UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                  For the Quarterly Period Ended June 30, 2005

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

              For the transition period from _________ to _________

                         Commission File Number: 0-25963

                              GPS INDUSTRIES, INC.
        (Exact name of small business issuer 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, British Columbia, Canada V3S-5J9
                    (Address of principal executive offices)

                    Issuer's telephone number: (604) 576-7442
              (Former name, former address and former fiscal year,
                         if changed since last report.)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

As of July 20, 2005 the Company had 257,456,255 shares of Class A common stock
issued and outstanding

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

Documents incorporated by reference: None.

<PAGE>

                      GPS INDUSTRIES, INC. AND SUBSIDIARIES




                                      INDEX

PART I.   FINANCIAL INFORMATION

  Item 1.  Financial Statements

         Consolidated Balance Sheet - June 30, 2005 (Unaudited)..............3

         Consolidated Statements of Operations (Unaudited) -
          Six months Ended June 30, 2005 and 2004............................4

         Consolidated Statements of Operations (Unaudited) -
          Three months Ended June 30, 2005 and 2004..........................5

         Consolidated Statements of Cash Flows (Unaudited) -
          Six months Ended June 30, 2005 and 2004............................6

         Notes to Consolidated Financial Statements (Unaudited) -
          Six months Ended June 30, 2005 and 2004............................7

  Item 2.  Management's Discussion and Analysis or Plan of Operation........12

  Item 3.  Controls and Procedures..........................................18

PART II.  OTHER INFORMATION

  Item 1.  Legal proceedings................................................19

  Item 2.  Changes in Securities and Use of Proceeds........................19

  Item 3.  Defaults Upon Senior Securities..................................19

  Item 4.  Submission of matters to a vote of security holders..............19

  Item 5.  Other information................................................19

  Item 6.  Exhibits.........................................................19

SIGNATURES


                                       2

<PAGE>

ITEM 1. FINANCIAL STATEMENTS

                      GPS INDUSTRIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                  June 30, 2005
                                   (Unaudited)

                                     Assets

Current assets

     Cash                                                           $    28,788
     Accounts receivable                                              1,132,250
     Inventory                                                        1,586,344
     Prepaid expenses and other current assets                          173,439
                                                                    ------------
     Total Current Assets                                             2,920,821

Property and equipment, net                                              89,105

Patents                                                               1,642,133

Deferred implementation costs                                           249,134
                                                                    ------------
                                                                    $ 4,901,193
                                                                    ============

                     Liabilities and Stockholders' Deficit

Current liabilities

     Bank indebtedness                                             $  2,793,159
     Bank loan                                                           20,987
     Deferred Revenue                                                   446,703
     Short term loans                                                 2,416,130
     Accounts payable and accrued liabilities                         3,319,853
     Liability associated with Optimal Golf acquisition               2,980,000
     Promissory notes - related parties                                 589,744
                                                                   -------------
                                                                     12,566,576

     Liabilities related to discontinued operations
     (Chapter 7 proceedings filed in 2002)
     Promissory note payable                                          1,274,757
     Accounts payable and accrued liabilities                         1,498,991
     Loans payable to related parties                                   258,000
     Capital lease obligations ( in default)                             29,467
                                                                   -------------
                                                                      3,061,215
                                                                   -------------
     Total current liabilities                                       15,627,791
                                                                   -------------

Long Term debt - related party                                        2,235,214
                                                                   -------------
Stockholders' deficit

     Class A common stock, $.001 par value, 500,000,000
     authorized 254,923,755 issued and outstanding                      254,924
     5% Convertible Preferred Shares, $.001 par value,
     50,000,000 authorized 375,000 issued and outstanding               375,000
     Accumulated other comprehensive income                             722,295
     Deferred compensation expense                                    ( 563,156)
     Subscriptions receivable                                         ( 200,000)
     Deferred financing costs                                         ( 260,000)
     Additional paid-in capital                                      36,723,680
     Accumulated deficit                                           ( 50,014,555)
                                                                   -------------
     Total Stockholder's Deficit                                   ( 12,961,812)
                                                                   -------------
                                                                   $  4,901,193
                                                                   =============

     See accompanying notes to unaudited consolidated financial statements

                                        3

<PAGE>

                      GPS INDUSTRIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                                                      For the Six Months Ended June 30,
                                                      ---------------------------------
                                                             2005            2004
                                                         (Unaudited)     (Unaudited)
                                                        --------------  --------------
<S>                                                       <C>           <C>
Revenue                                                   $ 3,228,512   $   1,000,234

Cost of Goods Sold                                          1,723,072         700,763

Installation Costs                                            409,051         174,279
                                                        --------------  --------------
Gross Profit                                                1,096,389         125,192
                                                        --------------  --------------


Operating Expenses

      General and Administrative Expenses                   3,134,943       1,102,223
      Depreciation and amortization                           139,853          35,822
      Sales and marketing                                   1,091,037         701,705
      Engineering and Research and Development                927,493         566,833
                                                        --------------  --------------
                                                            5,293,326       2,406,583
                                                        --------------  --------------
Loss Before Other Income (Expense)                        ( 4,196,937)    ( 2,281,391)
                                                        --------------  --------------
Other Income (Expense)

      Finance costs                                         ( 341,261)       ( 57,780)
      Interest expense                                      ( 972,842)      ( 133,130)
      Gain on foreign exchange                                  2,147          69,129
      Gain on extinguishment of debt                          187,453       1,104,739
                                                        --------------  --------------
                                                          ( 1,124,503)        982,958
                                                        --------------  --------------

Net Loss                                                $ ( 5,321,440)  $ ( 1,298,433)
                                                        ==============  ==============

Loss per common share - basic and diluted               $      ( 0.02)  $      ( 0.01)
                                                        ==============  ==============


Weighted average number of common shares outstanding -
      basic and diluted                                   213,580,934     155,043,822
                                                        ==============  ==============
</TABLE>

     See accompanying notes to unaudited consolidated financial statements

                                      4

<PAGE>

                      GPS INDUSTRIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                           For the Three Months Ended June 30,
                                                           -----------------------------------
                                                                 2005              2004
                                                              (Unaudited)      (Unaudited)
                                                             ------------     ------------
<S>                                                          <C>              <C>
Revenue                                                      $ 2,109,896      $   159,924

Cost of Goods Sold                                             1,195,954           94,402

Installation Costs                                               323,517           28,261

                                                             ------------     ------------
Gross Profit                                                     590,425           37,261
                                                             ------------     ------------


Operating Expenses

      General and Administrative Expenses                      2,187,059          624,141
      Depreciation and amortization                               72,488           18,827
      Sales and marketing                                        536,207          439,563
      Engineering and Research and Development                   568,020          316,997
                                                             ------------     ------------
                                                               3,363,774        1,399,528
                                                             ------------     ------------
Loss Before Other Income (Expense)                           ( 2,773,349)     ( 1,362,267)
                                                             ------------     ------------
Other Income (Expense)

      Finance costs                                            ( 278,230)        ( 34,125)
      Interest expense                                         ( 644,102)        ( 91,886)
      Gain on foreign exchange                                     2,147           60,354
      Gain on extinguishment of debt                              25,752          860,850
                                                             ------------     ------------
                                                               ( 894,433)        795,193
                                                             ------------     ------------
Net Loss                                                     $(3,667,782)     $ ( 567,074)
                                                             ============     ============

Loss per common share - basic and diluted                    $    ( 0.02)     $    ( 0.00)
                                                             ============     ============


Weighted average number of common shares outstanding -
      basic and diluted                                      219,805,728      157,808,811
                                                             ============     ============

     See accompanying notes to unaudited consolidated financial statements

</TABLE>

                                        5

<PAGE>

                      GPS INDUSTRIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                 For the Six Months Ended June 30,
                                                                 ---------------------------------
                                                                         2005           2004
                                                                     (Unaudited)    (Unaudited)
                                                                   -------------- --------------
Cash Flow From Operating Activities
<S>                                                                <C> <C>        <C> <C>
      Net loss from operations                                     $ ( 5,321,440) $ ( 1,298,433)

      Adjustments to reconcile net loss to
       net cash used in operating activities:
           Depreciation and amortization                                 158,144         35,822
           Amortization of deferred compensation                         112,633        112,628
           Loss/ (Gain) on extinguishment of debt                        174,854    ( 1,104,740)
           Expenses paid by issuance of stock                          1,806,067        243,040
           Interest converted to stock                                   501,491          2,940
           Finance charges converted to stock                            142,550         20,000
           Amortization of finance costs                                  90,000         26,000

      Changes in operating assets and liabilities:
           Inventories                                                  (193,146)     ( 611,678)
           Accounts Receivable                                          (892,552)      ( 65,116)
           Prepaid expenses and deposits                                  (2,906)        22,769
           Deferred implementation costs                                (243,837)       105,985
           Accounts payable and accrued liabilities                    1,160,215        325,047
           Discontinued Accounts payable and accrued liabilities        (362,307)             -
           Deferred Revenue                                              327,855              -
                                                                   -------------- --------------
Net Cash Used In Operating Activities                                ( 2,542,379)   ( 2,185,736)
                                                                   -------------- --------------
Cash Flow From Investing Activities
           Purchase of property and equipment                            ( 7,191)     ( 106,150)
           Purchase of patents                                           ( 8,500)             -
                                                                   -------------- --------------
Net Cash Flow Used In Investing Activities                              ( 15,691)     ( 106,150)
                                                                   -------------- --------------
Cash Flow From Financing Activities
           Common stock issued for cash                                1,025,700              -
           Proceeds from loans                                         1,152,798      1,455,941
           Repayments of term loan                                     ( 284,786)             -
           Repayments of bank loan                                        (4,134)      ( 12,637)
           Borrowings under bank indebtedness                            483,751        852,334
           Repayments of loans from related parties                      (13,671)       ( 6,112)
           Borrowing on convertible loans                                 54,108         10,655
                                                                   -------------- --------------
Net Cash Flow From Financing Activities                                2,413,766      2,300,181
                                                                   -------------- --------------
Net Increase (Decrease) In Cash                                        ( 144,304)         8,295

Cash, Beginning Of Period                                                173,092          3,367
                                                                   -------------- --------------
Cash, End Of Period                                                $      28,788  $      11,662
                                                                   ============== ==============

Supplemental disclosure of cash flow information:
      Cash paid for interest                                       $     471,351  $     136,070
                                                                   ============== ==============

      Cash paid for taxes                                          $           -  $           -
                                                                   ============== ==============

Non-Cash Investing And Financing Activities

      Common stock issued on conversion of convertible notes       $     726,000  $           -
                                                                   ============== ==============

      Common stock issued to settle debt                           $     400,000  $     150,000
                                                                   ============== ==============

      Common stock issued in settlement of accounts payable        $     143,425  $      38,889
                                                                   ============== ==============

     See accompanying notes to unaudited consolidated financial statements

</TABLE>

                                        6

<PAGE>

                     GPS Industries, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                     Six months Ended June 30, 2005 and 2004
                                   (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
June 30, 2005,  the results of operations for the six months ended June 30, 2005
and 2004,  and the cash flows for the six months  ended June 30,  2005 and 2004.
The  results  of  operations  for the six  months  ended  June 30,  2005 are not
necessarily  indicative of the results of operations to be expected for the full
fiscal year ending December 31, 2005.

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  Amended  Annual  Report on Form  10-KSB  for the  fiscal  year  ended
December 31, 2004, as filed with the Securities and Exchange Commission.

Business - The Company  develops  and markets  GPS and Wi-Fi  wireless  business
solutions for golf courses,  golf residential  communities and golf resorts. The
Company's management  information system enables golf course owners and managers
to run their  business  more  efficiently  with  pace-of-play  monitoring,  data
consolidation and reporting capabilities. Courses can generate more revenue with
advertising,  tournament  and  point-of-purchase  applications,  reduce costs of
operations  and retain more  customers  with  customer  relationship  management
programs.  The Company has developed  both hand-held and  cart-mounted  products
using Differential Global Positioning Satellite ("DGPS") technology. These units
help attract and retain  customers by delivering a better golf  experience  with
precise  distance  measurement,  detailed color course maps,  media streaming of
real-time  sports  scores  and  news  headlines,  food  and  beverage  ordering,
electronic  scoring,  tournament  play  and  emergency  communication  with  the
clubhouse.  At June 30,  2005,  substantially  all of the  Company's  assets and
operations were located in Canada.

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 labour and
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
"Engineering, Research and Development", all such costs are expensed as they are
incurred.

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).

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. No pro-forma  consolidated financial statements have been included in this
report as the results of Optimal are not material to the consolidated  financial
statements of the Company.

                                       7

<PAGE>
2. Going Concern

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 June 30, 2005 and December 31, 2004.  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 it's  GPS  systems  and
payments from  distributors  and  potential  strategic  partners.  The Company's
independent certified public accountants,  in their independent auditors' report
on the consolidated  financial  statements as of and for the year ended December
31,  2004,  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.

3. Summary of Significant Accounting Policies

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.

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 has adopted Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based  Compensation",  which establishes a fair value
method of accounting for stock-based compensation plans.

The  provisions  of SFAS No. 123 allow  companies to either record an expense in
the financial statements to reflect the estimated fair value of stock options or
warrants to employees,  or to continue to follow the intrinsic  value method set
forth in  Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock
Issued to Employees", but to disclose on an annual basis the pro forma effect on
net income  (loss) and net income  (loss) per common share had the fair value of
the stock options and warrants been recorded in the financial  statements.  SFAS
No. 123 was amended by SFAS No. 148, which now requires companies to disclose in
interim  financial  statements the pro forma effect on net income (loss) and net
income  (loss) per common  share of the  estimated  fair  market  value of stock
options or warrants issued to employees.  The Company has elected to continue to
account for stock-based compensation plans utilizing the intrinsic value method.
Accordingly, compensation cost for stock options and warrants is measured as the
excess,  if any, of the fair market price of the  Company's  common stock at the
date of grant above the amount an employee must pay to acquire the common stock.
No stock options were issued to  employees  in the six months  ended  June 30,
2005 or the six months ended June 30, 2004.

In accordance  with SFAS No. 123, the cost of stock options and warrants  issued
to  non-employees  is  measured at the grant date based on the fair value of the
award.  The  fair  value  of the  stock-based  award  is  determined  using  the
Black-Scholes  option pricing model.  The resulting amount is charged to expense
on the  straight-line  basis  over the  period in which the  Company  expects to
receive  benefit,  which is generally the vesting period.

                                       8
<PAGE>

Recent Accounting Pronouncements

In December 2004, the FASB finalized SFAS No. 123R "Share-Based  Payment" ("SFAS
123R"),  amending  SFAS No. 123,  effective  December 15,  2005.  SFAS 123R will
require the Company to expense  stock  options based on grant date fair value in
its  financial  statements.  Further,  adoption  of SFAS No.  123R will  require
additional  accounting  related to income tax effects and additional  disclosure
regarding cash flow effects  resulting from share-based  payments  arrangements.
The adoption of SFAS 123R will not affect the Company's  cash flows or financial
position, but may have an adverse impact on results of operations if options are
granted  in the  future.  In  December  2004,  the FASB  issued  SFAS  No.  153,
"Exchanges  of  Nonmonetary  Assets - an amendment for APB Opinion No. 29". This
statement  amends APB Opinion No. 29 to eliminate the exception for  nonmonetary
exchanges of similar  productive assets and replaces it with a general exception
for exchanges of nonmonetary  assets that do not have  commercial  substance.  A
nonmonetary exchange has commercial substance if future cash flows of the entity
are expected to change significantly as a result of the exchange. The provisions
of SFAS No. 153 are effective for the  Company's  year ended  December 31, 2006.
Management is currently evaluating the impact of the adoption of SFAS No. 153 on
the  Company's  consolidated  financial  position,   liquidity,  or  results  of
operations.

In April 2005,  the  Securities  and Exchange  Commission's  Office of the Chief
Accountant  and its  Division of Corporation  Finance released Staff  Accounting
Bulletin  (SAB) No.107 to provide  guidance  regarding the  application  of FASB
Statement  No.123  (revised  2004),  Share-Based  Payment.  Statement No. 123(R)
covers a wide range of share-based  compensation  arrangements  including  share
options,  restricted share plans,  performance-based  awards, share appreciation
rights,  and employee  share  purchase  plans.  SAB 107 provides  interpretative
guidance related to the interaction  between  Statement No. 123R and certain SEC
rules and  regulations,  as well as the staff's views regarding the valuation of
share-based  payment  arrangements  for public  companies.  SAB 107 also reminds
public companies of the importance of including  disclosures within filings made
with the SEC relating to the accounting for  share-based  payment  transactions,
particularly during the transition to Statement No. 123R.

In May 2005, the Financial  Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  No.  154,  "Accounting  Changes  and Error
Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3" ("SFAS
154"). This Statement replaces APB Opinion No. 20, Accounting Changes,  and FASB
Statement No. 3, Reporting  Accounting Changes in Interim Financial  Statements,
and changes the requirements for the accounting for and reporting of a change in
accounting  principle.  This  Statement  applies  to all  voluntary  changes  in
accounting  principle.  It also  applies to changes  required  by an  accounting
pronouncement  in the unusual instance that the  pronouncement  does not include
specific  transition   provisions.   When  a  pronouncement   includes  specific
transition provisions, those provisions should be followed.

Opinion  20  previously  required  that most  voluntary  changes  in  accounting
principle be  recognized  by including in net income of the period of the change
the  cumulative  effect  of  changing  to the  new  accounting  principle.  This
Statement  requires  retrospective   application  to  prior  periods'  financial
statements of changes in accounting  principle,  unless it is  impracticable  to
determine  either the  period-specific  effects or the cumulative  effect of the
change. When it is impracticable to determine the period-specific  effects of an
accounting  change  on one or more  individual  prior  periods  presented,  this
Statement requires that the new accounting  principle be applied to the balances
of assets and  liabilities as of the beginning of the earliest  period for which
retrospective  application is practicable and that a corresponding adjustment be
made  to  the  opening  balance  of  retained  earnings  (or  other  appropriate
components of equity or net assets in the  statement of financial  position) for
that  period  rather  than being  reported  in an income  statement.  When it is
impracticable  to  determine  the  cumulative  effect  of  applying  a change in
accounting principle to all prior periods,  this Statement requires that the new
accounting  principle  be applied as if it were adopted  prospectively  from the
earliest date  practicable.  This  Statement  shall be effective for  accounting
changes and  corrections of errors made in fiscal years beginning after December
15, 2005. The Company does not believe that the adoption of SFAS 154 will have a
significant effect on its financial statements.

Other  accounting  standards  that have been  issued or  proposed by the FASB or
other standards-setting  bodies that do not require adoption until a future date
are not  expected  to  have a  material  impact  on the  consolidated  financial
statements upon adoption.

                                       9

<PAGE>

4. Debt

Effective  June 27,  2003,  the  Company  obtained  a bank  line of  credit  for
$1,425,000 to fund its operations. As of June 30, 2005, the Company had borrowed
$1,794,493  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. was
renewed  until  March  27,  2005  and  subsequently  to  October  27,  2005.  As
consideration for renewing the standby bank letter of credit, the Company issued
to Hansen Inc. a common stock purchase warrant to purchase 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.  $52,000, the fair value of this
common stock purchase warrant,  calculated pursuant to the Black-Scholes  option
pricing  model,  was charged to  operations  as finance costs for the six months
ended June 30,  2005.  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 is payable.  As of June
30, 2005 this line was drawn down in the amount of $994,712.  The term was for a
period  of 1 year  from  the date of the  agreement.  As  consideration  for the
security  provided the Company  agreed to pay the Secured Party 15% per annum of
the  maximum  amount  outstanding  in the month,  payable  50% in US$ 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. The Company has accrued this
consideration to June 30, 2005. 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,  has been renewed  until October 31, 2005.  These  warrants have been
valued at $72,000.  An amount of $54,000 was charged to  operations,  as finance
costs, in 2004 and the remaining amount of $18,000 in the first quarter of 2005.
The value of the warrants was determined with use of the  Black-Scholes  pricing
model  with the  following  factors:  3 year  life,  risk free rate of return of
approximately 1.9% and a volatility factor of 200%.

At June 30, 2005 the Company was also indebted on its Bank of America account in
the amount of $3,954.

As of June 30, 2005 the Company has $2,228,930 owing on short term notes.  These
amounts are repayable on demand and bear interest at varying rates.  The largest
of these, amounting to $1,555,000, is from a director and shareholder.

On June 8, 2005 the Company  converted a  convertible  loan  outstanding  to the
Shaar Fund. The principal  amount converted was $629,488 and accrued interest of
$100,089 was also converted to common stock of the Company.  The total number of
shares issued to settle this liability was 9,119,714.

On November 19, 2004 the Company acquired 100% of the outstanding  common shares
of Optimal Golf Solutions, Inc., a Texas corporation, for $5,250,000. $1,100,000
in cash was paid on  closing  and the  balance of  $4,150,000  was to be paid in
common  shares using a target price of $.25 per share.  Thus,  9,000,000  shares
representing  $2,250,000  were issued on closing  (first  stock  payment) to the
former Optimal  shareholders and the balance of $1,900,000 was to be paid with a
second stock payment of 7,600,000  shares 180 trading days after closing.  These
shares  were  to  have  become   free-trading  by  June  30,  2005  through  the
effectiveness  of a  Registration  statement  filed with the SEC.  If the former
Optimal  shareholders  sold their shares and received less that 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).  On May 28, 2005 the
Company entered into a First Amendment to Stock Purchase  Agreement  whereby the
Company  would  be  granted  up to six  months  of  additional  time  to  have a
Registration Statement become effective by paying $100,000 per month which would
be applied  the  balance  owing  which was to be settled  with the second  stock
payment. If a Registration  Statement does not become effective by September 30,
2005,  then the Company looses the benefit of getting a reduction in the balance
owing to be paid by the second stock payment,  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  liability
associated with Optimal Golf acquisition noted on the balance sheet as a current
liability is comprised of the total purchase  price of $5,250,000  less the cash
payments  made to date to the  former  Optimal  shareholders  together  with the
market value of the shares issued to the former Optimal shareholders on the date
of issue.

                                       10

<PAGE>

In April 2005 the Company  borrowed funds under an agreement to obtain  purchase
order  financing on confirmed  sales orders.  The provider of this financing has
been issued  10,000,000 shares of the Company to be held as security against the
amounts  advanced.  The  provider of the  financing  is required to return these
shares to the Company  once the term of the  financing  line has expired and all
amounts  advanced under the line have been repaid.  Accordingly  the issuance of
these  shares  has not been  recorded  in the equity  section  of the  financial
statements. As of June 30, 2005 the Company owed $187,200 on this purchase order
financing line of credit.  The Company pays a $1,500 per transaction fee to this
lender for each advance,  plus 17% per annum interest for the period the advance
is required.  Additionally  the lender  receives  100,000  shares per month as a
standby fee as long as the facility is in effect.

Under the terms of the purchase order funding agreement,  the lender is entitled
to request certain  financial  information from the Company,  including  interim
financial statements.  The lender requested interim financial statements in July
2005 however these statements were then in preparation and were not available at
that time. As a result the lender formally notified the Company on July 27, 2005
that an Event of  Default  as defined by the  agreements  had  occurred  and was
outstanding.  Draft interim financial statements have since been provided to the
lender  as soon as  they  were  available,  receipt  of  which  the  lender  has
acknowledged,   and  the  lender  will  also  receive  final  interim  financial
statements  as of the  date of this  filing.  However  the  Company  has not yet
received formal  notification  that the Event of Default has been remedied.  The
amount  currently  outstanding  under the line of  credit  totals  $47,500  plus
accumulated interest payable.


5. Liabilities Related to Discontinued Operations

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.  The Company has recorded
accounts  payable  and accrued  liabilities  of  $923,863  with  respect to this
discontinued   operation,   which  are  included  in   liabilities   related  to
discontinued  operations  in the  accompanying  condensed  consolidated  balance
sheet.

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.  In  conjunction  with the ProShot
transaction,  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  $575,128.  All such
liabilities are included in liabilities  related to  discontinued  operations in
the accompanying  condensed  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.


6. Legal Proceedings

At June 30, 2005, the Company was involved in the following legal proceedings:

(a) The Company has been threatened  with potential  litigation for an amount of
approximately $155,000,  which is included in accounts payable. The agreement is
that  further  negotiations  will take place  before any action is taken on this
balance.

(b) The Company's  wholly-owned  subsidiary,  IGT, is a defendant in a number of
lawsuits  principally  arising from vendor debt,  which in the aggregate are not
material or for which a provision has been  recorded.  Both IGT and ProShot have
filed Chapter 7 petitions under the United States Bankruptcy Code.

7. Capital Stock Transactions

On January 6, 2005,  the Company  issued 700,000 shares of common stock for cash
received of $700 upon exercise of an employee stock option.

On February 3, 2005 the Company issued  1,840,000  shares of common stock valued
at $266,800 to the Shaar Fund Ltd. for principal and accrued  interest of
$96,512 and $13,158 respectively,  with respect to the $1,000,000 8% convertible
debenture due November 2, 2007.

On February 3, 2005,  the Company issued 25,000 shares of common stock valued at
market value of $3,625 for services rendered.

On February 18, 2005, the Company issued 80,000 shares of common stock valued at
market value of $8,640 for services rendered.

                                       11

<PAGE>

On February 22, 2005,  the Company  issued 685,998 shares of common stock valued
at market value of $61,740 for payment of interest owed.

On March 29, 2005,  the Company  issued 450,000 shares of common stock valued at
market value of $45,000 for services rendered.

On March 30, 2005 the Company issued  2,500,000 shares of common stock valued at
market value of $250,000 to a consultant for services rendered.

On March 31, 2005,  the Company  issued 366,828 shares of common stock valued at
market value of $53,190 for payment of interest owed.

On April 7, 2005 the Company  issued  200,000  shares of common  stock valued at
market value of $21,000 as a cost of obtaining inventory financing.

On April 7, 2005 the Company issued  10,000,000 shares of common stock valued at
market value of $1,050,000 as collateral against a purchase order financing Line
of Credit of up to  $1,000,000.  The  provider of the  financing  is required to
return  these  shares to the  Company  once the term of the  financing  line has
expired and all amounts  advanced  under the line have been repaid.  Accordingly
the issuance of these shares has not been recorded in the equity  section of the
financial statements.

On April 12, 2005 the Company issued  1,750,000 shares of common stock valued at
market value of $189,000 to a consultant for services rendered.

On April 20, 2005,  the Company  issued 189,068 shares of common stock valued at
market value of $18,907 for payment of interest owed.

On May 31, 2005 the Company  issued  400,000  shares of common  stock  valued at
market value of $48,000 to a consultant for services rendered.

On June 15, 2005,  the Company  issued  15,312,500  shares of common stock for a
series of private placements for cash consideration of $1,225,000.

On June 15, 2005 the Company issued  9,119,714  shares of common stock valued at
$729,577 to the Shaar Fund for  principal  and accrued  interest of $629,488 and
$100,089  respectively,  with respect to final  conversion of the  $1,000,000 8%
convertible debenture due November 2, 2007.

On June 15, 2005 the Company issued  5,294,444  shares of common stock valued at
$757,105 to the LTC Financial  Partners for  principal and accrued  interest and
financing  costs of $400,000  and $357,105  respectively,  with respect to final
conversion of the debt.

On June 16, 2005 the Company issued  5,600,000  shares of common stock valued at
market value of $795,200 to consultants for services rendered.

On June 22, 2005 the Company  issued  288,350  shares of common  stock valued at
market value of $34,602 for services rendered.

On June 22, 2005 the Company issued  3,600,000  shares of common stock valued at
market value of $432,000 to a consultant for services rendered.

On June 27, 2005 the Company issued  1,500,000  shares of common stock valued at
market  value of $180,000 in  settlement  of accounts  payable  incurred for the
provision of legal services.

On April  27,  2005 the  Company's  stockholders  approved  an  increase  in the
authorized  share  capital of the Company  from  275,000,000  authorized  shares
(250,000,000 common stock and 25,000,000 preferred stock) to 550,000,000 shares,
500,000,000  shares of common  stock par value  $.001 and  50,000,000  shares of
preferred stock with the series, rights, preferences privileges and restrictions
to be determined by the Board of Directors of the Company.

                                       12

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Cautionary   Statement  Pursuant  to  Safe  Harbor  Provisions  of  the  Private
Securities Litigation Reform Act of 1995:

This  Quarterly  Report on Form 10-QSB for the  quarterly  period ended June 30,
2005 contains "forward-looking"  statements within the meaning of Section 27A of
the Securities Act of 1933, as amended,  including  statements  that include the
words  "believes",  "expects",  "anticipates",  or  similar  expressions.  These
forward-looking  statements  include,  among others,  statements  concerning the
Company's  expectations  regarding its working capital  requirements,  financing
requirements,  its  business,  growth  prospects,  competition  and  results  of
operations,  and other  statements of  expectations,  beliefs,  future plans and
strategies,  anticipated  events or trends, and similar  expressions  concerning
matters that are not historical  facts. The  forward-looking  statements in this
Quarterly  Report on Form 10-QSB for the  quarterly  period  ended June 30, 2005
involve  known and unknown  risks,  uncertainties  and other  factors that could
cause the actual  results,  performance or achievements of the Company to differ
materially from those expressed in or implied by the forward-looking  statements
contained herein.

Overview:

The  Company  is  involved  in the  development  and  marketing  of golf  course
management technology using Differential Global Positioning Satellite (DGPS) and
Wi-Fi wireless business solutions.  The Company's management  information system
enables golf course owners and managers to run their  business more  efficiently
with pace-of-play  monitoring,  data  consolidation and reporting  capabilities.
Courses  can   generate   more   revenue  with   advertising,   tournament   and
point-of-purchase  applications,  reduce  costs of  operations  and retain  more
customers  with  customer  relationship  management  programs.  The  Company has
developed both  hand-held and  cart-mounted  products  using GPS technology.
These units help attract and retain customers by delivering a better golf
experience with precise distance measurement,  detailed colour  course  maps,
media  streaming  of  real-time  sports  scores  and news headlines, food and
beverage ordering,  electronic scoring,  tournament play and emergency
communication  with the clubhouse.  At June 30, 2005 and December 31, 2004,
substantially  all of the Company's assets and operations were located in
Canada. Sales offices are located in Canada, USA and England.

The Company applies DGPS, radio frequency and a sophisticated integrated network
of wireless  technology  to  information  systems for the golf and  recreational
industries.  The  Company's  portable  product,  the  "Inforemer",  is the first
patented  communications  network that utilizes advanced  internet  protocols to
provide a wireless  information system to enhance  recreational value,  increase
golf course  profits and improve player  safety.  The Company's  objective is to
obtain a leadership  position as an international  supplier of GPS golf wireless
products  and become  the  leader in  hand-held  portable  recreational  devices
("PRDs") for applications worldwide.

The Company  recorded  sales revenue  during the six months ended June 30, 2005.
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  products  delivered to the customer and  installed on the  customer's
site.  The costs of installing  the equipment on the  customer's  site,  such as
labour and travel and  accommodation  expenses,  are  recorded  as  Installation
Costs.  The  cost of  developing  software  installed  in the  equipment  on the
customer's   site  is  recorded  as  an   operating   expense  in  the  category
"Engineering, Research and Development", all such costs are expensed as they are
incurred.

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.

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.

                                       13

<PAGE>

As a result of these  Chapter 7  bankruptcy  filings,  the  liabilities  of such
discontinued  subsidiaries  have been  classified as liabilities of discontinued
operations in the accompanying financial statements.

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.

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 June 30, 2005 and December 31, 2004. The continued  commercialization
of  the  Company's   technology  is  dependent  on  the  Company's   ability  to
successfully  finance its cash  requirements  through a combination  of debt and
equity  financings,  sale  of  its  GPS  systems  and  payments  from  potential
distributors  and other partners.  The Company's  independent  certified  public
accountants, in their independent auditors' report on the consolidated financial
statements  as of and for the year  ended  December  31,  2004,  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.

Critical Accounting Policies:

The Company  prepared the consolidated  financial  statements in accordance with
accounting  principles  generally accepted in the United States of America.  The
preparation  of these  financial  statements  requires the use of estimates  and
assumptions  that affect the reported  amounts of assets and liabilities and the
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period.  Management  periodically  evaluates the  estimates and judgments  made.
Management  bases its estimates and  judgments on historical  experience  and on
various  factors that are  believed to be  reasonable  under the  circumstances.
Actual  results  may  differ  from  these  estimates  as a result  of  different
assumptions or conditions.

The following critical accounting policies affect the more significant judgments
and estimates used in the  preparation of the Company's  consolidated  financial
statements.

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  products  delivered to the customer and  installed on the  customer's
site. The cost of installing the equipment on the customer's site, such as labor
and 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
"Engineering, Research and Development", all such costs are expensed as they are
incurred.

Impairment of Long-Lived Assets:

The Company's long-lived assets consist of patents,  property and equipment.  In
assessing  the  impairment  of  these  assets,  the  Company  makes  assumptions
regarding  the  estimated  future cash flows and other  factors to determine the
fair value of the respective  assets.  The Company did not record any impairment
charges for the six months ended June 30, 2005.  However,  if these estimates or
the related  assumptions  change in the  future,  the Company may be required to
record impairment charges for these assets at such time.

                                       14

<PAGE>

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.

Results of Operations:

Six months ended June 30, 2005 and 2004

Revenue - The Company  recorded  total  revenue in the six months ended June 30,
2005 of  $3,228,512  as compared to  $1,000,234 in the first six months of 2004.
This amounted to an increase of $2,228,278 or 223% in total revenue. The Company
recorded  sales of its  Inforemer  product  for the first time in the six months
ended June 30, 2004 and this increase  reflects the year over year growth of the
Company's sales from its startup position in 2004 and growing  acceptance of the
Inforemer in the marketplace  resulting in the Company's greater  penetration of
its core market.  This revenue is comprised of sales of the Company's  Inforemer
product and related service contract fees, together with fees payable by certain
of its  distributors  for  distributorship  partnership  fees  and  purchase  of
promotional  materials  from the Company.  Revenue also includes  patent licence
fees  received by the Company's  subsidiary,  Optimal Golf  Solutions,  Inc. The
total  revenue from  Inforemer  products and service  contract  fees amounted to
$2,810,137 as compared to $899,234 in the first six months of 2004. Revenue from
distributorship  partnership  fees amounted to $174,000  compared to $101,000 in
2004. Total patent licence revenue earned by Optimal Golf Solutions  amounted to
$244,375 as compared to $0 in the first six months of 2004.

Cost of  Goods  Sold - Cost of  Goods  Sold  represents  the  cost of  Inforemer
products and related  equipment  delivered to the customer and  installed on the
customer's  site.  Cost of Goods Sold for the six months ended June 30, 2005 was
$2,132,123  of which  $1,723,072  represents  costs of goods  sold and  $409,051
represents  installation  costs.  In the first six  months of 2004 Cost of Goods
Sold was $875,042  comprised of cost of goods sold of $700,763 and  installation
costs of $174,279.

Selling and Marketing  Expenses - Selling and marketing expenses were $1,091,037
for the six months  ended June 30,  2005,  as compared  to $701,705  for the six
months ended June 30, 2004. The increase was attributable to increased sales and
marketing  personnel,  sales commissions,  creation of marketing and promotional
materials,  attendance at trade shows,  travel,  accommodation,  advertising and
various promotional costs to introduce the Inforemer product to the marketplace.

General and Administrative  Expenses - General and administrative  expenses were
$3,134,943 for the six months ended June 30, 2005, as compared to $1,102,223 for
the six  months  ended June 30,  2004.  This  increase  was  attributable  to an
increase in personnel,  professional fees and consulting fees in connection with
enforcement of the Company's  recently  acquired  patents,  financing  costs and
stock based  compensation  compared to 2004. In particular the Company  incurred
significant costs in seeking  additional  financing  opportunities;  these costs
were  primarily  paid by stock  issuance.  The sum of expenses in this  category
which were satisfied by stock  issuances  rather than cash payments  amounted to
$1,806,067 or 58% of total general and administrative expenses.

Engineering,  Research  and  Development  Expenses -  Engineering,  research and
development  expenses  increased  to $927,493  for the six months ended June 30,
2005 from  $566,833 for the six months ended June 30,  2004.  This  increase was
attributable to the engineering and continuing development cost of the Inforemer
product. These costs comprised personnel costs,  consultants,  computer software
development costs and service costs of the increased number of Inforemer systems
installed.

Depreciation  and  Amortization -  Depreciation  and  amortization  increased by
$104,031 or 290 % to  $139,853  in the first six months of 2005,  as compared to
$35,822 in 2004.  The Company  acquired the rights to certain North American and
international GPS patents in the year ended December 31, 2004. These patents are
being  amortized  over  the  remaining  life of the  patents.  The  increase  in
depreciation and  amortization is due to the amortization  charged against these
patents.

Loss from  Operations  - The loss from  operations  was  $4,196,937  for the six
months ended June 30, 2005, as compared to a loss from  operations of $2,281,391
for the six months  ended June 30, 2004.  The increase was due to  substantially
higher  legal,  financing  and  administrative  expenses and sales and marketing
expenses  in the  period.  Engineering  and  R&D  expenses  in the  period  also
increased.

                                       15

<PAGE>

Interest Expense - Interest  expense  increased by $839,712 to $972,842 in 2005,
as compared to $133,130 in 2004, as a result of an increase of  interest-bearing
debt,  particularly  the loan from Great  White  Shark  Enterprises  obtained to
enable purchase of the Company's  patents,  drawdowns on bank operating lines of
credit and short term financing loans.  $501,491 of this total was paid in stock
issuances rather than cash payments.

Finance Costs - Finance costs relate to warrants issued in conjunction  with the
Company's  debt  financings and fees paid to third parties who assist in raising
capital for the Company.  The value of these  warrants is recorded as a discount
on the  convertible  debentures  and is  being  amortized  over  the term of the
respective convertible  debenture.  Finance costs increased to $341,261 in first
six  months of 2005 as  compared  to  $57,780  in the  respective  2004  period.
$142,550 of this total was paid by stock issuances.

Gain on  Extinguishment  of Debt - Gain on  extinguishment  of debt decreased to
$187,453  in the six months  ended  June 30,  2005 from  $1,104,739  for the six
months  ended  June 30,  2004.  This gain was  comprised  of a gain of  $362,307
relating to the write-off of debt  guarantees of  discontinued  operations and a
loss  amounting to $174,854  arising from the issuance of stock in settlement of
debt.

Net Loss - Net loss was  $5,321,440  for the six months ended June 30, 2005,  as
compared to a net loss of  $1,298,433  for the six months  ended June 30,  2004.
This increase is a reflection of the increased expenses incurred in bringing the
Inforemer  product  to  market,  financing  costs  and  setting  up a sales  and
distribution  organization,  which  have  partially  been  offset by the gain on
extinguishment  of debt  and net  sales  revenue  for the  period.  The  company
incurred significant costs in seeking additional financing opportunities,  these
costs were  primarily  paid by stock issuance and are included under the General
and Administrative  Expense category.  Total expenses paid by stock issuances in
the period amounted to $2,624,962.

Liquidity and Capital Resources - June 30, 2005:

The Company is continuing  its efforts to raise new capital during the remainder
of 2005.

The Company's  limited cash and working capital  resources,  and the uncertainty
with  respect to the  Company's  ability  to fund its  operations,  have  raised
substantial  doubt about the  Company's  ability to continue as a going  concern
(see "Going  Concern"  above).  The Company will require a substantial  input of
capital,  either  through debt or equity  capital or a combination  thereof,  to
continue operations. To the extent of the inability of the Company to raise such
capital the Company may have to cease or curtail  operations or seek  protection
from it's creditors under the bankruptcy laws.

Operating  Activities - The  Company's  operations  utilized cash of $ 2,542,379
during the six months ended June 30, 2005, as compared to $2,185,736  during the
six months ended June 30, 2004.  The increase in cash  utilized in operations in
2005 as  compared to 2004 was  primarily a result of an increase in  inventories
and accounts receivable, combined with the increase in net loss for the period.

At June 30, 2005, cash decreased by $144,304 to $28,788, as compared to $173,092
at December 31, 2004.

The Company had a working  capital  deficit of $ 12,706,970 at June 30, 2005, as
compared to a working  capital  deficit of  $14,210,188 at December 31, 2004. At
June 30, 2005 and December 31, 2004,  $3,061,215 and $3,423,522  respectively of
the  Company's  current  liabilities  consisted of  liabilities  with respect to
discontinued operations.

Investing  Activities  - Net cash used in investing  activities  was $15,691 and
$106,150  for the six  months  ended  June  30,  2005  and  2004,  respectively,
consisting of the purchase of equipment and patents.

Financing  Activities - Net cash provided by financing activities was $2,413,766
for the six months ended June 30, 2005,  as compared to  $2,300,181  for the six
months  ended June 30,  2004.  During the six months  ended June 30,  2005,  the
Company made  payments on loans of $288,920  and loans from  related  parties of
$13,671.  During  the six months  ended  June 30,  2005,  the  Company  received
proceeds from borrowing on  convertible  loans of $54,108 and proceeds from bank
borrowings  and short term loans of $1,636,549  During the six months ended June
30, 2005 the Company issued common stock for cash consideration of $1,025,700.

                                       16

<PAGE>

Effective  June 27,  2003,  the  Company  obtained  a bank  line of  credit  for
$1,425,000 to fund its operations. As of June 30, 2005, the Company had borrowed
$1,794,493  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. was
renewed  until  March  27,  2005  and  subsequently  to  October  27,  2005.  As
consideration for renewing the standby bank letter of credit, the Company issued
to Hansen Inc. a common stock purchase warrant to purchase 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.  $52,000, the fair value of this
common stock purchase warrant,  calculated pursuant to the Black-Scholes  option
pricing  model,  was charged to  operations  as finance costs for the six months
ended June 30,  2005.  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 is payable.  As of June
30, 2005 this line was drawn down in the amount of $994,712.  The term was for a
period  of 1 year  from  the date of the  agreement.  As  consideration  for the
security  provided the Company  agreed to pay the Secured Party 15% per annum of
the  maximum  amount  outstanding  in the month,  payable  50% in US$ 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. The Company has accrued this
consideration to June 30, 2005. 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,  has been renewed  until October 31, 2005.  These  warrants have been
valued at $72,000.  An amount of $54,000 was charged to  operations,  as finance
costs, in 2004 and the remaining amount of $18,000 in the first quarter of 2005.
The value of the warrants was determined with use of the  Black-Scholes  pricing
model  with the  following  factors:  3 year  life,  risk free rate of return of
approximately 1.9% and a volatility factor of 200%.

Off Balance Sheet Arrangements.

The Company had no Off Balance Sheet  arrangements for the six months ended June
30, 2005, or for the six months ended June 30, 2004

Recent Accounting Pronouncements:

In December 2004, the FASB finalized SFAS No. 123R "Share-Based  Payment" ("SFAS
123R"),  amending  SFAS No. 123,  effective  December 15,  2005.  SFAS 123R will
require the Company to expense  stock  options based on grant date fair value in
its  financial  statements.  Further,  adoption  of SFAS No.  123R will  require
additional  accounting  related to income tax effects and additional  disclosure
regarding cash flow effects  resulting from share-based  payments  arrangements.
The adoption of SFAS 123R will not effect the Company's  cash flows or financial
position, but may have an adverse impact on results of operations if options are
granted in the future.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets
- an amendment for APB Opinion No. 29". This statement amends APB Opinion No. 29
to eliminate  the  exception  for  nonmonetary  exchanges of similar  productive
assets and replaces it with a general  exception  for  exchanges of  nonmonetary
assets  that do not  have  commercial  substance.  A  nonmonetary  exchange  has
commercial  substance  if future cash flows of the entity are expected to change
significantly  as a result of the exchange.  The  provisions of SFAS No. 153 are
effective  for the  Company's  year  ended  December  31,  2006.  Management  is
currently evaluating the impact of the adoption of SFAS No. 153 on the Company's
consolidated financial position, liquidity, or results of operations.

                                       17

<PAGE>

In April 2005,  the  Securities  and Exchange  Commission's  Office of the Chief
Accountant and its Division of Corporation Finance has released Staff Accounting
Bulletin  (SAB) No.107 to provide  guidance  regarding the  application  of FASB
Statement  No.123  (revised  2004),  Share-Based  Payment.  Statement No. 123(R)
covers a wide range of share-based  compensation  arrangements  including  share
options,  restricted share plans,  performance-based  awards, share appreciation
rights,  and employee  share  purchase  plans.  SAB 107 provides  interpretative
guidance related to the interaction  between  Statement No. 123R and certain SEC
rules and  regulations,  as well as the staff's views regarding the valuation of
Share-based  payment  arrangements  for public  companies.  SAB 107 also reminds
public companies of the importance of including  disclosures within filings made
with the SEC relating to the accounting for  share-based  payment  transactions,
particularly during the transition to Statement No. 123R.

In May 2005, the Financial  Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  No.  154,  "Accounting  Changes  and Error
Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3" ("SFAS
154"). This Statement replaces APB Opinion No. 20, Accounting Changes,  and FASB
Statement No. 3, Reporting  Accounting Changes in Interim Financial  Statements,
and changes the requirements for the accounting for and reporting of a change in
accounting  principle.  This  Statement  applies  to all  voluntary  changes  in
accounting  principle.  It also  applies to changes  required  by an  accounting
pronouncement  in the unusual instance that the  pronouncement  does not include
specific  transition   provisions.   When  a  pronouncement   includes  specific
transition provisions, those provisions should be followed.

Opinion  20  previously  required  that most  voluntary  changes  in  accounting
principle be  recognized  by including in net income of the period of the change
the  cumulative  effect  of  changing  to the  new  accounting  principle.  This
Statement  requires  retrospective   application  to  prior  periods'  financial
statements of changes in accounting  principle,  unless it is  impracticable  to
determine  either the  period-specific  effects or the cumulative  effect of the
change. When it is impracticable to determine the period-specific  effects of an
accounting  change  on one or more  individual  prior  periods  presented,  this
Statement requires that the new accounting  principle be applied to the balances
of assets and  liabilities as of the beginning of the earliest  period for which
retrospective  application is practicable and that a corresponding adjustment be
made  to  the  opening  balance  of  retained  earnings  (or  other  appropriate
components of equity or net assets in the  statement of financial  position) for
that  period  rather  than being  reported  in an income  statement.  When it is
impracticable  to  determine  the  cumulative  effect  of  applying  a change in
accounting principle to all prior periods,  this Statement requires that the new
accounting  principle  be applied as if it were adopted  prospectively  from the
earliest date  practicable.  This  Statement  shall be effective for  accounting
changes and  corrections of errors made in fiscal years beginning after December
15, 2005. The Company does not believe that the adoption of SFAS 154 will have a
significant effect on its financial statements.

Other  accounting  standards  that have been  issued or  proposed by the FASB or
other standards-setting  bodies that do not require adoption until a future date
are not  expected  to  have a  material  impact  on the  consolidated  financial
statements upon adoption.

ITEM 3. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Disclosure  controls  and  procedures  are  designed to ensure that  information
required to be  disclosed in the reports  filed or submitted  under the Exchange
Act of 1934 is recorded,  processed,  summarized  and reported,  within the time
periods  specified  in the  rules  and  forms  of the  Securities  and  Exchange
Commission.  Disclosure  controls and procedures  include,  without  limitation,
controls  and  procedures  designed  to ensure that  information  required to be
disclosed in the reports filed under the Exchange Act of 1934 is accumulated and
communicated  to  management,  including its  principal  executive and financial
officers,   as  appropriate,   to  allow  timely  decisions  regarding  required
disclosure.

The  Company  carried  out an  evaluation,  under the  supervision  and with the
participation  of the Company's  management,  including the Company's  principal
executive  and  financial  officer,  of  the  effectiveness  of the  design  and
operation of the Company's  disclosure  controls and procedures as of the end of
the  period  covered  by this  report.  Based  upon  and as of the  date of that
evaluation,  the Company's  principal  executive and financial officer concluded
that the Company's  disclosure  controls and  procedures are effective to ensure
that  information  required to be disclosed in the reports the Company files and
submits under the Exchange Act of 1934 is recorded,  processed,  summarized  and
reported  within the time  periods  specified  in the  Securities  and  Exchange
Commission's rules and forms.

(b) Changes in Internal Controls

There were no changes in the  Company's  internal  controls or in other  factors
that could have significantly  affected those controls subsequent to the date of
the Company's most recent evaluation.

                                       18

<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

During  the six  months  ended  June  30,  2005  the  Company  issued a total of
49,901,902  shares of common stock,  valued at a market value of $5,120,086.  Of
these,  15,393,350  shares were issued for services  rendered valued at a market
value of $1,806,767;  4,361,000  shares were issued to pay interest of $501,491;
1,050,000 were issued for financing  costs valued at a market value of $142,550:
9,487,849  shares were issued in payment of convertible  debt valued at a market
value of $864,279;  4,297,203 shares were issued in other debt settlement valued
at a market  value of  $580,000  and  15,312,500  shares  were  issued  for cash
consideration of $1,225,000.

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 3. DEFAULTS UPON SENIOR SECURITIES

None

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

On April  27,  2005 the  Company's  shareholders  approved  an  increase  in the
authorized  share  capital of the Company  from  275,000,000  authorized  shares
(250,000,000 common stock and 25,000,000 preferred stock) to 550,000,000 shares,
500,000,000  shares of common  stock par value  $.001 and  50,000,000  shares of
preferred stock with the series, rights, preferences privileges and restrictions
to be  determined by the Board of Directors of the Company.  120,297,017  shares
were voted at the meeting out of 207,552,851 entitled to vote,  representing 58%
of the shares  entitled to vote.  Of the  120,297,017  shares voted  115,180,874
voted in favour of the increase, 5,029,798 voted against the increase and 86,345
abstained.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

A list of  exhibits  required to be filed as part of this report is set forth in
the  Index  to  Exhibits,  which  immediately  precedes  such  exhibits,  and is
incorporated herein by reference.

                                       19

<PAGE>

                                                           INDEX TO EXHIBITS



Exhibit Number                      Title

31.1              Certification of Chief Executive Officer pursuant
                    to Section 302 of the Sarbanes Oxley Act of 2002

31.2              Certification of Chief Financial Officer pursuant
                   to Section 302 of the Sarbanes Oxley Act of 2002

32.1              Certification of Chief Executive Officer pursuant
                   to Section 906 of the Sarbanes Oxley Act of 2002

32.2              Certification of Chief Financial Officer pursuant
                   to Section 906 of the Sarbanes Oxley Act of 2002



                                       20

<PAGE>

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                              GPS INDUSTRIES, INC.
                                  (Registrant)





                                       /s/ ROBERT C. SILZER, SR.
Date:  August 15, 2005            By:  ___________________________
                                       Robert C. Silzer, Sr.
                                       Chief Executive Officer
                                       (Duly Authorized Officer)



                                       /s/ GEORGE DORIN
Date:  August 15, 2005            By:  ___________________________
                                       George Dorin
                                       Chief Financial Officer
                                       (Duly Authorized Officer)