Notes in November 2006. Accordingly, during the 2007 fiscal quarter we
did not incur interest on the Callable Notes. In addition, in December 2006 we
completed the sale of $15,740,890 of our preferred stock, which proceeds were
also used to further reduce our interest bearing indebtedness.

         Derivative Liabilities - Our derivative financial instruments consist
of embedded derivatives related to the issuance of the Callable Notes. The
accounting treatment of derivative financial instruments requires that we record
the derivatives at their fair values and record them at fair value as of each
subsequent balance sheet date. Any change in fair value is recorded as
non-operating, non-cash income or expense at each reporting date. During the
2006 fiscal quarter we recorded $1,262,000 of non-operating, non-cash charges.
Because we repaid the Callable Notes in November 2006, we did not incur any of
these charges in the 2007 fiscal quarter.

                                       17
<PAGE>

         Gain on Extinguishment of Debt - Gain on extinguishment of debt
increased to $108,000 in the 2007 fiscal quarter from $88,000 in the 2006 fiscal
quarter. This gain represents a gain relating to the write-off of debt
guarantees of discontinued operations.

         Net Loss - Net loss was $2,880,000 in the 2007 fiscal quarter, which
was a $1,200,000 increase from the net loss of in the 2006 fiscal quarter.
However, but for a non-cash accounting adjustments related to derivative
liabilities that resulted in a financial statement gain of $1,262,000, the net
loss in the 2006 fiscal quarter would have been greater than the net loss in the
2007 fiscal quarter. Although we expect our interest expenses to further
decrease as our outstanding indebtedness is paid down and our revenues to
increase due to increased additional sales, decreasing the amount of our net
losses will be significantly dependent upon the success of our new advertising
and Fire At The Flag(TM) initiatives.

Liquidity And Capital Resources

         To date, we have incurred significant losses from operations. As of
March 31, 2007, we had a working capital deficit of $8,377,000. Our operations
currently do not generate sufficient cash to internally fund our working capital
needs. Accordingly, to date, our operating deficits have had to be supplemented
by outside sources of funding, including funds raised from (i) the sale of
shares of our common stock and preferred stock, (ii) the issuance of debentures,
(iii) the issuance of shares as payment for services and in satisfaction of
indebtedness, (iv) bank lines of credit, and (v) short-term loans made to us by
our affiliates and by third parties.

         Our liquidity and capital resources were substantially improved on
December 29, 2006 by the sale of $15,740,890 of newly authorized Series B
Convertible Preferred Stock (the "Series B Shares") and warrants to Great White
Shark Enterprises, Inc. ("GWSE") and Leisurecorp LLC and by the concurrent sale
of the Series B Shares to Douglas Wood, one of our directors, in exchange for,
and as payment for $3,000,000 of cash loans he had previously made to us. Also,
on December 29, 2006 Robert C. Silzer, our Chief Executive Officer, cancelled
$750,000 of obligations we owed to him in exchange for 12,295,082 shares of our
common stock and warrants to purchase 3,073,770 shares of common stock. A
portion of the cash proceeds of the foregoing sales of securities were used to
reduce our indebtedness, and the balance is being used for working capital to
fund our losses from operations.

         In connection with the foregoing purchase of Series B Shares by GWSE
and Leisurecorp, we agreed to give GWSE and Leisurecorp each the right,
exercisable until the end of April 2007, to increase their investment in our
shares of Series B Shares and warrants on the same terms as the securities sold
to them on December 29, 2006. GWSE and Leisurecorp timely exercised the
foregoing option in April 2007 to purchase a total of $12,500,000 of additional
shares of Series B Stock and warrants, and the closing of the $12,500,000
purchase of additional Series B Shares and warrants was consummated on May 8,
2007. Leisurecorp purchased its Series B Shares and warrants by delivering to us
a $10,000,000 interest-free promissory note (the "Note") that is secured by the
securities we sold to Leisurecorp, and GWSE purchased its Series B Shares and
warrants in exchange for cash ($1,500,000) and the cancellation of $1,000,000 of
outstanding indebtedness that we owed to GWSE. Leisurecorp is required to repay
the Note as follows: $2,000,000 on or before June 30, 2007; $4,000,000 on or
before October 31, 2007; and the remaining $4,000,000 on or before December 31,
2007. We have agreed to use approximately $5.5 million of the future Note
payments to repay most of our currently outstanding indebtedness (other than
trade accounts payable and accrued operating liabilities incurred in the
ordinary course of operations).


                                       18
<PAGE>

         Operating Activities - During the 2007 fiscal quarter, our operations
utilized cash of $4,520,000 as compared to $1,524,000 during the three months
ended March 31, 2006. The increase in cash utilized in operations in the 2007
fiscal quarter as compared to the 2006 fiscal quarter was primarily a result of
increases in accounts receivable and inventory, a decrease in accounts payable,
combined with an increase in the net loss adjusted for non-cash items; partially
offset by increases in deferred revenue and a reduction of prepaid expenses.

         Investing Activities - Net cash used in investing activities was
$815,000 in the 2007 fiscal quarter, consisting of the purchase of equipment and
patents and payments relating to the purchase of Optimal Golf Solutions, Inc.

         Financing Activities - Net cash provided by financing activities was
$3,184,000 for the 2007 fiscal quarter as a result of receipt of equity
investment funds partially offset by repayment of loans.

         We do not believe that inflation has had a material impact on our
business or operations.

         We are not a party to any off-balance sheet arrangements and do not
engage in trading activities involving non-exchange traded contracts. In
addition, we have no financial guarantees, debt or lease agreements or other
arrangements that could trigger a requirement for an early payment or that could
change the value of our assets.


Lines of Credit
         We currently have a bank line of credit for $1,485,000 available to us
to fund our operations. As of March 31, 2006, we had borrowed $1,951,905 under
this line of credit. The excess represents the cash float arising from timing
differences between when payments are issued from this account and when they are
presented for payment. The line of credit bears interest at prime plus 0.5%, is
repayable in full on demand and is secured by a one year standby bank letter of
credit for $1,500,000 that was provided by a third party, Hansen Inc. This
standby letter of credit from Hansen Inc. has been renewed a number of times and
is currently renewed to July 31, 2007. As consideration for renewing the standby
bank letter of credit, we issued to Hansen Inc. common stock purchase warrants
to purchase 1,500,000 shares of common stock, exercisable at $0.10 per share (a
15% discount to the then market price) for a period of three years. In addition,
we extended 2,000,000 previously issued warrants which expired in 2006 to expire
in 2008 at a price of $0.05. We also pay a standby letter of credit fee to
Hansen Inc. equal to 2% per annum on a quarterly basis, amounting to
approximately $7,500 per quarter.

         On February 28, 2007, a line of credit that was available to us under
an agreement with Douglas J. Wood, Daniel S. Wood and James Liken expired and is
now no longer available to us. This $1,400,000 line of credit from HSBC Bank
Canada was used for funding our manufacturing costs.

                                       19
<PAGE>

         In January 2006 we entered into an agreement with Great White Shark
Enterprises to obtain purchase order financing on confirmed sales orders. GWSE
has agreed to make up to a maximum $1,250,000 of such advances available to us
at any one time. Advances are made to us against firm purchase orders that we
receive for sales and installations of our golf course GPS products, and all
funds advanced are to be used to fulfill the identified purchase order. The
advances are then repaid at the time that the payments are made by our clients
under the purchase order. As of March 31, 2007 we owed $554,560 on this purchase
order financing line of credit. We pay interest on advances made to us under
this facility at a rate of 18% per annum. Additionally we have agreed to issue
100,000 shares of our common stock to GWSE for each $250,000 advanced to us
under this facility. The balance of $554,560 owing under this financing line at
March 31, 2007 is included in the balance of $1,269,560 owed on short term
loans.

         Based on our currently projected revenues, the foregoing existing lines
of credit, and the $10,000,000 of proceeds to be received during 2007 under the
Note, we believe that we have sufficient capital resources to fund our
anticipated working capital needs through December 31, 2007. As previously
disclosed, our goal is to acquire one or more third party businesses in order to
(i) obtain additional technologies that compliment or supplement our current
products, and (ii) increase the number of golf courses that utilize our products
and services. Depending on the terms of any such acquisitions and the amount of
funds needed to integrate and fund the acquired operations, these acquisitions
could materially impact our anticipated future working capital needs.

FACTORS THAT MAY AFFECT OUR BUSINESS AND OUR FUTURE RESULTS

         We face a number of substantial risks. Our business, financial
condition, results of operations and stock price could be harmed by any of these
risks. The following factors should be considered in connection with the other
information contained in this Quarterly Report on Form 10-QSB.

Risks Related To Our Business

         We have a history of losses, and our auditors have issued a going
concern opinion.

         We have incurred operating losses since our inception and no assurance
can be given that we will ever become profitable. Our auditors have included a
going concern opinion on our financial statements because we have not generated
sufficient cash flows to meet our obligations and sustain our operations. Our
operating losses are attributable to the developing nature of our business and
have resulted primarily from:

o        significant costs associated with the development of our products;

o        marketing and distribution costs of our products; and

o        limited sales history of our recently developed products.

         Although we currently believe that our revenues will significantly
increase by the end of the fiscal year ended December 31, 2007 and that our
balance sheet will be significantly improved on December 31, 2007, we believe
that our ability to generate profits over the longer term is dependent upon a
number of factors including our ability to increase sales as projected and to
complete complementary acquisitions, and on our ability to generate significant
revenues from our advertising initiative and our Fire At The Flag(TM) program.
If any of the projected events do not occur as we currently anticipate, our
operations will continue to operate at a loss and with a negative cash flow. If
we are unable to continue as a going concern, you could lose your entire
investment in us.

                                       20
<PAGE>

         We may need additional financial support in order to continue to
operate and grow, and cannot be certain that additional funds will be available
when needed on satisfactory terms, if at all.

         Our internal business plan assumes that we will acquire one or more
businesses during 2007 and significantly increase our sales to golf courses
(including sales at under our low margin ACE program to establish a future base
for advertising venues). Depending on the acquisitions that we complete, if any,
and the terms or purchase and the cost of integrating and operating those
additional business, it is likely that we will have to obtain additional debt or
equity financing. If we cannot obtain the amount of additional financing that we
will need to support our operations or to fully implement our business plan, our
future operations will be severely hindered, and our ability to sustain our
operations and growth will be jeapordized.

         We depend on GPS technology owned and controlled by others. If we do
not have continued access to GPS technology and satellites, we will be unable to
deliver our services and our revenues will decrease.

         Our services rely on signals from GPS satellites built and maintained
by the U.S. Department of Defense. GPS satellites and their ground support
systems are subject to electronic and mechanical failures and sabotage. If one
or more satellites malfunction, there could be a substantial delay before they
are repaired or replaced, if at all, and our services may cease and customer
satisfaction would suffer.

         In addition, the U.S. government could decide not to continue to
operate and maintain GPS satellites over a long period of time or to charge for
the use of GPS. Furthermore, because of ever-increasing commercial applications
of GPS, other U.S. government agencies may become involved in the administration
or the regulation of the use of GPS signals in the future. If the foregoing
factors affect GPS, such as by affecting the availability and pricing of GPS
technology, our business will suffer.

         Our GPS technology depends on the use of radio frequency spectrum
controlled by others.

         Our GPS technology is dependent on the use of radio frequency spectrum.
The assignment of spectrum is controlled by an international organization known
as the International Telecommunications Union or ITU. The Federal Communications
Commission or FCC is responsible for the assignment of spectrum for
non-government use in the United States in accordance with ITU regulations. Any
ITU or FCC reallocation of radio frequency spectrum, including frequency band
segmentation or sharing of spectrum, could cause interference with the reception
of GPS signals and may materially and adversely affect the utility and
reliability of our products, which would, in turn, cause a material adverse
effect on our operating results. In addition, emissions from mobile satellite
service and other equipment operating in adjacent frequency bands or inband may
materially and adversely affect the utility and reliability of our products,
which could result in a material adverse effect on our operating results.

         On May 11, 2000, the FCC issued a Notice of Proposed Rulemaking that
proposes rules for the operation of Ultra-Wideband or UWB radio devices on an
unlicensed basis in the frequency bands allocated to GPS. If the FCC issues
final rules authorizing such operation, UWB devices might cause interference
with the reception of GPS signals. Such interference could reduce demand for GPS
products in the future. Any resulting change in market demand for GPS products
could have an adverse effect on our financial results.

                                       21
<PAGE>

         Speculative Nature of Business.

         The profits of an enterprise involved in the golf industry are
generally dependent upon many variables. Our customer appeal depends upon
factors which cannot be reliably ascertained in advance and over which we have
no control, such as unpredictable critic reviews and appeal to the public.

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

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

         Government regulations and standards may harm our business and could
increase our costs or reduce our opportunities to earn revenues.

         In addition to regulations applicable to businesses in general, we may
also be subject to direct regulation by governmental agencies, including the FCC
and Department of Defense. A number of legislative and regulatory proposals
under consideration by federal, state, provincial, local and foreign
governmental organizations may lead to laws or regulations concerning various
aspects of wireless communications and GPS technology. Additionally, it is
uncertain how existing laws governing issues such as taxation, intellectual
property, libel, user privacy and property ownership, will be applied to our
services. The adoption of new laws or the application of existing laws may
expose us to significant liabilities and additional operational requirements,
which could decrease the demand for our services and increase our cost of doing
business.

         We depend on intellectual property rights and development of new
products and the inability to obtain patents or develop new products may have an
adverse effect on our ability to be profitable.

         Our success is partly dependent upon our intellectual property rights.
Effective protection may not be available for these rights. There can be no
assurance that a patent will provide adequate protection for the underlying
technology. While we have patents covering our technology, there is no assurance
that such patents will be able to prevent other companies from developing
substantially similar products. In addition, litigation may be necessary in the
future to enforce the intellectual property rights. Such litigation, whether
successful or unsuccessful, could result in substantial costs and diversions of
resources, either of which could negatively affect our business.

         Our future success is dependent upon our ability to retain key
management.

         Our success is dependent upon the continued services of Robert C.
Silzer, Sr., our chief Executive Officer and Chairman of the Board of Directors
and upon the skills, experience and efforts of our key marketing and other
management personnel. The loss of the continued services of any of these
individuals could have a negative effect on our business.

         Conflicts of Interest.

         We have engaged in transactions with our management in the past, and we
can be expected to engage in such transactions in the future. In each case, the
transactions are approved by our Board of Directors and are considered to be
fair to and in the best interests of the company.

                                       22
<PAGE>

         Competition.

         We face competition in all aspects of our business. We compete for
customers with other electronics and recreation companies, many of which have
substantially greater assets and resources. Our primary competitors are
companies such as Prolink Holdings Corp. and UpLink Corp. Our ability to compete
successfully in the future will depend on several factors, including:

     o the cost effectiveness,  quality, price, service and market acceptance of
       our products;

     o  response  to the entry of new  competitors  or the  introduction  of new
        products by competitors;

     o ability to keep pace with changing technology and customer requirements;

     o timely development or acquisition of new or enhanced products; and

     o timing of new product introductions by GPSI or our competitors.

         Acquisitions of companies may disrupt our business and distract
management due to difficulties in assimilating personnel and operations.

         Provided that we have sufficient financing, we may consider purchasing
other businesses that could complement or supplement our current product
offerings. If we acquire any other company, we could face difficulties in
assimilating that company's personnel and operations. Acquisitions also involve
the need for integration into existing administration, services marketing, and
support efforts. These acquisitions and investments could disrupt our ongoing
business, distract management and employees and increase our expenses. In
addition, key personnel of the acquired company may decide not to work for us.

         We may not be able to implement Section 404 of the Sarbanes-Oxley Act
on a timely basis.

         The SEC, as directed by Section 404 of the Sarbanes-Oxley Act, adopted
rules generally requiring each public company to include a report of management
on the company's internal controls over financial reporting in its annual report
on Form 10-KSB that contains an assessment by management of the effectiveness of
the company's internal controls over financial reporting. This requirement will
first apply to our annual report on Form 10-KSB for the fiscal year ending
December 31, 2007.

         We have not yet developed a complete Section 404 implementation plan.
We have in the past discovered, and may in the future discover, areas of our
internal controls that need improvement. We expect that we will need to hire
and/or engage additional personnel and incur incremental costs in order to
complete the work required by Section 404. We can not assure you that we will be
able to complete a Section 404 plan on a timely basis. Additionally, upon
completion of a Section 404 plan, we may not be able to conclude that our
internal controls are effective, or in the event that we conclude that our
internal controls are effective, our independent accountants may disagree with
our assessment. Any failure to implement required new or improved controls, or
difficulties encountered in their implementation, could negatively affect our
operating results or cause us to fail to meet our reporting obligations.


                                       23
<PAGE>
RISKS RELATED TO OUR COMMON STOCK

         Our common stock is traded on the OTC Bulletin Board, and a shareholder
may be unable to sell at or near ask prices or at all if the shareholder needs
to sell his shares to raise money or otherwise desire to liquidate his shares.

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

         The holders of our outstanding Series B Shares have the right to
approve or disapprove certain corporate action, which could materially affect
the holders of our common stock. Currently, the rights of the Series B Shares
are controlled by Leisurecorp LLC.

         In December 2006 and May 2007 we issued the Series B Shares to three
investors. Under the terms of the Series B Shares, we may not, without first
obtaining the prior approval of the holders of a majority of the then
outstanding Series B Shares, voting separately as a class, take any of the
following actions: (i) amend our Articles of Incorporation or Bylaws if such
action would adversely affect the rights, preferences, privileges, or
restrictions of the Series B Shares; (ii) authorize or issue any class or series
of our capital stock or any rights, options, warrants or other securities that
are convertible into or exchangeable for any of our capital stock, having any
right, preference or privilege superior to or on parity with the Series B Shares
in any respect whether by reclassification or otherwise; (iii) pay any dividends
or distributions on any shares of our capital stock; (iv) amend any of the
provisions of the Certificate of Designation of the Series B Shares; (v) redeem
or declare a dividend with respect to any security; (vi) increase or decrease
the authorized number of shares of Series B Shares; (vii) effect a merger,
consolidation, or business combination or other acquisition involving GPSI
(other than solely for the purposes of reincorporation); or (viii) increase or
decrease the authorized number of directors on our Board of Directors. The
foregoing voting provisions shall remain in effect so long as one holder of our
Series B Shares, Leisurecorp LLC, is the owner of record of 25% or more of the
number of Series B Shares that it purchased on December 2006 or that it
subsequently may still purchase under the additional purchase right that we have
extended to Leisurecorp. As a result of its investment in the Series B Shares
and the voting agreements contained in a shareholders agreement Leisurecorp has
entered into with the other holders of the Series B Shares, Leisurecorp LLC owns
or controls the vote of approximately 90% of the currently issued and
outstanding Series B Shares.


                                       24
<PAGE>

         The holders of the Series B Shares have the ability to elect a majority
of our Board of Directors, and we are prohibited from taking certain corporate
actions without the approval of the directors elected by Series B Share holders.

         The holders of a majority of the outstanding Series B Shares have the
right, voting as a separate class, to elect three of our five members of our
board of directors, of which two shall be designated by the holders of a
majority of the outstanding Series B Shares as the "Reviewing Preferred
Directors." Our Board of Directors may not take certain actions, and none of
such actions shall be valid and constitute an action of the Board of Directors
unless such action is approved by a majority of the Board of Directors, which
majority shall include at least one of the Reviewing Preferred Directors. The
actions that must be approved by at least one Reviewing Preferred Director are
as follows: (i) reorganize GPSI or voluntarily liquidate, dissolve or wind up
GPSI, (ii) incur any new indebtedness or refinance any existing indebtedness for
borrowed money other than trade payables and accrued expenses incurred in the
ordinary course of business and indebtedness not to exceed at any time $500,000
in the aggregate, (iii) approve, adopt or amend our annual budget, (iv) incur
any capital or operating expenditures (other than purchases of inventory
purchased solely for, and specifically to fill signed purchase orders) in excess
of $50,000 in one or a series of related expenditures, or in excess of $250,000
in the aggregate unless included in our annual budget approved by the Board of
Directors (including one of the Reviewing Preferred Directors), (v) hire or fire
our Chief Executive Officer, the Chief Financial Officer, or any of our other
officer or employee who, at the time, earns or is expected to earn a salary
(excluding bonuses) of $100,000 or more per year, (vi) acquire any assets or
equity securities of any other business or entity, or sell any of our assets
(other than in the ordinary course of business), in each case if the transaction
value of such acquisition or disposition is greater than $2,000,000, (vii) issue
options or securities except under our stock compensation, bonus or other
compensation plan, (viii) amend our stock compensation, bonus or other
compensation plan, or (ix) enter into a transaction with a stockholder or an
affiliate of ours or of a stockholder of ours. The foregoing restrictions will
remain in effect until the earlier of (a) the date on which Leisurecorp is the
owner of record of less than 25% of the number of Series B Shares that it
purchased on December 29, 2006 pursuant to the Securities Purchase Agreement, or
(b) we meet or exceed the approved annual budget for two consecutive fiscal
years. Under a shareholder agreement entered into by, among others, the holder
of approximately 90% of our currently outstanding Series B Shares, Leisurecorp
LLC has the right to designate both Reviewing Preferred Directors.


                                       25
<PAGE>

         Our Board of Directors has the right to issue additional series of
preferred stock, the terms of which could adversely affect the value of our
common stock.

         Under our articles of incorporation, our board of directors has the
power, without further action by the holders of our common stock, to designate
the relative rights and preferences of the preferred stock, and to issue the
preferred stock in one or more series as designated by our board of directors.
The designation of rights and preferences could include preferences as to
liquidation, redemption and conversion rights, voting rights, dividends or other
preferences, any of which may be dilutive of the interest of the holders of our
common stock or the preferred stock of any other series. The issuance of
preferred stock may have the effect of delaying or preventing a change in
control of our company without further stockholder action and may adversely
affect the rights and powers, including voting rights, of the holders of our
common stock.

         If securities or industry analysts do not publish research reports
about our business, our stock price and trading volume could decline.

         Small, relatively unknown public companies can achieve visibility in
the trading market through research and reports that industry or securities
analysts publish. However, to our knowledge, no analysts cover our company. The
lack of published reports by independent securities analysts could limit the
interest in our stock and negatively affect our stock price. We do not have any
control over research and reports these analysts publish or whether they will be
published at all. If any analyst who does cover us downgrades our stock, our
stock price would likely decline. If any analyst initiates and then ceases
coverage of our company or fails to regularly publish reports on us, we could
lose visibility in the financial markets or never achieve such visibility, which
in turn could cause our stock price or trading volume to stagnate or decline.


                                       26
<PAGE>

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

         Since our Common Stock is not listed on the Nasdaq Stock Market or any
national securities exchange, if the trading price of our Common Stock is below
$5.00 per share, trading in our Common Stock will be subject to the requirements
of certain rules promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These rules require additional disclosures by
broker-dealers in connection with any trades involving a stock defined as a
penny stock. Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally defined as an investor with a net worth in
excess of $1,000,000 or annual income exceeding $200,000 individually or
$300,000 together with a spouse). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
the sale. The broker-dealer also must disclose the commissions payable to the
broker-dealer, current bid and offer quotations for the penny stock and, if the
broker-dealer is the sole market maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Such information
must be provided to the customer orally or in writing before or with the written
confirmation of trade sent to the customer. Monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. The additional burdens
imposed upon broker-dealers by such requirements could discourage broker-dealers
from effecting transactions in our common stock, which could severely limit the
market liquidity of the common stock and the ability of holders of the common
stock to sell their shares.

         The market price of our Common Stock may be adversely affected by
market volatility.

         The market price of our Common Stock is likely to be volatile and could
fluctuate widely in response to many factors, including:

     o  announcements  of the results of our operations or the operations of our
        competitors,

     o developments with respect to intellectual property rights,

     o announcements of technological innovations by us or our competitors,

     o  announcements  of new  services,  products or new contracts by us or our
        competitors,

     o actual or  anticipated  variations  in our  operating  results due to the
       level of development expenses and other factors,

     o changes in  financial  estimates  by  securities  analysts,  if any,  and
       whether our earnings meet or exceed such estimates,

     o new accounting standards,

     o general economic, political and market conditions and other factors, and

     o the  occurrence  of any of  the  risks  described  in  this  registration
       statement.



                                       27
<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES

         We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the reports that we file
with, or submit to, the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms and that such information is accumulated and communicated to our
management, including our principal executive and financial officers, as
appropriate, to allow for timely decisions regarding required disclosure. As
required by SEC Rule 15d-15(b), we carried out an evaluation, under the
supervision and with the participation of our management, including our
principal executive and financial officers, of the effectiveness of the design
and operation of our disclosure controls and procedures as of the end of the
most recent fiscal quarter covered by this report. Based on the foregoing, our
principal executive and financial officers concluded that our disclosure
controls and procedures are effective to ensure that the information required to
be disclosed in our reports filed or submitted under the Exchange Act is
recorded, processed and reported within the time periods specified in the SEC's
rules and forms and that such information is accumulated and communicated to our
management, including our principal executive and financial officers, as
appropriate, to allow for timely decisions regarding required disclosure.

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

                                       28
<PAGE>

PART II.  OTHER INFORMATION

Item 1.    Legal Proceedings

     On  February 5, 2007 David  Stratton,  a former  employee,  filed a lawsuit
against the Company in the Supreme Court of British Columbia, Vancouver, Canada.
Mr.  Stratton  entered into a written  employment  agreement with the Company on
June 12,  2006  pursuant  to which the  Company  employed  Mr.  Stratton as Vice
President, Sales. The employment agreement had a three-year term, renewable each
year.  Under the employment,  Mr. Stratton was entitled to an annual base salary
of CDN $150,000,  options to purchase up to 1,500,000  shares of common stock at
an  exercise  price of $0.05 per share,  a signing  bonus of  300,000  shares of
common stock,  certain  bonuses  (including  bonuses based on gross sales),  and
sales  commissions.   On  November  8,  2006,  Mr.  Stratton's   employment  was
terminated.  Mr.  Stratton has set forth his claims in the  Statement of Claims,
which claims principally  consist of the following:  (i) a judgment equal to the
amount of his base salary  that he would have  earned,  (ii) the  signing  bonus
stock options referred to in the employment agreement, (iii) the 300,000 signing
bonus shares, (iv) special damages and punitive damages, and (v) legal fees. The
Company  has filed a  statement  of defense  denying  the claims and  intends to
vigorously defend this lawsuit.

Item 2.    Unregistered Sales of Equity and Use of Proceeds

On January 16, 2007 the Company issued to two accredited investors 30,392,082
shares of common stock valued at $1,653,329 under the terms of a contract for
the purchase of certain patents.

All such securities were issued pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended, under Section 4 (2) and
regulation D.

ITEM 6. Exhibits

Exhibit Number          Description

31.1                   Certification of the Chief Executive Officer pursuant
                        to Section 302 of the Sarbanes-Oxley Act

31.2                   Certification of the Principal Accounting Officer
                        pursuant to Section 302 of the Sarbanes-Oxley Act

32.1                   Certification of the Chief Executive Officer pursuant
                        to Section 906 of the Sarbanes-Oxley Act

32.1                   Certification of the Principal Accounting Officer
                        pursuant to Section 906 of the Sarbanes-Oxley Act


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<PAGE>

                                   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.


                                      GPS INDUSTRIES, INC.

Date:  May 21, 2007           By: /s/ ROBERT C. SILZER, SR.
                                      ------------------------
                                      Robert C. Silzer, Sr.,
                                      Chief Executive Officer


Date:  May 21, 2007           By: /s/ MICHAEL MARTIN
                                      ------------------------
                                      Michael Martin
                                      Controller (Principal
                                      Accounting Officer)


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