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, 2006

        [ ] 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 [ ]

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

As of July 11, 2006 the Company had 307,495,547 shares of 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, 2006 (Unaudited)..................3

    Consolidated Statements of Operations (Unaudited) -
    Six months ended June 30, 2006 and 2005.................................4

    Consolidated Statements of Operations (Unaudited) -
    Three months ended June 30, 2006 and 2005...............................5

    Consolidated Statements of Cash Flows (Unaudited) -
    Six months ended June 30, 2006 and 2005.................................6

    Notes to Consolidated Financial Statements (Unaudited) -
    Six months ended June 30, 2006 and 2005.................................7

  Item 2.  Management's Discussion and Analysis or Plan of Operation.......18

  Item 3.  Controls and Procedures.........................................26

PART II.  OTHER INFORMATION

  Item 1.  Legal proceedings...............................................28

  Item 2.  Changes in Securities and Use of Proceeds.......................28

  Item 3.  Defaults Upon Senior Securities.................................29

  Item 4.  Submission of matters to a vote of security holders.............29

  Item 5.  Other information...............................................29

  Item 6.  Exhibits........................................................29

SIGNATURES


                                       2

<PAGE>


ITEM 1. FINANCIAL STATEMENTS

                      GPS INDUSTRIES INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET


                                                                   June 30, 2006
                                                                     Unaudited
--------------------------------------------------------------------------------
Assets

Current

      Cash                                                        $      43,714
      Accounts receivable                                               533,665
      Inventories                                                     1,448,775
      Prepaid expenses and other current assets                         505,596
                                                                  --------------
           Total current assets                                       2,531,750

Long-term accounts receivable                                           106,480

Property and equipment, net                                              97,622

Patents                                                               1,391,487

Deferred implementation costs                                           194,461
                                                                  --------------

                                                                  $   4,321,800
                                                                  ==============
--------------------------------------------------------------------------------

Liabilities and Stockholders' Deficit

Current liabilities

      Bank indebtedness                                           $   3,299,303
      Bank loan                                                          20,987
      Deferred Revenue                                                  986,003
      Short term loans                                                4,659,910
      Accounts payable and accrued liabilities                        5,151,869
      Liability associated with Optimal Golf acquisition              3,181,000
      Promissory notes - related parties                                496,481
      Derivative liabilities                                          6,250,699
                                                                  --------------
                                                                     24,046,252

      Liabilities related to discontinued operations
      (Chapter 7 proceedings filed in 2002)
      Promissory note payable                                         1,274,757
      Accounts payable and accrued liabilities                        1,076,425
      Loans payable to related parties                                  258,000
      Capital lease obligations ( in default)                            29,467
                                                                  --------------
                                                                      2,638,649
                                                                  --------------

           Total current liabilities                                 26,684,901
                                                                  --------------


Convertible Debt, net of unamortized debt discount and
deferred interest of $2,071,690                                         757,400

Long Term debt - Related Party, net of unamortized debt
discount of $377,143                                                  2,077,023
                                                                  --------------


Stockholders' deficit
      5% Convertible Preferred Shares, $.001 par value,
      50,000,000 authorized, 375,000 issued and outstanding             375,000
      Class A common stock, $.001 par value, 500,000,000
      authorized, 302,107,241 issued and outstanding                    302,107
      Accumulated other comprehensive income                            722,295
      Deferred compensation expense                                   ( 337,894)
      Deferred Financing Costs                                        ( 252,966)
      Additional paid-in capital                                     38,234,476
      Accumulated deficit                                          ( 64,240,542)
                                                                  --------------
           Total Stockholder's Deficit                             ( 25,197,524)
                                                                  --------------

                                                                  $   4,321,800
                                                                  ==============



     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       2006             2005
                                                         ---------------------------------
                                                              Unaudited       Unaudited
------------------------------------------------------------------------------------------

<S>                                                      <C>                  <C>
Revenue                                                  $       2,455,720    $ 3,228,512

Cost of Goods Sold                                               1,347,296      1,871,404

Installation Costs                                                 249,867        409,051
                                                         ---------------------------------
Gross Profit                                                       858,557        948,057
                                                         ---------------------------------


Operating Expenses

      General and Administrative Expenses                        1,630,489      3,134,943
      Depreciation and amortization                                166,668        139,853
      Sales and marketing                                        1,176,709      1,091,037
      Engineering and Research and Development                   1,354,055        779,161
                                                         ---------------------------------
                                                                 4,327,921      5,144,994
                                                         ---------------------------------

Loss Before Other Income (Expense)                             ( 3,469,364)   ( 4,196,937)
                                                         ---------------------------------

Other Income (Expense)

      Finance costs                                              ( 108,010)     ( 341,261)
      Interest expense                                         ( 2,060,329)     ( 972,842)
      Derivative liabilities - Decrease in fair value            3,209,667              -
      (Loss)/Gain on foreign exchange                            ( 167,207)         2,147
      Gain on extinguishment of debt                               238,854        187,453
                                                         ---------------------------------
                                                                 1,112,975    ( 1,124,503)
                                                         ---------------------------------

Net Loss                                                 $     ( 2,356,389) $ ( 5,321,440)
------------------------------------------------------------------------------------------

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


Weighted average number of common shares outstanding -
      basic and diluted                                        293,554,966    213,580,934
------------------------------------------------------------------------------------------
</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      2006             2005
                                                         ---------------------------------
                                                            (Unaudited)      (Unaudited)
------------------------------------------------------------------------------------------

<S>                                                      <C>                <C>
Revenue                                                  $       1,629,629  $   2,109,896

Cost of Goods Sold                                                 914,039      1,281,509

Installation Costs                                                 194,473        323,517
                                                         ---------------------------------
Gross Profit                                                       521,117        504,870
                                                         ---------------------------------


Operating Expenses

      General and Administrative Expenses                          693,726      2,187,059
      Depreciation and amortization                                 82,525         72,488
      Sales and marketing                                          531,115        536,207
      Engineering and Research and Development                     706,829        482,465
                                                         ---------------------------------
                                                                 2,014,195      3,278,219
                                                         ---------------------------------
Loss Before Other Income (Expense)                             ( 1,493,078)   ( 2,773,349)
                                                         ---------------------------------
Other Income (Expense)

      Finance costs                                               ( 53,898)     ( 278,230)
      Interest expense                                         ( 1,060,432)     ( 644,102)
      Derivative Liabilities - Decrease in fair value            1,947,252              -
      (Loss)/Gain on foreign exchange                            ( 166,917)         2,147
      Gain on extinguishment of debt                               150,904         25,752
                                                         ---------------------------------
                                                                   816,909      ( 894,433)
                                                         ---------------------------------
Net Loss                                                 $       ( 676,169) $ ( 3,667,782)
------------------------------------------------------------------------------------------

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


Weighted average number of common shares outstanding -
      basic and diluted                                       268,547,360     219,805,728
------------------------------------------------------------------------------------------
</TABLE>

                                       5
<PAGE>



                      GPS INDUSTRIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                         For the Six Months Ended June 30                            2006           2005
                                                                                   Unaudited      Unaudited
--------------------------------------------------------------------------------------------------------------
Cash Flow From Operating Activities

<S>                                                                             <C> <C>         <C> <C>
      Net loss from operations                                                  $ ( 2,356,389)  $ ( 5,321,440)

      Adjustments to reconcile net loss to net cash used in operating
        activities:
           Depreciation and amortization                                              166,668         158,144
           Amortization of deferred compensation                                      112,632         112,633
           Loss on extinguishment of debt                                              91,076         174,854
           Expenses paid by issuance of stock                                         128,880       1,806,067
           Interest converted to stock                                                 16,989         501,491
           Finance charges converted to stock                                               -         142,550
           Finance charges charged to equity                                           32,900               -
           Decrease in fair value of derivative liabilities                       ( 3,209,667)              -
           Amortization of debt discount                                            1,266,543               -
           Amortization of finance costs                                              155,092          90,000

      Changes in operating assets and liabilities:
           Inventories                                                              ( 348,068)      ( 193,146)
           Accounts receivable                                                        170,433       ( 892,552)
           Long-term accounts receivable                                               11,329               -
           Prepaid expenses and deposits                                            ( 304,457)        ( 2,906)
           Deferred implementation costs                                             ( 66,547)      ( 243,837)
           Accounts payable and accrued liabilities                                 1,087,747       1,160,215
           Discontinued operations - accounts payable and accrued liabilities       ( 329,933)      ( 362,307)
           Deferred revenue                                                           762,017         327,855
                                                                                ------------------------------
Net Cash Used In Operating Activities                                             ( 2,612,755)    ( 2,542,379)
                                                                                ------------------------------
Cash Flow From Investing Activities
           Purchase of property and equipment                                        ( 60,183)        ( 7,191)
           Purchase of patents                                                              -         ( 8,500)
                                                                                ------------------------------
Net Cash Flow Used In Investing Activities                                           ( 60,183)       ( 15,691)
                                                                                ------------------------------
Cash Flow From Financing Activities
           Common stock issued for cash                                                     -       1,025,700
           Proceeds from loans                                                      2,338,074       1,152,798
           Repayments of long term loan                                             ( 226,762)      ( 284,786)
           Repayments of bank loan                                                          -         ( 4,134)
           Borrowings under bank indebtedness                                         741,510         483,751
           Repayments of loans from related parties                                  ( 17,856)       ( 13,671)
           Borrowing on convertible loans                                           ( 249,488)        54,108
                                                                                ------------------------------
Net Cash Flow Provided By Financing Activities                                      2,585,478       2,413,766
                                                                                ------------------------------

Nt Decrease In Cash                                                                  ( 87,460)      ( 144,304)

Cash, Beginning Of Period                                                             131,174         173,092
                                                                                ------------------------------
Cash, End Of Period                                                             $      43,714   $      28,788
                                                                                ==============================

--------------------------------------------------------------------------------------------------------------

Supplemental disclosure of cash flow information:
      Cash paid for interest                                                    $     267,773   $     471,351
                                                                                ==============================
      Cash paid for taxes                                                       $           -   $           -
                                                                                ==============================

Non-Cash Investing And Financing Activities

      Common stock issued on conversion of convertible notes                    $     467,863   $     726,000
                                                                                ==============================
      Common stock issued to settle debt                                        $     107,241   $     400,000
                                                                                ==============================
      Common stock issued in settlement of accounts payable                     $     699,740   $     143,425
                                                                                ==============================

</TABLE>


See accompanying notes to unaudited consolidated financial statements


                                        6
<PAGE>

GPS Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements Six Months Ended June 30, 2006 and
2005 (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, 2006, the results of operations for the six months ended June 30, 2006
and 2005, and the cash flows for the six months ended June 30, 2006 and 2005.
The results of operations for the six months ended June 30, 2006 are not
necessarily indicative of the results of operations to be expected for the full
fiscal year ending December 31, 2006.

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,
2005, 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, 2006, 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).

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, 2006 and December 31, 2005. 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, 2005, 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

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 "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.

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.

                                       8
<PAGE>

Stock, Options and Warrants Issued for Services - Issuances of shares of the
Company's stock to employees or third-parties for compensation or services is
valued using the closing market price on the date of grant for employees and the
date services are completed for non-employees. Issuances of options and warrants
of the Companies stock are valued using the Black-Scholes option model.

Stock Options - In December 2004, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No. 123R,
Share-Based Payment ("SFAS No. 123R"). This Statement is a revision of SFAS No.
123, Accounting for Stock-Based Compensation, and supersedes Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and
its related implementation guidance. SFAS No. 123R focuses primarily on
accounting for transactions in which an entity obtains employee services in
share-based payment transactions. The Statement requires entities to recognize
stock compensation expense for awards of equity instruments to employees based
on the grant-date fair value of those awards (with limited exceptions).

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 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.

APB Opinion No. 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.

In February 2006, the FASB issued FASB Statement No. 155, which is an amendment
of FASB Statements No. 133 and 140. This Statement; a) permits fair value
remeasurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation, b) clarifies which
interest-only strip and principal-only strip are not subject to the requirements
of Statement 133, c) establishes a requirement to evaluate interests in
securitized financial assets to identify interests that are freestanding
derivatives or that are hybrid financial instruments that contain an embedded
derivative requiring bifurcation, d) clarifies that concentrations of credit
risk in the form of subordination are not embedded derivatives, e) amends
Statement 140 to eliminate the prohibition on a qualifying special-purpose
entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument. This
Statement is effective for financial statements for fiscal years beginning after
September 15, 2006. Earlier adoption of this Statement is permitted as of the
beginning of an entity's fiscal year, provided the entity has not yet issued any
financial statements for that fiscal year. Management is currently evaluating
the impact this statement will have on the financial statements of the Company
once adopted.

                                       9
<PAGE>

In March 2006, the FASB issued FASB Statement No. 156, which amends FASB
Statement No. 140. This Statement establishes, among other things, the
accounting for all separately recognized servicing assets and servicing
liabilities. This Statement amends Statement 140 to require that all separately
recognized servicing assets and servicing liabilities be initially measured at
fair value, if practicable. This Statement permits, but does not require, the
subsequent measurement of separately recognized servicing assets and servicing
liabilities at fair value. An entity that uses derivative instruments to
mitigate the risks inherent in servicing assets and servicing liabilities is
required to account for those derivative instruments at fair value. Under this
Statement, an entity can elect subsequent fair value measurement to account for
its separately recognized servicing assets and servicing liabilities. By
electing that option, an entity may simplify its accounting because this
Statement permits income statement recognition of the potential offsetting
changes in fair value of those servicing assets and servicing liabilities and
derivative instruments in the same accounting period. This Statement is
effective for financial statements for fiscal years beginning after September
15, 2006. Earlier adoption of this Statement is permitted as of the beginning of
an entity's fiscal year, provided the entity has not yet issued any financial
statements for that fiscal year. Management is currently evaluating the impact
this statement will have on the financial statements of the Company once
adopted.

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.

4. Debt

Bank Indebtedness

Effective June 27, 2003, the Company obtained a bank line of credit for
$1,425,000 to fund its operations. As of June 30, 2006, the Company had borrowed
approximately $1,860,248 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 and has now
been renewed to September 30, 2006. 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. The Company has issued a further common stock purchase warrant to Hansen
Inc. to purchase 1,000,000 shares of the Company's common stock, exercisable at
$0.10 per share for a period of three years. $17,900, 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, 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. In the six months ended June 30, 2006 Hansen Inc. loaned the Company a
further $1,000,000. This amount is included in the Short-Term Loan total below.
In return for this loan 1,500,000 warrants to Hansen Inc. were extended to a
period of five years at a price of $0.05 per share. The fair value of this
change in the warrants, amounting to $32,900 was charged to operations as a
finance cost for the period.

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. This line of credit was subsequently increased to $1,400,000 on June
16, 2006. 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, 2006 this line was drawn approximately $1,439,055. The excess represents the
cash float arising from timing differences between when payments are issued from
this account and when they are presented for payment. The term was for a period
of 1 year from the date of the agreement. As consideration for the security
provided, the Company agreed to pay the Secured Party 15% per annum of the
maximum amount outstanding in the month, payable 50% in US$ 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, 2006. Additionally the Company agreed to issue 666,667
warrants to purchase common stock of the Company at $0.15 per common share for a
period of three years. 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 renewed until October 31, 2005 and
subsequently renewed until October 2006.

Short-Term Loan

As of June 30, 2006 the Company has $4,659,910 owing on short term notes. These
amounts are repayable on demand and bear interest at varying rates. The largest
of these, amounting to $2,522,165, is from a director and shareholder.

                                       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
June 30, 2006 the Company owed $630,909 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 $630,909 owing under this financing line at June 30,
2006 is included in the balance of $4,659,910 owed on Short Term Loans.


Liability Associated with Acquisition of Optimal Golf Solutions, Inc.

On November 19, 2004 GPSI 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% per annum 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 can be sold after the effectiveness of a
registration statement and in accordance with a Leakage Agreement. The final
purchase price will vary based upon the performance of the Company's shares. The
obligation to pay the deferred purchase price was secured by a first security
interest in the Optimal patents.

The first stock payment of 9,000,000 shares can be sold (in accordance with the
Leakage Agreement) over 180 trading days. Any funds received from the sale of
those shares over $3,250,000 (i.e. $1,000,000 over the $2,250,000 target price
for the first share payment) will be deducted from the amount to be paid with
the second stock payment, for the remaining amount due of $1,900,000 (plus
interest). 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 is 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 the Company 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, which would be applied to the balance owing which was to be
settled with the second stock payment. 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.

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 $0.10 on October 20, 2005 when the Registration Statement
was filed.

On June 30, 2006 the Company recorded an additional $54,000 in the liability
associated with the Optimal acquisition due to the decrease in the stock price
from $.13, the price at the original issuance of the 9,000,000 shares, to $0.041
on June 30, 2006. The Registration Statement covering these shares was filed by
the Company on October 20, 2005 and was declared effective by the SEC on
December 7, 2005.

Long-Term Debt -Related Party (Great White Shark Enterprises)

On December 3, 2004, GPSI entered into a Credit Agreement with Great White Shark
Enterprises, Inc. ("GWSE") for GWSE to provide a Term Loan of $3,000,000 to
GPSI. These funds were received by GPSI as follows: $1,000,000 on November 22,
2004 and the balance of $2,000,000 on December 3, 2004 (less outstanding service
fees owed by GPSI to GWSE on December 31, 2004 of $548,750 pursuant to a
Merchandising Agreement dated April, 2003). Collateral for the loan was (a) a
first priority security interest in all of the shares of the capital stock of
Optimal, (b) a second security interest in the Optimal Patents and (c) a first
security interest in the Pinranger Patents acquired by GPSI pursuant to an
Agreement dated July 2, 2004 between GPSI and Pinranger (Australia) Pty. Ltd.
and PagiSat, LLC. The Pinranger Patents are registered in 13 countries in
Europe, Japan, and Australia.

The Term Loan may be repaid at any time prior to maturity without premium or
penalty, except that the total minimum interest to be paid must be $300,000
irrespective of when the loan is repaid. During the term of the loan, GPSI must
pay interest of 10% per annum on a monthly basis in cash or shares. If GWSE
chooses to receive shares, the interest rate will be adjusted to 15% for the
period selected and the shares will be priced at a 15% discount to market, using
the average daily close for the three trading days prior to the end of the
monthly period for which interest is due.

                                       11

<PAGE>

Repayment of the principal and interest due under the Credit Agreement has been
provided for by GPSI giving to GWSE (commencing December 4, 2004) all license
payments GPSI receives under all license agreements between Optimal as licensor
and its licensees. Once the Term Loan and accrued interest is paid in full, for
a period of two years from the repayment date, GWSE will receive 20% of the
license payments and thereafter 40% of the license payments for the remaining
life of the Patents. Any fees received in connection with enforcement of the
Optimal Patents will also be paid to GWSE in accordance with the above-mentioned
formula, except that GPSI must pay all legal costs to enforce the Optimal
Patents. Any fees received from infringement payments relating to the Pinranger
Patents will be shared on a 50/50 basis (net of legal costs) until the Term Loan
and accrued interest are fully repaid, after which GPSI will have no further
obligation to GWSE regarding the Pinranger Patents for any revenue they
generate, and GWSE will agree to have its security interest in the Pinranger
Patents removed by GPSI.

To the extent that, during any calendar year commencing January 1, 2005, the
total annual license payments received by GWSE do not total $500,000, then the
shortfall must be paid to GWSE in equal monthly payments over the next calendar
year, above and beyond the following year's minimum license payment. The
maturity date of the Term Loan is November 15, 2011, the termination of the life
of one of the key Optimal Patents.

In addition to the above-mentioned interest and security provided for the Term
Loan, GWSE also received an equity bonus of 3,000,000 restricted Common Shares
of GPSI and a three year Warrant dated December 3, 2004 to purchase 2,000,000
Common Shares of GPSI at an exercise price of $.15.

The Company has paid $226,762 of this liability during the six months ended June
30, 2006. As at June 30, 2006 the principal amount outstanding is $2,454,166
which is offset by unamortized debt discount of $377,143, giving a net balance
of $2,077,023.

Convertible Debt


On September 20, 2005, the Company entered into a Securities Purchase Agreement
(the "Stock Purchase Agreement") with AJW Offshore, Ltd, AJW Partners, LLC, AJW
Qualified Partners, LLC and New Millennium Capital Partners II, LLC (the
Purchasers) providing for the issuance by the Company to the Purchasers of up to
$3,720,000 of secured convertible notes (the "Notes"). The Notes are convertible
into shares of the Company's Common Stock at the option of the holder. The
conversion price is the lesser of (i) the Variable Conversion Price (as defined)
and (ii) $.10 (subject, in each case, to equitable adjustments for stock splits,
stock dividends or rights offerings combinations, recapitalization,
reclassifications, extraordinary distributions and similar events). The
"Variable Conversion Price" means the Applicable Percentage (as defined)
multiplied by the Market Price. "Market Price" means the average of the lowest
three (3) Trading Prices (as defined) for the Common Stock during the twenty
(20) Trading Day period ending one Trading Day prior to the date the conversion
notice is sent by the applicable Holder to the Company. "Trading Price" means
the intraday trading price on the Over-the-Counter Bulletin Board. The
Applicable Percentage is 60%.

The term of the Notes is three years from the date of issuance. The repayment of
the principal amount of the Notes is based on 124% of the subscription amount.

The Company may redeem the Notes upon at least 10 trading days notice in
accordance with the following. So long as the Common stock is trading at or
below $.15 per share, as such price may be adjusted for stock splits,
recapitalizations and similar events (the "Maximum Price") the Company has the
right to prepay all of the outstanding Notes in an amount in cash (the "Optional
Prepayment Amount") equal to (i) 125% (for prepayments occurring within 30 days
of the Issue Date), (ii) 130% for prepayments occurring between 31 and 60 days
of the Issue Date, or (iii) 135% (for prepayments occurring after the sixtieth
60th day following the Issue Date), multiplied by the sum of the then
outstanding principal amount of the applicable Note plus certain other amounts,
if any, required to be paid by the Company as a result of specified defaults
under the definitive agreements. If the stock is trading above the Maximum
Price, the Company may exercise its right to prepay the Notes by paying to the
Holders, in addition to the Optional Prepayment Amount, an amount equal to the
aggregate number of shares that such Holders would have received upon conversion
of the amount of the Note being prepaid multiplied by the difference between the
closing price of the Company's Common Stock on the Optional Prepayment Date less
the Conversion Price then in effect. In the event that the average daily price
of the Common Stock for each day of the month ending on any determination date
is below the Initial Market Price, the Company may, at its option, prepay a
portion of the outstanding principal amount of the Notes equal to 104% of the
principal amount hereof divided by 36 plus one month's interest. The term
"Initial Market Price" means the volume weighted average price of the Common
Stock for the five (5) Trading Days immediately preceding the Closing which is
$.08. During the six months ended June 30, 2006 the Company prepaid a portion of
the outstanding principal amount under this provision, amounting to $249,488.

                                       12
<PAGE>

As a condition to the closing, the Company's President entered into a Guaranty
and Pledge agreement (the "Pledge Agreement") pursuant to which he agreed to
pledge 6,371,306 shares as collateral. The Notes are also secured by the assets
of the Company pursuant to a Security Agreement and Intellectual Property
Security Agreement.

On September 20, 2005, pursuant to the Securities Purchase Agreement, the
Company sold to the Purchasers, pursuant to Section 4(2) of the Securities Act
of 1933, as amended (the "Securities Act"), and Rule 506 promulgated thereunder,
$1,860,000 in aggregate principal amount of Notes and issued Warrants to
purchase an aggregate of 3,000,000 shares at an exercise price of $0.25 per
share for an aggregate purchase price of $1,500,000. Lionheart Group, Ocean
Avenue Advisors and E.H. Winston Associates and Co. received commissions in the
aggregate amount of $150,000.

On October 28, 2005, pursuant to the Securities Purchase Agreement, the Company
sold to the Purchasers, pursuant to Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act"), and Rule 506 promulgated thereunder, $930,000
in aggregate principal amount of Notes and issued Warrants to purchase an
aggregate of 1,500,000 shares for an aggregate purchase price of $750,000.
Lionheart Group, Ocean Avenue Advisors and E.H. Winston Associates and Co.
received commissions in the aggregate amount of $75,000.

On December 9, 2005, pursuant to the Securities Purchase Agreement, the Company
sold to the Purchasers, pursuant to Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act"), and Rule 506 promulgated thereunder, $930,000
in aggregate principal amount of Notes and issued Warrants to purchase an
aggregate of 1,500,000 shares for an aggregate purchase price of $750,000.
Lionheart Group, Ocean Avenue Advisors and E.H. Winston Associates and Co.
received commissions in the aggregate amount of $75,000.

On September 20, 2005, in connection with the purchase of the Notes, the Company
also entered into a Registration Rights Agreement with the investors signatory
thereto, which provided that on or prior to 30 days after the closing, of which
one occurred on September 20, 2005, the Company would prepare and file with the
Securities and Exchange Commission a registration statement ("Registration
Statement") covering the resale of all of the Registrable Securities (defined as
the shares issuable upon conversion of the Notes and the shares issuable upon
exercise of the Warrants). If the registration statement was not filed within 30
days or was, for any reason, not declared effective within 90 days, or was for
any reason not available for use after the effective date, the Registrant would
pay liquidated damages to the investors. The Company filed the Registration
Statement on October 20, 2005 and it was declared effective on December 7, 2005.

The aggregate principal amount of the Notes is $3,720,000 of which $720,000
represents deferred interest at 8% p.a. over a three year term. This deferred
interest has been recorded as an offset against the principal amount of the
notes to be amortized over the term of the notes. In addition there were debt
discounts incurred on the issue of the Notes and Warrants and a Derivatibe
Liability arising from the conversion features of the Notes and Warrants. See
"Derivative Liabilities". The debt discount arising from the issuance of the
Notes amounted to $3,000,000. Both the debt discount and deferred interest
amounts have been recorded as an offset against the principal amount of the
notes to be amortized over the term of the notes. For the period ended June 30,
2006 amortization of these offsets amounted to $1,232,257.

The Noteholders exercised their conversion privileges to convert a total of
$145,780 of the principal amount in the period ended June 30, 2006 leaving a
principal balance payable of $ 2,829,090. Unamortized debt discount and deferred
interest amounted to $2,071,690 at June 30, 2006 giving a net balance of
$757,400.

The issuance of the Notes and the Registration Statement, in particular the
variable conversion rights and the potential for liquidated damages and a
default premium if the Company has insufficient authorized and unissued shares
to meet its obligations under the Notes, created derivative liabilities which
the Company has valued at June 30, 2006 as approximately $6.25 million. Changes
in the fair value of the derivative liability are recorded as an Other Income or
Expense item in the Consolidated Statement of Operations. The change in the fair
value of the derivative in the six months ended June 30, 2006 resulted in income
of approximately $3.21 million. The derivative liabilities are more fully
disclosed in the "Derivative Liabilities" note to the Financial Statements.

                                       13
<PAGE>

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
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. (See "Convertible Debt"). The
recognition of these derivative liabilities is more fully described in the
10-KSB for the year ended December 31, 2005

After the Company satisfied certain conditions precedent it issued $3,720,000 of
Notes in three tranches: $1,860,000 on September 20, 2005, $930,000 on October
28, 2005 and $930,000 on December 9, 2005

In connection with the issuance of the Notes, the Company determined that the
conversion feature of the Notes represents an embedded derivative and the Notes
are not considered to be conventional debt under EITF 00-19 and the embedded
conversion feature must be bifurcated from the debt host and accounted for as a
derivative liability. Furthermore, the related warrants require that the Company
reimburse any holder of a warrant in respect of any trading loss resulting from
the failure of the Company to timely deliver shares issued pursuant to the
exercise of warrants. This compensation may be paid in shares of common stock or
cash.

The Company believes that the aforementioned embedded derivatives and
freestanding warrants meet the criteria of SFAS 133 and EITF 00-19, when
appropriate, and should be accounted for as separate derivatives with a
corresponding value recorded as liability

Additionally, because the number of shares that are to be delivered upon
satisfaction of the conversion of the Notes and warrants or liquidated damages
is variable, the Company is unable to assert that it had sufficient authorized
and unissued shares to settle the liquidated damages or conversion of the Notes
and Warrants. Accordingly, all of the Company's previously issued and
outstanding instruments, such as warrants and convertible preferred shares as
well as those issued in the future, would be classified as liabilities as well,
effective with the granting of the registration rights. The fair value of the
derivative liabilities at the date of issuance of the Notes and the granting of
registration rights, at December 31, 2005 and at June 30, 2006 is as follows:

<TABLE>
<CAPTION>


     ---------------------------------- -------------------- ------------------------ ----------------------
                                            At Issuance       At December 31, 2005      At June 30, 2006
     ---------------------------------- -------------------- ------------------------ ----------------------
<S>                                     <C>                  <C>                      <C>
     Convertible Notes                  $         8,162,811  $             8,702,321  $           5,820,066
     ---------------------------------- -------------------- ------------------------ ----------------------
     Warrants associated with the       $           330,224  $               223,383  $             135,883
     Convertible Notes
     ---------------------------------- -------------------- ------------------------ ----------------------
     Other outstanding warrants         $           461,950  $               335,531  $             204,433
     ---------------------------------- -------------------- ------------------------ ----------------------
     Convertible preferred shares       $           307,242  $               199,131  $              90,317
     ---------------------------------- -------------------- ------------------------ ----------------------
                                        $         9,262,227  $             9,460,366  $           6,250,699
     ---------------------------------- -------------------- ------------------------ ----------------------
</TABLE>


The above total is net of $720,000 of the fair value of the Notes which was
recorded as deferred interest and will be amortized over the term of the Notes.
$3,000,000, the amount of proceeds actually received on issuance of the Notes,
has been recorded as a debt discount to be amortized over the term of the Notes.
The balance of the fair value at December 31, 2005, amounting to $6,460,366, was
recorded as other expense. The change in the balance of the fair value in the
six months ended June 30, 2006, amounting to $3,209,667 has been recorded as
other income for the period.

The Company computed the fair value of the identified derivatives using the
Black Scholes valuation model with the following assumptions:

At the date of issuance of the three tranches of Convertible Notes, related
warrants, and related registration rights, at December 31, 2005 and at June 30,
2006

                                       14
<PAGE>
<TABLE>
<CAPTION>

            Convertible Notes

       --------------------------- -------------------- ------------------------- -----------------------
                                       At issuance        At December 31, 2005       At June 30, 2006
       --------------------------- -------------------- ------------------------- -----------------------
<S>                                      <C>     <C>                      <C>                     <C>
       Market price                      $0.10 - $.078                    $0.065                  $0.041
       --------------------------- -------------------- ------------------------- -----------------------
       Conversion price:             $0.0556 - $0.0422                   $0.0328                 $0.0234
       --------------------------- -------------------- ------------------------- -----------------------
       Term:                                   3 years         2.72 - 2.94 years         2.22-2.44 years
       --------------------------- -------------------- ------------------------- -----------------------
       Volatility:                              102.8%                    102.8%                  115.8%
       --------------------------- -------------------- ------------------------- -----------------------
       Risk-free interest rate:         3.96% -  4.39%                     4.39%                   5.09%
       --------------------------- -------------------- ------------------------- -----------------------
       Maximum liability:
       --------------------------- -------------------- ------------------------- -----------------------
       Principal Notes:                     $3,720,000                $3,546,440              $2,829,090
       --------------------------- -------------------- ------------------------- -----------------------
       Liquidated damages:                  $1,785,600                $1,702,291              $1,357,963
       --------------------------- -------------------- ------------------------- -----------------------
       Default premium:                     $1,116,000                $1,063,932                $848,727
       --------------------------- -------------------- ------------------------- -----------------------



            Warrants associated with the Convertible Notes


       --------------------------- -------------------- ------------------------- -----------------------
                                       At issuance        At December 31, 2005       At June 30, 2006
       --------------------------- -------------------- ------------------------- -----------------------
       Market price:                     $0.10 - $.078                    $0.065                  $0.041
       --------------------------- -------------------- ------------------------- -----------------------
       Exercise price:                           $0.25                     $0.25                   $0.25
       --------------------------- -------------------- ------------------------- -----------------------
       Term:                                   5 years         4.72 - 4.94 years         4.22-4.44 years
       --------------------------- -------------------- ------------------------- -----------------------
       Volatility:                              102.8%                    102.8%                  115.8%
       --------------------------- -------------------- ------------------------- -----------------------
       Risk-free interest rate:                  3.96%                     4.39%                   5.09%
       --------------------------- -------------------- ------------------------- -----------------------
       Number of Warrants                    6,000,000                 6,000,000               6,000,000
       --------------------------- -------------------- ------------------------- -----------------------


            Other outstanding warrants

       --------------------------- -------------------- ------------------------- -----------------------
                                       At issuance        At December 31, 2005       At June 30, 2006
       --------------------------- -------------------- ------------------------- -----------------------
       Market price:                             $.085                    $0.065                  $0.041
       --------------------------- -------------------- ------------------------- -----------------------
       Exercise  price:                 $6.28 - $0.055            $6.28 - $0.055           $0.32 - $0.05
       --------------------------- -------------------- ------------------------- -----------------------
       Term:                            3 - 0.48 years         2.78 - 0.20 years        3.5 - 0.56 years
       --------------------------- -------------------- ------------------------- -----------------------
       Volatility:                              102.8%                    102.8%                  115.8%
       --------------------------- -------------------- ------------------------- -----------------------
       Risk-free interest rate:                  3.96%                     4.39%                   5.09%
       --------------------------- -------------------- ------------------------- -----------------------
       Number of Warrants                   16,763,884                19,472,773              21,750,611
       --------------------------- -------------------- ------------------------- -----------------------


            Convertible preferred shares outstanding

       --------------------------- -------------------- ------------------------- -----------------------
                                       At issuance        At December 31, 2005       At June 30, 2006
       --------------------------- -------------------- ------------------------- -----------------------
       Market price:                             $.085                    $0.065                  $0.041
       --------------------------- -------------------- ------------------------- -----------------------
       Exercise price:                $.0527 - $0.0710          $.0527 - $0.0710        $.0527 - $0.0710
       --------------------------- -------------------- ------------------------- -----------------------
       Term:                          2.1 - 1.87 years         1.82 - 1.59 years       1.33 - 1.09 years
       --------------------------- -------------------- ------------------------- -----------------------
       Volatility:                              102.8%                    102.8%                  115.8%
       --------------------------- -------------------- ------------------------- -----------------------
       Risk-free interest rate:                  3.96%                     4.39%                   5.09%
       --------------------------- -------------------- ------------------------- -----------------------
       Number of shares                      5,893,043                 5,893,043               5,893,043
       --------------------------- -------------------- ------------------------- -----------------------

</TABLE>

                                       15
<PAGE>

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 $655,726 with respect to this
discontinued operation, which are included in liabilities related to
discontinued operations in the accompanying 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 $420,699. 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 six months ended June 30, 2006 the Company wrote off trade debts
arising from discontinued operations amounting to $329,933. 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

At June 30, 2006, the Company was involved in the following legal proceedings:

On November 10, 2005 the Company initiated court proceedings in the Patents
County Court in the UK against Prolink Solutions LLC, Elumina Iberica S.A. and
Elumina Iberica Limited for an injunction, delivery up and/or damages or an
account of profits arising from the defendant's infringement of European Patent
(UK) 0617794 B1, which is owned by the Company, together with a claim for the
Company's costs and expenses in the action. This case is still before the courts
and no judgement has been rendered. The defendants have counterclaimed alleging
the patent is invalid, that it is not infringed and that it be revoked. The
defendants are also claiming legal costs and expenses to defend the action.
Under the legal system in the UK if the defendant prevails in the action the
Company may be liable to pay the defendants costs, including attorney fees,
which may be substantial. As of August 14, 2006 the Company had paid UK Pounds
115,000 into the Court against the potential liability for these fees, and is
currently required to pay a further UK Pounds 75,000 on or before October 1,
2006 into the Court against this potential liability.

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.

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 5, 2006 the Company issued 508,928 shares of common stock valued at
market value of $33,080 for services rendered.

On January 5, 2006 the Company issued 12,172,917 shares of common stock valued
at market value of $791,240 in settlement of debt. The resale of 12,129,167 of
these shares, valued at a market value of $788,396 were covered by an SB2
Registration Statement declared effective December 7, 2005

                                       16
<PAGE>

On January 5, 2006 the Company issued 2,000,000 shares of common stock valued at
$73,200 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

On January 12, 2006 the Company issued 416,667 shares of common stock valued at
market value of $25,000 to a consultant for services rendered.

On January 16, 2006 the Company issued 300,000 shares of common stock valued at
$16,500 for services rendered.

On January 19, 2006 the Company issued 4,555,595 shares of common stock in
settlement of cashless options previously granted to employees of the Company.

On January 19, 2006 the Company issued 440,000 shares of common stock valued at
market value of $26,400 in settlement of debt.

On January 26, 2006 the Company issued 750,000 shares of common stock valued at
$24,750 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

On February 6, 2006 the Company issued 600,000 shares of common stock valued at
$40,800 to employees as a signing bonus.

On February 6, 2006 the Company issued 324,957 shares of common stock valued at
market value of $22,097 in settlement of debt

On February 10, 2006 the Company issued 750,000 shares of common stock valued at
$24,593 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

On February 21, 2006 the Company issued 2,000,000 shares of common stock valued
at $71,180 with respect to a $1,860,000 8% convertible note due September 20,
2008. The resale of these securities were covered by an SB2 Registration
Statement declared effective December 7, 2005

On March 8, 2006 the Company issued 2,000,000 shares of common stock valued at
$66,780 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

On March 22, 2006 the Company issued 2,000,000 shares of common stock valued at
$61,580 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

On April 4, 2006 the Company issued 93,487 shares of common stock valued at
$4,207 in payment of interest on a short term loan.

On April 5, 2006 the Company issued 300,000 shares of common stock valued at
$13,500 for services rendered.

On April 7, 18, 21, & 27 2006 the Company issued a total of 6,000,000 shares of
common stock valued at $145,780 with respect to a $1,860,000 8% convertible note
due September 20, 2008. The resale of these securities were covered by an SB2
Registration Statement declared effective December 7, 2005

On May 1, 2006 the Company issued 131,524 shares of common stock valued at
$6,445 in payment of interest on a short term loan.

On May 4, 2006 the Company issued 425,000 shares of common stock valued at
market value of $23,800 in settlement of debt.

On May 12, 2006 the Company issued 400,000 shares of common stock valued at
market value of $22,000 in settlement of debt.

On May 30, 2006 the Company issued 401,000 shares of common stock valued at
market value of $17,243 in settlement of debt.

On June 7, 2006 the Company issued 132,030 shares of common stock valued at
$6,337 in payment of interest on a short term loan.

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.

                                       17
<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,
2006 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, 2006
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, 2006 and December 31, 2005, substantially all of the
Company's assets and operations were located in Canada. Sales offices are
located in Canada and the USA. The Company has distributors in Canada, United
States, Europe, Australia/New Zealand, Asia and South Africa

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, 2006.
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
contract 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.

                                       18
<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.

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 the Company 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 the
Company.

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, 2006 and December 31, 2005. 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, 2005, 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
contract 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.

                                       19

<PAGE>

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.

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, 2006. 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.

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, 2006 and 2005

Revenue - The Company recorded total revenue in the six months ended June 30,
2006 of $2,455,720 as compared to $3,228,512 in the first six months of 2005.
This amounted to a decrease of $772,792 or 24 % in total revenue. This revenue
is comprised of sales of the Company's Inforemer product and related service
contract 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 $2,163,557 as compared to $2,810,137 in the first six
months of 2005. This reduction was primarily due to the Company's introduction
of its new generation of product and a corporate restructure. As of June 30,
2006 the Company had approximately $750,000 of installations in progress which
will be recorded as revenue in the third quarter. There was no revenue from
distributorship partnership fees in 2006 compared to $174,000 in 2005. Total
patent licence revenue earned by Optimal Golf Solutions amounted to $292,163 as
compared to $244,375 in the first six months of 2005.

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, 2006 was
$1,597,163 of which $1,347,296 represents costs of goods sold and $249,867
represents installation costs. In the first six months of 2005 Cost of Goods
Sold was $2,280,455 comprised of cost of goods sold of $1,871,404 and
installation costs of $409,051.

Selling and Marketing Expenses - Selling and marketing expenses were $1,176,709
for the six months ended June 30, 2006, as compared to $1,091,037 for the six
months ended June 30, 2005. 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.

                                       20
<PAGE>

General and Administrative Expenses - General and administrative expenses were
$1,630,489 for the six months ended June 30, 2006, as compared to $3,134,943 for
the six months ended June 30, 2005. The sum of expenses in this category which
were satisfied by stock issuances rather than cash payments amounted to $128,880
or 8 % of total general and administrative expenses compared to $1,806,067, or
58% of the total, in the six months ended June 30, 2005. The stock based
expenses incurred in 2005 were primarily for financing, marketing and public
relations consulting. The reduction in these expenses in the six months ending
June 30, 2006 is the primary reason for the lower general and administrative
expenses recorded in this period compared to the corresponding period in 2005.

Engineering, Research and Development Expenses - Engineering, research and
development expenses increased to $1,354,055 for the six months ended June 30,
2006 from $779,161 for the six months ended June 30, 2005. 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
$26,815 or 19% to $166,668 in the first six months of 2006, as compared to
$139,853 in 2005. 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 depreciation charged against
purchases of fixed assets.

Loss from Operations - The loss from operations was $3,469,364 for the six
months ended June 30, 2006, as compared to a loss from operations of $4,196,937
for the six months ended June 30, 2005. The decrease was primarily due to the
reduction in general and administrative expenses, offset by higher engineering
and R&D expenses in the period.

Interest Expense - Interest expense increased by $1,087,487 to $2,060,329 in
2006, as compared to $972,842 in 2005. The primary component of this increase
was the amortization of debt discount on the convertible notes, amounting to
$1,232,257. There was also an increase in interest-bearing debt, drawdowns on
bank operating lines of credit and short term financing loans.

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. Finance costs decreased to $108,010 in first six months
of 2006 as compared to $341,261 in the respective 2005 period.

Derivative Liabilities - Derivative liabilities were incurred in the year ended
December 31, 2005 arising from the issue of $3,720,000 of convertible secured
notes. This resulted in an expense of $6,460,366 in 2005 representing the excess
of the fair value of the derivative liabilities at December 31, 2005 over the
principal amount of the notes. At June 30, 2006 the excess of the fair value of
the of the derivative liabilities had declined by $3,209,667. This reduction is
recorded as income for the period ended June 30, 2006. The valuation and basis
for this expense is more fully discussed in the "Derivative Liabilities" note to
the financial statements.

Gain on Extinguishment of Debt - Gain on extinguishment of debt increased to
$238,854 in the six months ended June 30, 2006 from $187,453 for the six months
ended June 30, 2005. This gain was comprised of a gain of $329,934 relating to
the write-off of debts of discontinued operations and a loss amounting to
$91,080 arising from the issuance of stock in settlement of debt.

Net Loss - Net loss was $2,356,389 for the six months ended June 30, 2006, as
compared to a net loss of $5,321,440 for the six months ended June 30, 2005.
This decrease is a reflection of the reduction in general and administrative
expenses and the decrease in the fair value of the derivative liabilities,
partially offset by the increase in engineering and R&D expenses.

Liquidity and Capital Resources - June 30, 2006:

The Company is continuing its efforts to raise new capital during the remainder
of 2006.

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 its creditors under the bankruptcy laws.

Operating Activities - The Company's operations utilized cash of $2,612,755
during the six months ended June 30, 2006, as compared to $2,542,379 during the
six months ended June 30, 2005.

                                       21
<PAGE>

At June 30, 2006, cash decreased by $87,460 to $43,714 as compared to $131,174
at December 31, 2005.

The Company had a working capital deficit of $24,153,151 at June 30, 2006, as
compared to a working capital deficit of $23,771,591 at December 31, 2005. At
June 30, 2006 and December 31, 2005, $2,638,649 and $2,968,582 respectively of
the Company's current liabilities consisted of liabilities with respect to
discontinued operations. At June 30, 2006 and December 31, 2005, $6,250,699 and
$9,460,366 respectively of the Company's current liabilities consisted of
liabilities with respect to derivative liabilities.

Investing Activities - Net cash used in investing activities was $60,183 and
$15,691 for the six months ended June 30, 2006 and 2005, respectively,
consisting of the purchase of equipment.

Financing Activities - Net cash provided by financing activities was $2,585,478
for the six months ended June 30, 2006, as compared to $2,413,766 for the six
months ended June 30, 2005. During the six months ended June 30, 2006, the
Company made payments on long term, convertible and related parties loans of
$494,106 and received proceeds from bank borrowings and short term loans of
$3,079,584.

Lines of Credit

Effective June 27, 2003, the Company obtained a bank line of credit for
$1,425,000 to fund its operations. As of June 30, 2006, the Company had borrowed
approximately $1,860,248 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 and has now
been renewed to September 30, 2006. 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. The Company has issued a further common stock purchase warrant to Hansen
Inc. to purchase 1,000,000 shares of the Company's common stock, exercisable at
$0.10 per share for a period of three years. $17,900, 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, 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. In the six months ended June 30, 2006 Hansen Inc. loaned the Company a
further $1,000,000. This amount is included in the Short-Term Loan total below.
In return for this loan 1,500,000 warrants to Hansen Inc. were extended to a
period of five years at a price of $0.05 per share. The fair value of this
change in the warrants, amounting to $32,900 was charged to operations as a
finance cost for the period.

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. This line of credit was subsequently increased to $1,400,000 on June
16, 2006. 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, 2006 this line was drawn approximately $1,439,055. The excess represents the
cash float arising from timing differences between when payments are issued from
this account and when they are presented for payment. The term was for a period
of 1 year from the date of the agreement. As consideration for the security
provided, the Company agreed to pay the Secured Party 15% per annum of the
maximum amount outstanding in the month, payable 50% in US$ 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, 2006. Additionally the Company agreed to issue 666,667
warrants to purchase common stock of the Company at $0.15 per common share for a
period of three years. 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 renewed until October 31, 2005 and
subsequently renewed until October 2006.

Acquisition of Optimal Golf Solutions, Inc.

On November 19, 2004 GPSI 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% per annum 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 can be sold after the effectiveness of a
registration statement and in accordance with a Leakage Agreement. The final
purchase price will vary based upon the performance of the Company's shares. The
obligation to pay the deferred purchase price was secured by a first security
interest in the Optimal patents.

                                       22
<PAGE>

The first stock payment of 9,000,000 shares can be sold (in accordance with the
Leakage Agreement) over 180 trading days. Any funds received from the sale of
those shares over $3,250,000 (i.e. $1,000,000 over the $2,250,000 target price
for the first share payment) will be deducted from the amount to be paid with
the second stock payment, for the remaining amount due of $1,900,000 (plus
interest). 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 is 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 the Company 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, which would be applied to the balance owing which was to be
settled with the second stock payment. 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.

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 $0.10 on October 20, 2005 when the Registration Statement
was filed.

On June 30, 2006 the Company recorded an additional $54,000 in the liability
associated with the Optimal acquisition due to the decrease in the stock price
from $.13, the price at the original issuance of the 9,000,000 shares, to $0.041
on June 30, 2006. The Registration Statement covering these shares was filed by
the Company on October 20, 2005 and was declared effective by the SEC on
December 7, 2005.


Loan From Great White Shark Enterprises

On December 3, 2004, GPSI entered into a Credit Agreement with Great White Shark
Enterprises, Inc. ("GWSE") for GWSE to provide a Term Loan of $3,000,000 to
GPSI. These funds were received by GPSI as follows: $1,000,000 on November 22,
2004 and the balance of $2,000,000 on December 3, 2004 (less outstanding service
fees owed by GPSI to GWSE on December 31, 2004 of $548,750 pursuant to a
Merchandising Agreement dated April, 2003). Collateral for the loan was (a) a
first priority security interest in all of the shares of the capital stock of
Optimal, (b) a second security interest in the Optimal Patents and (c) a first
security interest in the Pinranger Patents acquired by GPSI pursuant to an
Agreement dated July 2, 2004 between GPSI and Pinranger (Australia) Pty. Ltd.
and PagiSat, LLC. The Pinranger Patents are registered in 13 countries in
Europe, Japan, and Australia.

The Term Loan may be repaid at any time prior to maturity without premium or
penalty, except that the total minimum interest to be paid must be $300,000
irrespective of when the loan is repaid. During the term of the loan, GPSI must
pay interest of 10% per annum on a monthly basis in cash or shares. If GWSE
chooses to receive shares, the interest rate will be adjusted to 15% for the
period selected and the shares will be priced at a 15% discount to market, using
the average daily close for the three trading days prior to the end of the
monthly period for which interest is due.

Repayment of the principal and interest due under the Credit Agreement has been
provided for by GPSI giving to GWSE (commencing December 4, 2004) all license
payments GPSI receives under all license agreements between Optimal as licensor
and its licensees. Once the Term Loan and accrued interest is paid in full, for
a period of two years from the repayment date, GWSE will receive 20% of the
license payments and thereafter 40% of the license payments for the remaining
life of the Patents. Any fees received in connection with enforcement of the
Optimal Patents will also be paid to GWSE in accordance with the above-mentioned
formula, except that GPSI must pay all legal costs to enforce the Optimal
Patents. Any fees received from infringement payments relating to the Pinranger
Patents will be shared on a 50/50 basis (net of legal costs) until the Term Loan
and accrued interest are fully repaid, after which GPSI will have no further
obligation to GWSE regarding the Pinranger Patents for any revenue they
generate, and GWSE will agree to have its security interest in the Pinranger
Patents removed by GPSI.

                                       23
<PAGE>

To the extent that, during any calendar year commencing January 1, 2005, the
total annual license payments received by GWSE do not total $500,000, then the
shortfall must be paid to GWSE in equal monthly payments over the next calendar
year, above and beyond the following year's minimum license payment. The
maturity date of the Term Loan is November 15, 2011, the termination of the life
of one of the key Optimal Patents.

In addition to the above-mentioned interest and security provided for the Term
Loan, GWSE also received an equity bonus of 3,000,000 restricted Common Shares
of GPSI and a three year Warrant dated December 3, 2004 to purchase 2,000,000
Common Shares of GPSI at an exercise price of $.15.

The Company has paid $226,762 of this liability during the six months ended June
30, 2006. As at June 30, 2006 the principal amount outstanding is $2,454,166
which is offset by unamortized debt discount of $377,143, giving a net balance
of $2,077,023.


Convertible Debt


On September 20, 2005, the Company entered into a Securities Purchase Agreement
(the "Stock Purchase Agreement") with AJW Offshore, Ltd, AJW Partners, LLC, AJW
Qualified Partners, LLC and New Millennium Capital Partners II, LLC (the
Purchasers) providing for the issuance by the Company to the Purchasers of up to
$3,720,000 of secured convertible notes (the "Notes"). The Notes are convertible
into shares of the Company's Common Stock at the option of the holder. The
conversion price is the lesser of (i) the Variable Conversion Price (as defined)
and (ii) $.10 (subject, in each case, to equitable adjustments for stock splits,
stock dividends or rights offerings combinations, recapitalization,
reclassifications, extraordinary distributions and similar events). The
"Variable Conversion Price" means the Applicable Percentage (as defined)
multiplied by the Market Price. "Market Price" means the average of the lowest
three (3) Trading Prices (as defined) for the Common Stock during the twenty
(20) Trading Day period ending one Trading Day prior to the date the conversion
notice is sent by the applicable Holder to the Company. "Trading Price" means
the intraday trading price on the Over-the-Counter Bulletin Board. The
Applicable Percentage is 60%.

The term of the Notes is three years from the date of issuance. The repayment of
the principal amount of the Notes is based on 124% of the subscription amount.

The Company may redeem the Notes upon at least 10 trading days notice in
accordance with the following. So long as the Common stock is trading at or
below $.15 per share, as such price may be adjusted for stock splits,
recapitalizations and similar events (the "Maximum Price") the Company has the
right to prepay all of the outstanding Notes in an amount in cash (the "Optional
Prepayment Amount") equal to (i) 125% (for prepayments occurring within 30 days
of the Issue Date), (ii) 130% for prepayments occurring between 31 and 60 days
of the Issue Date, or (iii) 135% (for prepayments occurring after the sixtieth
60th day following the Issue Date), multiplied by the sum of the then
outstanding principal amount of the applicable Note plus certain other amounts,
if any, required to be paid by the Company as a result of specified defaults
under the definitive agreements. If the stock is trading above the Maximum
Price, the Company may exercise its right to prepay the Notes by paying to the
Holders, in addition to the Optional Prepayment Amount, an amount equal to the
aggregate number of shares that such Holders would have received upon conversion
of the amount of the Note being prepaid multiplied by the difference between the
closing price of the Company's Common Stock on the Optional Prepayment Date less
the Conversion Price then in effect. In the event that the average daily price
of the Common Stock for each day of the month ending on any determination date
is below the Initial Market Price, the Company may, at its option, prepay a
portion of the outstanding principal amount of the Notes equal to 104% of the
principal amount hereof divided by 36 plus one month's interest. The term
"Initial Market Price" means the volume weighted average price of the Common
Stock for the five (5) Trading Days immediately preceding the Closing which is
$.08. During the six months ended June 30, 2006 the Company prepaid a portion of
the outstanding principal amount under this provision, amounting to $249,488.

As a condition to the closing, the Company's President entered into a Guaranty
and Pledge agreement (the "Pledge Agreement") pursuant to which he agreed to
pledge 6,371,306 shares as collateral. The Notes are also secured by the assets
of the Company pursuant to a Security Agreement and Intellectual Property
Security Agreement.

On September 20, 2005, pursuant to the Securities Purchase Agreement, the
Company sold to the Purchasers, pursuant to Section 4(2) of the Securities Act
of 1933, as amended (the "Securities Act"), and Rule 506 promulgated thereunder,
$1,860,000 in aggregate principal amount of Notes and issued Warrants to
purchase an aggregate of 3,000,000 shares at an exercise price of $0.25 per
share for an aggregate purchase price of $1,500,000. Lionheart Group, Ocean
Avenue Advisors and E.H. Winston Associates and Co. received commissions in the
aggregate amount of $150,000.

                                       24
<PAGE>

On October 28, 2005, pursuant to the Securities Purchase Agreement, the Company
sold to the Purchasers, pursuant to Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act"), and Rule 506 promulgated thereunder, $930,000
in aggregate principal amount of Notes and issued Warrants to purchase an
aggregate of 1,500,000 shares for an aggregate purchase price of $750,000.
Lionheart Group, Ocean Avenue Advisors and E.H. Winston Associates and Co.
received commissions in the aggregate amount of $75,000.

On December 9, 2005, pursuant to the Securities Purchase Agreement, the Company
sold to the Purchasers, pursuant to Section 4(2) of the Securities Act of 1933,
as amended (the "Securities Act"), and Rule 506 promulgated thereunder, $930,000
in aggregate principal amount of Notes and issued Warrants to purchase an
aggregate of 1,500,000 shares for an aggregate purchase price of $750,000.
Lionheart Group, Ocean Avenue Advisors and E.H. Winston Associates and Co.
received commissions in the aggregate amount of $75,000.

On September 20, 2005, in connection with the purchase of the Notes, the Company
also entered into a Registration Rights Agreement with the investors signatory
thereto, which provided that on or prior to 30 days after the closing, of which
one occurred on September 20, 2005, the Company would prepare and file with the
Securities and Exchange Commission a registration statement ("Registration
Statement") covering the resale of all of the Registrable Securities (defined as
the shares issuable upon conversion of the Notes and the shares issuable upon
exercise of the Warrants). If the registration statement was not filed within 30
days or was, for any reason, not declared effective within 90 days, or was for
any reason not available for use after the effective date, the Registrant would
pay liquidated damages to the investors. The Company filed the Registration
Statement on October 20, 2005 and it was declared effective on December 7, 2005.

The aggregate principal amount of the Notes is $3,720,000 of which $720,000
represents deferred interest at 8% p.a. over a three year term. This deferred
interest has been recorded as an offset against the principal amount of the
notes to be amortized over the term of the notes. In addition there were debt
discounts incurred on the issue of the Notes and Warrants and a Derivatibe
Liability arising from the conversion features of the Notes and Warrants. See
"Derivative Liabilities". The debt discount arising from the issuance of the
Notes amounted to $3,000,000. Both the debt discount and deferred interest
amounts have been recorded as an offset against the principal amount of the
notes to be amortized over the term of the notes. For the period ended June 30,
2006 amortization of these offsets amounted to $1,232,257.

The Noteholders exercised their conversion privileges to convert a total of
$145,780 of the principal amount in the period ended June 30, 2006 leaving a
principal balance payable of $ 2,829,090. Unamortized debt discount and deferred
interest amounted to $2,071,690 at June 30, 2006 giving a net balance of
$757,400.

The issuance of the Notes and the Registration Statement, in particular the
variable conversion rights and the potential for liquidated damages and a
default premium if the Company has insufficient authorized and unissued shares
to meet its obligations under the Notes, created derivative liabilities which
the Company has valued at June 30, 2006 as approximately $6.25 million. Changes
in the fair value of the derivative liability are recorded as an Other Income or
Expense item in the Consolidated Statement of Operations. The change in the fair
value of the derivative in the six months ended June 30, 2006 resulted in income
of approximately $3.21 million. The derivative liabilities are more fully
disclosed in the "Derivative Liabilities" note to the Financial Statements.

Off Balance Sheet Arrangements.

The Company had no Off Balance Sheet arrangements for the six months ended June
30, 2006, or for the six months ended June 30, 2005

Recent Accounting Pronouncements:

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.

                                       25
<PAGE>

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.

In February 2006, the FASB issued FASB Statement No. 155, which is an amendment
of FASB Statements No. 133 and 140. This Statement; a) permits fair value
remeasurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation, b) clarifies which
interest-only strip and principal-only strip are not subject to the requirements
of Statement 133, c) establishes a requirement to evaluate interests in
securitized financial assets to identify interests that are freestanding
derivatives or that are hybrid financial instruments that contain an embedded
derivative requiring bifurcation, d) clarifies that concentrations of credit
risk in the form of subordination are not embedded derivatives, e) amends
Statement 140 to eliminate the prohibition on a qualifying special-purpose
entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument. This
Statement is effective for financial statements for fiscal years beginning after
September 15, 2006. Earlier adoption of this Statement is permitted as of the
beginning of an entity's fiscal year, provided the entity has not yet issued any
financial statements for that fiscal year. Management believes this Statement
will have no impact on the financial statements of the Company once adopted.

In March 2006, the FASB issued FASB Statement No. 156, which amends FASB
Statement No. 140. This Statement establishes, among other things, the
accounting for all separately recognized servicing assets and servicing
liabilities. This Statement amends Statement 140 to require that all separately
recognized servicing assets and servicing liabilities be initially measured at
fair value, if practicable. This Statement permits, but does not require, the
subsequent measurement of separately recognized servicing assets and servicing
liabilities at fair value. An entity that uses derivative instruments to
mitigate the risks inherent in servicing assets and servicing liabilities is
required to account for those derivative instruments at fair value. Under this
Statement, an entity can elect subsequent fair value measurement to account for
its separately recognized servicing assets and servicing liabilities. By
electing that option, an entity may simplify its accounting because this
Statement permits income statement recognition of the potential offsetting
changes in fair value of those servicing assets and servicing liabilities and
derivative instruments in the same accounting period. This Statement is
effective for financial statements for fiscal years beginning after September
15, 2006. Earlier adoption of this Statement is permitted as of the beginning of
an entity's fiscal year, provided the entity has not yet issued any financial
statements for that fiscal year. Management believes this Statement will have no
impact on the financial statements of the Company once adopted.

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.

                                       26
<PAGE>

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 materially affected those controls subsequent to the date of the
Company's most recent evaluation.
















                                       27
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On November 10, 2005 the Company initiated court proceedings in the Patents
County Court in the UK against Prolink Solutions LLC, Elumina Iberica S.A. and
Elumina Iberica Limited for an injunction, delivery up and/or damages or an
account of profits arising from the defendant's infringement of European Patent
(UK) 0617794 B1, which is owned by the Company, together with a claim for the
Company's costs and expenses in the action. This case is still before the courts
and no judgement has been rendered. The defendants have counterclaimed alleging
the patent is invalid, that it is not infringed and that it be revoked. The
defendants are also claiming legal costs and expenses to defend the action.
Under the legal system in the UK if the defendant prevails in the action the
Company may be liable to pay the defendants costs, including attorney fees,
which may be substantial. As of August 14, 2006 the Company had paid UK Pounds
115,000 into the Court against the potential liability for these fees, and is
currently required to pay a further UK Pounds 75,000 on or before October 1,
2006 into the Court against this potential liability.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the six months ended June 30, 2006 the Company issued a total of
36,702,105 shares of common stock, valued at a market value of $1,516,512. Of
these, 2,125,595 shares were issued for services rendered valued at a market
value of $128,880; 15,500,000 shares were issued in payment of convertible debt
valued at $467,863; 14,163,874 shares were issued in other debt settlement
valued at a market value of $902,780; 357,041 shares were issued in payment of
interest of $16,989 and 4,555,595 shares were issued upon exercise of cashless
stock options.

On January 5, 2006 the Company issued 508,928 shares of common stock valued at
market value of $33,080 for services rendered.

On January 5, 2006 the Company issued 12,172,917 shares of common stock valued
at market value of $791,240 in settlement of debt. The resale of 12,129,167 of
these shares, valued at a market value of $788,396 were covered by an SB2
Registration Statement declared effective December 7, 2005

On January 5, 2006 the Company issued 2,000,000 shares of common stock valued at
$73,200 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

On January 12, 2006 the Company issued 416,667 shares of common stock valued at
market value of $25,000 to a consultant for services rendered.

On January 16, 2006 the Company issued 300,000 shares of common stock valued at
$16,500 for services rendered.

On January 19, 2006 the Company issued 4,555,595 shares of common stock in
settlement of cashless options previously granted to employees of the Company.

On January 19, 2006 the Company issued 440,000 shares of common stock valued at
market value of $26,400 in settlement of debt.

On January 26, 2006 the Company issued 750,000 shares of common stock valued at
$24,750 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

On February 6, 2006 the Company issued 600,000 shares of common stock valued at
$40,800 to employees as a signing bonus.

On February 6, 2006 the Company issued 324,957 shares of common stock valued at
market value of $22,097 in settlement of debt

On February 10, 2006 the Company issued 750,000 shares of common stock valued at
$24,593 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

                                       28
<PAGE>

On February 21, 2006 the Company issued 2,000,000 shares of common stock valued
at $71,180 with respect to a $1,860,000 8% convertible note due September 20,
2008. The resale of these securities were covered by an SB2 Registration
Statement declared effective December 7, 2005

On March 8, 2006 the Company issued 2,000,000 shares of common stock valued at
$66,780 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

On March 22, 2006 the Company issued 2,000,000 shares of common stock valued at
$61,580 with respect to a $1,860,000 8% convertible note due September 20, 2008.
The resale of these securities were covered by an SB2 Registration Statement
declared effective December 7, 2005

On April 4, 2006 the Company issued 93,487 shares of common stock valued at
$4,207 in payment of interest on a short term loan.

On April 5, 2006 the Company issued 300,000 shares of common stock valued at
$13,500 for services rendered.

On April 7, 18, 21, & 27 2006 the Company issued a total of 6,000,000 shares of
common stock valued at $145,780 with respect to a $1,860,000 8% convertible note
due September 20, 2008. The resale of these securities were covered by an SB2
Registration Statement declared effective December 7, 2005

On May 1, 2006 the Company issued 131,524 shares of common stock valued at
$6,445 in payment of interest on a short term loan.

On May 4, 2006 the Company issued 425,000 shares of common stock valued at
market value of $23,800 in settlement of debt.

On May 12, 2006 the Company issued 400,000 shares of common stock valued at
market value of $22,000 in settlement of debt.

On May 30, 2006 the Company issued 401,000 shares of common stock valued at
market value of $17,243 in settlement of debt.

On June 7, 2006 the Company issued 132,030 shares of common stock valued at
$6,337 in payment of interest on a short term loan.

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

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

(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.

                                       29
<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 Accounting 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 Accounting Officer pursuant
                   to Section 906 of the Sarbanes Oxley Act of 2002



                                       30
<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)





Date:  August 18, 2006             By:  /s/ ROBERT C. SILZER, SR.
                                     ---------------------------
                                     Robert C. Silzer, Sr.
                                     Chief Executive Officer
                                     (Duly Authorized Officer)




Date:  August 18, 2006              By:  /s/ MICHAEL MARTIN
                                      ---------------------------
                                      Michael Martin
                                      Chief Accounting Officer
                                      (Duly Authorized Officer)