UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549







FORM
      10-KSB







xANNUAL
      REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      fiscal year ended December 31, 2007





oTRANSITION
      REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF
      1934




For
      the
      transition period from ______ to ______




Commission
      file number: 000-30104





GPS
      INDUSTRIES, INC.


(Name
      of
      small business issuer in its charter)


Nevada
              88-0350120(State
                  or other jurisdiction of
              (I.R.S.
                  Employerincorporation
                  or organization)
              Identification
                  Number)5500
                  152nd Street, Suite 214Surrey,
                  B.C. Canada
              V3S
                  5J9(Address
                  of principal executive offices)
              (Zip
                  Code)


Issuer's
        telephone number: (604) 576-7442


Securities
      registered under Section 12(b) of the Act: None.





Securities
      registered under Section 12(g) of the Act: None.





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d)
      of the Exchange Act. o





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 xNo o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of Regulation
      S-B contained in this form, and no disclosure will be contained, to the
      best
      of the registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to this Form 10-KSB. x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act):


Yes
oNo
x





Issuer's
      revenues for its fiscal year ended December 31, 2007: $7,266,040





Aggregate
      market value of the common stock held by non-affiliates of the Issuer as
      of
      March 31, 2008 was approximately $30.8 million.





There
      were 544,386,703 shares of the Company's common stock outstanding on March 31,
      2008.





Transitional
      Small Business Disclosure Format: Yes oNo x









TABLE
      OF
      CONTENTS





PART
                IITEM
                1.
            DESCRIPTION
                OF BUSINESS
            
            1ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            
            9ITEM
                3.
            LEGAL
                PROCEEDINGS
            
            10ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            10PART
                IIITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            
            11ITEM
                6.
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            
            12ITEM
                7.
            FINANCIAL
                STATEMENTS
            
            20ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            
            21ITEM
                8A.
            CONTROLS
                AND PROCEDURES
            
            21ITEM
                8B.
            OTHER
                INFORMATION
            
            22PART
                IIIITEM
                9.
            DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION
                  16(a) OF THE EXCHANGE ACT
            
            23ITEM
                10.
            EXECUTIVECOMPENSATION
            
            26ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            
            29ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            
            32ITEM
                13.
            EXHIBITS
            
            33ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            35




"SAFE
      HARBOR" STATEMENT





From
      time
      to time, we make oral and written statements that may constitute
      "forward-looking statements" (rather than historical facts) as defined in the
      Private Securities Litigation Reform Act of 1995 or by the Securities and
      Exchange Commission, or SEC, in its rules, regulations and releases, including
      Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
      Securities Exchange Act of 1934, as amended. We desire to take
      advantage of the "safe harbor" provisions in the Private Securities Litigation
      Reform Act of 1995 for forward-looking statements made from time to time,
      including the forward-looking statements made in this Annual Report, as well
      as
      those made in our other filings with the SEC.





All
      statements in this Annual Report, including under the captions "Business,"
      "Risk
      Factors," and "Management's Discussion and Analysis or Plan of Operation,"
      other
      than statements of historical fact are forward-looking statements for purposes
      of these provisions, including statements of our current views with respect
      to
      our business strategy, business plan and research and development activities,
      our future financial results, and other future events. These
      statements include forward-looking statements both with respect to us,
      specifically, and the biotechnology industry, in general. In some cases,
      forward-looking statements can be identified by the use of terminology such
      as
      "may," "will," "expects," "plans," "anticipates," "estimates," "potential"
      or
      "could" or the negative thereof or other comparable terminology. Although we
      believe that the expectations reflected in the forward-looking statements contained
      herein are reasonable, there can be no assurance that such expectations or
      any
      of the forward-looking statements will prove to be correct, and actual results
      could differ materially from those projected or assumed in the forward-looking
      statements.





All
      forward-looking statements involve inherent risks and uncertainties, and there
      are or will be important factors that could cause actual results to differ
      materially from those indicated in these statements. We believe that these
      factors include, but are not limited to, those factors set forth in this Annual
      Report under the captions "Business," "Risk Factors," and "Management's
      Discussion and Analysis or Plan of Operation," all of which you should review
      carefully. If one or more of these or other risks or uncertainties materialize,
      or if our underlying assumptions prove to be incorrect, actual results may
      vary
      materially from what we anticipate. Please consider our forward-looking
      statements in light of those risks as you read this Annual Report. We undertake
      no obligation to publicly update or review any forward-looking statement,
      whether as a result of new information, future developments or
      otherwise.










**EXPLANATORY
      NOTE REGARDING RESTATEMENTS**





As
      a
      result of an in-depth review of certain sales and installation agreements and
      course installations that occurred in the first three quarters of 2007, the
      Company determined that it had incorrectly accounted for the related revenues,
      cost of goods sold, course assets, accrued liabilities and deferred revenues.
      The Company’s financial statements presented in this Annual Report on Form
      10-KSB includes these restatements. See Note 1, “Restatement of Quarterly
      Consolidated Financial Statements,” to our Consolidated Financial Statements for
      a detailed discussion of the effect of the restatements.





As
      previously reported on our Current Report on Form 8-K filed with the Commission
      on April 15, 2008, previously filed quarterly reports on Form 10-QSB for the
      quarters ended March 31, 2007, June 30, 2007 and September 30, 2007 initially
      filed with the Securities and Exchange Commission (the “SEC”) on May 21, 2007,
      August 14, 2007 and November 19, 2007 (the “Original Filings”), should no longer
      be relied upon. The Company’s consolidated financial statements presented in
      this report as at and for the period ending December 31, 2007 reflect these
      restatements.





The
      table
      below reflects the impact of the restatement adjustments discussed above on
      our
      consolidated statements of operations for the periods presented below:





2007
                Restatement of Financial ResultsIncrease
                (decrease)Condensed
                statement of operations:
            
            Quarter
                1
            
            Quarter
                2
            
            Quarter
                3
            
            2007(a)
            
            (a)
            
            (a)Revenue
            
            $
            (164,000
            )
            $
            (1,454,000
            )
            $
            61,000
            
            $
            (1,557,000
            )Expense
            
            
            148,000
            
            
            (1,032,000
            )
            
            24,000
            
            
            (860,000
            )Operating
                income
            
            $
            (312,000
            )
            $
            (422,000
            )
            $
            37,000
            
            $
            (697,000
            )Condensed
                balance sheets:Assets
            
            $
            -
            
            $
            (217,000
            )
            $
            996,000
            
            $
            779,000Liabilities
            
            
            312,000
            
            
            205,000
            
            
            959,000
            
            
            1,476,000Accumulated
                deficit
            
            
            (312,000
            )
            
            (422,000
            )
            
            37,000
            
            
            (697,000
            )




See
      Note
      1, “Restatement of Consolidated Financial Statements” in Notes to Consolidated
      Financial Statements included in this Form 10-K.









**PART
      I**





**ITEM
      1. DESCRIPTION OF BUSINESS**





**Overview**





For
      purposes of the discussion contained in this sections, the use of “we”, “our” or
“us” is meant to include GPS Industries, Inc. (“GPSI”) its subsidiaries Optimal
      Golf Solutions Ltd., Direct Golf Services Inc., Golf Academies Ltd.
      (collectively “GPSI Europe”) and GPS IT, LLC.





**Company
      History**





GPS
      Industries, Inc. was originally incorporated as Diversified Marketing Services
      Ltd. in 1996, subsequently changed its name to Inforetech Wireless Technology
      Inc. in 1999 and then to GPS Industries, Inc in 2004. GPSI common stock was
      first publicly traded on the OTC Bulletin Board in January 2000 as Inforetech
      Wireless Technology and is currently trading on the OTC Bulletin Board under
      the
      symbol "GPSN."





In
      January 2001, Inforetech Wireless Technology Inc. acquired 100% of the
      outstanding capital stock of ProShot Golf, Inc. through a wholly owned
      subsidiary, Inforetech Golf Technology 2000 Inc. IGT filed for relief under
      Chapter 7 of the U.S. Bankruptcy Court on December 19, 2002 and ProShot filed
      for relief under Chapter 7 of the U.S Bankruptcy Court on May 31, 2002.





In
      October 2007, GPSI acquired 100% of the outstanding capital stock of Direct
      Golf
      Services Inc. and Golf Academies Ltd., now operating as GPSI Europe and owns
      17.5% of GPSI Asia, our Asian distributor.





On
      January 18, 2008, GPSI’s wholly owned subsidiary, GPS IT, LLC, acquired the
      assets and assumed certain liabilities of UpLink Corporation.




**Business**





GPS
      Industries, Inc. is a global technology solutions provider with customizable,
      patent-protected applications in GPS and Wi-Fi software and hardware for use
      with golf course operations, residential community developments and other
      recreational and industrial applications. With the development of the Inforemer
      HDX largely complete, GPSI is transitioning away from a research and development
      focus; however, GPSI will continue to dedicate resources to new opportunities
      where market potential and economics justify investment. Our primary business
      is
      the development, manufacture and sale of the Inforemer HDX mobile display units
      (“MDU”) in both cart mounted and hand held product lines along with the related
      infrastructure.





In
      late
      2007, GPSI reorganized its various product offerings and divisions to more
      accurately reflect how GPSI manages its internal operations whereby Inforemedia,
      Wi Stream and Fire at the Flag are peripheral to the core Inforemer product
      and
      hence the management of these divisions have been collapsed into our core
      Inforemer business.





GPSI
      has
      offices in the United States, Canada and United Kingdom in order to focus on
      the
      geographic markets including North America, Europe and the Middle East with
      exclusive distributor arrangements covering Asia, South Africa, Australia and
      New Zealand.





Corporate
      activities are divided between our Vancouver, Canada and Austin, Texas offices
      with software development, research and development, manufacturing and finance
      located in Canada and sales, customer service and installation and repairs
      and
      maintenance in Austin, Texas.





**Products
      and Systems**





The
      Inforemer(TM) GPS Management System is the only product offered in the industry
      that utilizes a WiFi network backbone. The WiFi network turns the entire
      property into a WiFi “Hotspot” facilitating robust, high speed information
      delivery and two way communications between the facility operator and the
      golfer. The operator can also leverage the WiFi network for other applications
      such as wireless security cameras, if desired. The golfer interfaces with the
      system through either the H2 handheld, the only handheld device with full
      management capability, or the HDX, a cart-mounted colored displays that delivers
      GPS yardage information, rich course graphics, and streaming data such as CBS
      Sportsline. This information is delivered in real time over the WiFi network
      which is also capable of delivering multimedia enriching the experience for
      the
      golfer. The course operator has a full suite of management functions controlled
      through a central computer, such as tournament management, cart location
      information, pin placement, food and beverage ordering, and pace of play. This
      functionality gives the operator far greater control of the operation which
      can
      ultimately impact the facility’s profitability.




1





The
      architecture of the InforemerTM system allows the operator to custom design a
      system around their specific needs. Much like purchasing an automobile where
      you
      start with a base model then add options and functionality as desired, the
      Inforemer begins with a handheld configuration or basic HDX Lite system and
      different capabilities are selected by the operator depending upon their needs
      and budget. This flexibility gives the Inforemer the ability to appeal to a
      wider variety of markets. An option that is currently under consideration for
      development is the integration of the IQ Link “cart control” technology that is
      unique in the industry and was acquired in the purchase of UpLink Corporation
      (see recent activity below).





GPSI
      also
      offers (i) an Inforemer Lite System that requires less infrastructure at a
      lower
      price point but still includes distance measurement and (ii) the Inova golf
      course system product that was acquired with the UpLink asset acquisition.





**The
      Market**





The
      market for the Inforemer System is most broadly defined as golf facilities
      worldwide or approximately 33,000 golf courses. Approximately 20,000 of these
      golf courses are currently located in North America (16,700 in the United States
      and 3,200 in Canada). Almost 50% (5,900) of the remaining golf courses are
      located in Europe, with 3,100 concentrated in Great Britain and Ireland. Other
      territories containing more than 250 courses include Japan, Australia and South
      Africa. The fastest growing golf territories, reporting double-digit growth,
      include China, Spain, Mexico and the rest of Latin America.





The
      most
      readily penetrable, primary market for the Wi-Fi powered `full management'
      Inforemer(TM) system includes resort courses, high-end daily fee facilities,
      and
      residential golf communities. These facilities constitute approximately 37%
      of
      the total golf course market and include large-scale golf-centric resorts and
      developments. A secondary market includes the private courses, mid-range
      facilities, lower-end daily-fee facilities and municipal courses that represent
      approximately 40% of the global market. This market is more receptive to a
      product at a lower price point, which could be addressed by the sale of a
      refurbished product or the Inova golf course system product.





Because
      our Inforemer system is marketed to our primary and secondary target markets,
      our market effectively includes 75% of all golf courses worldwide. The balance,
      approximately 25%, consists of smaller executive facilities, par 3 courses
      and
      pitch-and-putt facilities for which current product offerings are not
      appropriate.





Current
      market penetration of GPS Management systems is estimated at less than 5% of
      the
      global market.





**Service
      and Support**





GPSI
      typically offers 1 year of limited manufacturer’s warranty with service and
      maintenance fees payable thereafter. GPSI has approximately 22,000 mobile
      display units in operation worldwide in combination with the acquired
      UpLink customer base. GPSI, as a result of the UpLink acquisition, now manages
      our North American installation base through a geographically dispersed customer
      service network consisting of Regional Service Managers (RSM’s) supported by our
      Austin, Texas based management team and repair center.





GPSI
      Europe and GPSI Asia are responsible for their own service and maintenance
      to
      customers outside of North America.





**Financing**





GPSI
      customers often require financing in order to acquire the Inforemer System.
      While GPSI typically does not engage in, in-house financing, we do offer
      assistance to our customers to source, customize and obtain financing acceptable
      to them through a number of well established lenders in the Golf and Leisure
      industry.





**Sales
      and Marketing**





With
      offices, distribution and sales channels worldwide, GPSI has the opportunity
      to
      market and sell our products globally. In North America, we sell our systems
      through our network of direct sales representatives, distributors and multi-line
      agents. We also sell our systems through both GPSI Europe, GPSI Asia and more
      recently announced the signing of a distributor agreement with On-Pin for
      Australia and New Zealand. GPSI generally sells our systems outright for cash
      or
      through a fixed payment lease arrangement with a third party lessor whereby
      GPSI
      sells the system to the lessor for the net present value (NPV) of the stream
      of
      payments made by the golf course to the lessor.




2





**Advertising**





The
      InforemerTM system has industry leading capabilities to deliver advertising
      messaging to the golfer while they are in the golf environment. The InforemerTM
can deliver advertising messages that can be location based, language specific
      and dynamic in nature. This ability gives the Inforemer a far more flexible
      offering than a static ad that is just displayed “by the hole”. The golfer while
      they are in the golf environment is a very desirable demographic for
      advertisers. GPSI partners with the course operator and sells advertising in
      the
      various markets through agents or third parties in the advertising industry.
      The
      revenue generated is then shared with the course operator.





**Recent
      Events**





1.
            Series
                B Convertible Preferred Stock
                Financing





In
      May
      2007, the Company sold additional shares of Series B Convertible Preferred
      Stock. In connection with the December 2006 purchase of Series B Shares by
      GWSE
      and Leisurecorp, the Company agreed to grant GWSE and Leisurecorp each the
      right, exercisable until the end of April 2007, to increase their investment,
      or
      make an additional investment in the Series B Shares and warrants on the same
      terms as the securities sold to them on December 29, 2006. GWSE and Leisurecorp
      timely exercised the foregoing option in April 2007 to purchase 1,250,000 Series
      B Shares and warrants to purchase up to 51,229,508 shares of common stock for
      a
      total purchase price of $12,500,000. The closing of the purchase of the
      $12,500,000 additional Series B Shares and warrants was consummated on May
      8,
      2007. Leisurecorp purchased its Series B Shares and warrants by delivering
      a
      $10,000,000 interest-free promissory note (the "Note") that was secured by
      the
      securities sold to Leisurecorp, and GWSE purchased its Series B Shares and
      warrants in exchange for cash ($1,500,000) and the cancellation of $1,000,000
      of
      outstanding indebtedness the Company owed to GWSE. Leisurecorp was required
      to
      repay the Note as follows: $2,000,000 on or before June 30, 2007; $4,000,000
      on
      or before October 31, 2007; and the remaining $4,000,000 on or before December
      31, 2007. The first payment under the Note of $2,000,000 was received by the
      Company on July 9, 2007, the second payment of $4,000,000 was received by the
      Company on October 9, 2007 and the third payment of $4,000,000 was received
      by
      the Company on December 17, 2007.





2.
            Acquisition
                of Direct Golf Services and Golf Academies (“GPSI
                Europe”)





Effective
      October 18, 2007, the Company purchased 100% of the outstanding shares of
      capital stock of Direct Golf Services Limited (“DGS”). DGS is a registered
      company in England and Wales whose principal activity is to be that of corporate
      golf day organizer which included the operation of a hole-in one contest similar
      to GPSI’s Fire At The Flag (TM) product. As a result of the acquisition, GPSI
      expects to build the Fire At The Flag (TM) product into the leading hole-in
      one
      contest throughout Europe. The aggregate purchase price was $800,000 payable
      $200,000 in cash and 6,000,000 restricted shares of the Company’s Common Stock.
      The value of the 6,000,000 restricted shares issued was determined based on
      the
      average market price of GPSI’s common stock over the 2-day period before and
      after the stock was issued.




Effective
      October 18, 2007, the Company purchased 100% of the outstanding shares of
      capital stock of Golf Academies Limited (“GAL”). GAL is a registered company in
      England and Wales whose principal activity is sales and rental of golf equipment
      specifically golf distance measuring devices using GPS technology. As a result
      of the acquisition, GPSI expects to increase sales of the Company’s cart mounted
      GPS golf distance measuring product throughout Europe. The aggregate purchase
      price was $500,000 payable in 5,000,000 restricted shares of the Company’s
      Common Stock. The value of the 5,000,000 restricted shares issued was determined
      based on the average market price of GPSI’s common stock over the 2-day period
      before and after the stock was issued.





3.
            Robert
                Silzer Sr. resigned as Chief Executive Officer of GPSI and undertook
                restructuring of operations.





In
      November 2007, the Board of Directors accepted the resignation of Mr. Robert
      Silzer Sr. as Chief Executive Officer of the company and replaced him with
      Mr.
      Douglas Wood on an interim basis. The Board also engaged the Carl Marks Advisory
      Group to oversee the acquisition of the assets of Uplink and to assist in the
      restructuring of the business pursuant to a consulting agreement entered into
      on
      November 16, 2007.





4.
            Acquisition
                of the Business and Assets of Uplink
                Corporation





On
      January 18, 2008, the Company acquired the operations, assets and assumed
      certain liabilities of UpLink Corporation (“UpLink”), a Texas corporation that
      produces and sells global positioning satellite distance measuring systems,
      associated software, software development and service and maintenance contracts
      to golf course owners and operators. In consideration for the acquisition,
      the
      Company paid approximately $11,816,000 including Notes Payable of $1,521,000,
      142,100,000 Common Shares valued at $7,815,000, Series B Preferred Shares with
      a
      par value of $1,200,000 and 4,918,033 common stock warrants at an exercise
      price
      of $0.122 per share valued at $219,000. The Company also assumed approximately
      $9,244,000 in liabilities.




3





5.
            Silicon
                Valley Bank Credit Facility





On
      February 29, 2008, the Company and Silicon Valley Bank entered into a Loan
      and
      Security Agreement pursuant to which the Bank agreed to make available to the
      Company advances under a revolving line of credit of up to $3,000,000. The
      Revolving Line terminates in February 2010 at which time all advances and unpaid
      interest are due. The principal amount outstanding accrues interest at a
      floating rate per annum of the greater of 1% above the prime rate or 6%, with
      interest payable monthly. The obligations of the Company under the Revolving
      Line (up to $1,500,000) were guaranteed by Douglas Wood, who at the time was
      the
      Company’s interim Chief Executive Officer, director and a shareholder. The
      obligations of the Company under the Revolving Line are also secured by a first
      priority security interest (subject to permitted liens) on the assets of the
      Company, and certificates of deposit in the principal amount of $1,500,000
      provided by Hansen, Inc. The Agreement provides for customary covenants. The
      Company will use $1,500,000 of the Revolving Line to repay a credit facility
      from HSBC Bank which is secured by a letter of credit from Hansen, Inc.





6.
            Douglas
                Wood, Chairman of the Board and Interim Chief Executive Officer passed
                away.





On
      March
      30, 2008, Douglas Wood passed away. The Company’s Board of Directors
      has initiated their plans to find a new Chief Executive Officer. 
Until such time as a new CEO is hired, Marc Potter will be acting as the
      Company’s Principal Executive Officer.





The
      passing of Mr. Wood triggered an event of default of the Silicon Valley Bank
      Loan Agreement whereby the bank could demand repayment of $1,500,000 secured
      by
      Mr. Wood. Silicon Valley Bank is currently forbearing such demand as it
      negotiates with the estate of Mr. Wood.





7.
            Liquidity





Based
      on
      our currently projected revenues and our existing lines of credit, the Company
      does not have sufficient capital resources to fund our anticipated working
      capital needs. The Company is currently working with its existing investors
      to
      obtain additional debt or equity funding. At this time, we are unable to
      determine if we will be successful in obtaining this funding. Should the Company
      not be able to obtain this funding, the Company will not be able to meet its
      working capital needs through the second quarter 2008. The Company has received
      an advance payment on obligations due under a project with a related party
      totaling an amount of $477,000 and, with the concurrence of the related party,
      the monies are being used for general corporate purposes in advance of
      performing work on said project and in anticipation of receiving additional
      capital.





**Intellectual
      Property**





On
      July
      2, 2004, we purchased the patents to differential GPS in Australia, Japan and
      eleven European Nations from Pinranger (Australia) Pty Ltd. On November 19,
      2004, we purchased the patents to GPS for golf in the United States and in
      Canada from Optimal Golf Solutions, Inc. (“Optimal”). In addition to providing
      us with broad patent protection for a number of our products in the GPS market,
      these patents also generate recurring revenue through licensing fees paid to
      us
      by competitors in the golf industry. Our patents owned by our wholly owned
      subsidiary Optimal have been licensed to six companies. We intend to license
      these patents on a non-exclusive basis to other GPS-based golf system providers
      and believe we are in a strong position to enforce these patents against
      infringers. The Company has received a notice from the seller’s of Optimal that
      it is in breach of the Company’s obligations under the purchase documents. The
      Company is in the process of evaluating the seller’s position but believes that
      no default has occurred. In addition, in November 2006 we entered into a US$1.2
      million dollar settlement in a patent-infringement lawsuit we initiated in
      London County Court, UK. In 2006, we received a $212,500 as part of this
      settlement as the first license payment; we are scheduled to receive additional
      license payments under that settlement/license agreement of $210,000 per year,
      paid quarterly, until 2011, with the last payment due in August 2011.





We
      funded
      the purchase of the foregoing Optimal patents through loans that we obtained
      from Great White Shark Enterprises, Inc. As compensation for the loans that
      enabled the acquisition of these patents, Great White Shark Enterprises now
      receives 20% of all Optimal patent license payments we receive through December
      31, 2008, at which time their share of these fees will be increased to 40%
      for
      the remaining life of the patents.





On
      January 18, 2008 GPSI also acquired significant patents as part of the Uplink
      Asset Purchase - specifically: U.S. Patent 7,239,965 issued July 3, 2007 for
      the
      method and system for golf cart control (“IQ Link”) and U.S. Patents 5,685,786 -
      Passive Golf Information System and Method and 5,772,534 - Satellite Enhanced
      Golf Information System issued November 11, 1997 and June 30, 1998 respectively.
      These related to automatic zone detection and determination of distance to
      course landmarks. The ‘786 patent also provides coverage for displaying
      advertising information and tournament standings information received from
      a
      transmitting station on the display units.




In
      addition to those referenced above, we have filed for and/or obtained certain
      other patents, including the following:





1.
            Hand
                Held communicator patents issued in the U.S. on February 1, 2000,
                in
                Canada on September 29, 2000; and in the United Kingdom on November
                30,
                1999.


2.
            Charging
                base for Electronic Apparatus patent issued in the US on February
                1, 2000.




4




3.
            Golf
                course communication system and method patent was applied for in
                the US on
                January 29, 2004 and is awaiting office action by the USPTO. We also
                filed
                a PCT application in the European Community on January 20, 2005 and
                it is
                awaiting a serial number and filing
                receipt.


4.
            Endurable
                Sports PDA with communications capabilities and accessories. This
                patent
                was applied for in the US on January 22, 2003 and is pending, awaiting
                office action of the USPTO.


5.
            Portable
                GPS Unit patent was applied for in the US on April 1, 2004 and is
                pending,
                awaiting office action.


6.
            Cart
                mounted GPS Unit patent was applied for in the US on April 1, 2004
                and
                remains pending.


7.
            Mounting
                bracket patent was applied for in the US on April 1, 2004 and remains
                pending.


8.
            Method
                for conducting a multi-golf course performance contest patent was
                applied
                for in the US on May 4, 2004 and is pending, awaiting office
                action.





We
      have
      also registered our trademarks as follows:





1.
            Inforemer
                2000 Handset Software trademark in the
                US.


2.
            Inforetech
                Clubhouse Computer Software in the
                US.


3.
            Inforemer
                in the European Community.


4.
            Inforemer
                in the US.


5.
            Inforetech
                in Canada.


6.
            Inforetech
                in the European Community.


7.
            Inforetech
                in the US.


8.
            UpLink
                in the US.




**Competition**





Competition
      in the GPS golf market can be segmented into two main categories; low-priced
      consumer products and high-value GPS-based management business
      solutions.




While
      there are an increasing number of GPS golf products on the market, many of
      these
      are consumer oriented, utilizing devices such as laser finders, binoculars
      or
      personal digital assistants (PDA's). These commodity products are basic in
      functionality, and do not provide the same level of accuracy or reliability
      as
      our products and business solutions.





Our
      direct competition in the GPS golf management market consists primarily of
      Prolink Holdings Corp. ProLink’s website indicates that they have over 700
      course installations worldwide and is a competitor in most markets GPSI operates
      in. Management believes that the Prolink offering however lacks in the
      sophistication, technological advantages and functionality of the Inforemer
      product offering. Prolink has a non-exclusive license from GPSI for use of
      the
      `Optimal' GPS patents in the United States and the “PinRanger” patents in the
      UK. Prolink is also a competitor for on-course advertising. However, with GPSI’s
      recent acquisition of UpLink’s business and assets, GPSI now owns the patents
      and exclusive use for location based on-course advertising.





**RISK
      FACTORS**





You
      should carefully consider the risks described below before deciding to invest
      in
      or maintain your investment in GPS Industries, Inc. The risks described below
      are not intended to be an all-inclusive list of the potential risks relating
      to
      an investment in our securities. If any of the following or other risks actually
      occur, our business, financial condition or operating results and the trading
      price or value of our securities could be materially adversely
      affected.





We
      have a
      history of losses, and our auditors have issued a going concern opinion as
      a
      result of an inability to generate sufficient cash from operations to meet
      our
      current obligations. GPSI has undertaken a restructuring of our operations
      in
      order to reduce and ultimately eliminate the operating losses incurred. In
      addition, GPSI is evaluating alternate sources and types of financing to
      generate sufficient liquidity to maintain operations for the foreseeable future.
      However there can be no assurance that we will be successful in these
      efforts.




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





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





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




5





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





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





Speculative
      Nature of Business.





There
      is
      sufficient evidence to determine that there is in fact a market for our
      products. It is less than certain that the market is deep enough to generate
      revenues of sufficient magnitude to cover all costs associated with the
      manufacture, sales, marketing, general and administrative nature of the
      business.





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





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





We
      depend
      on intellectual property rights and development of new Products. The inability
      to obtain patents or develop new products may have an adverse effect on our
      ability to be profitable. The Company has received a notice from the seller’s of
      one of our key patents that it is in breach of the Company’s obligations under
      the purchase documents. The Company is in the process of evaluating the seller’s
      position but believes that no default has occurred.





Our
      future success is dependent upon our ability to attract and retain key
      management including a permanent Chief Executive Officer. GPSI currently has
      no
      permanent Chief Executive Officer and is operating under the management of
      its
      three member Board of Directors with consulting assistance provided by a third
      party management consulting group, Carl Marks Advisory Group, pursuant to a
      consulting agreement entered into on November 16, 2007.





Conflicts
      of Interest





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





Board
      Independence





The
      current Board of Directors, Audit and Compensation Committee are all considered
      to be non-independent Directors as a result of the investment in the Series
      B
      Preferred Shares in November 2006 and again in April 2007. The holders of our
      outstanding Series B Shares have the right to approve or disapprove certain
      corporate action, which could materially affect the holders of our common stock.
      Currently, the rights of the Series B Shares are controlled by Leisurecorp
      LLC.




6




Competition.





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





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





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





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





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





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




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





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





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





The
      Company Management has identified groups of control deficiencies, each of which,
      in the aggregate, represents a material weakness in the Company’s internal
      control over financial reporting as of December 31, 2007. See Item 8A in this
      report for Management’s discussion of these material weaknesses.





We
      are
      required to restate the 1 st ,
      2 nd and
      3 rd quarters
      of 2007. Management is evaluating the Company’s internal controls over financial
      reporting in light of the restatements, to determine the magnitude of the
      deficiency in the design and/or effectiveness of the Company’s internal controls
      over financial reporting.





Although
      GPSI has made progress towards Section 404 compliance, we are not able to
      conclude that our internal controls are effective nor have we completed our
      Section 404 implementation. We have in the past discovered, and may in the
      future discover, areas of our internal controls that need improvement. However,
      we can not assure you that we will be successful. Any failure to implement
      required new or improved controls, or difficulties encountered in their
      implementation, could negatively affect our operating results or cause us to
      fail to meet our reporting obligations. The costs incurred necessary to achieve
      compliance may be significant.





**RISKS
      RELATED TO OUR COMMON STOCK**





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





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




7




The
        holders of our outstanding Series B Shares have the right to approve or
        disapprove certain corporate action, which could materially affect the holders
        of our common stock. Currently, the rights of the Series B Shares are controlled
        by Leisurecorp LLC.
  In
        May
        2007 and December 2006 we issued the Series B Shares to three investors.
        Under
        the terms of the Series B Shares, we may not, without first obtaining the
        prior
        approval of the holders of a majority of the then outstanding Series B Shares,
        voting separately as a class, take any of the following actions: (i) amend
        our
        Articles of Incorporation or Bylaws if such action would adversely affect
        the
        rights, preferences, privileges, or restrictions of the Series B Shares;
        (ii)
        authorize or issue any class or series of our capital stock or any rights,
        options, warrants or other securities that are convertible into or exchangeable
        for any of our capital stock, having any right, preference or privilege superior
        to or on parity with the Series B Shares in any respect whether by
        reclassification or otherwise; (iii) pay any dividends or distributions on
        any
        shares of our capital stock; (iv) amend any of the provisions
        of the Certificate of Designation of the Series B Shares; (v) redeem or declare
        a dividend with respect to any security; (vi) increase or decrease the
        authorized number of shares of Series B Shares; (vii) effect a merger,
        consolidation, or business combination or other acquisition involving GPSI
        (other than solely for the purposes of reincorporation); or (viii) increase
        or
        decrease the authorized number of directors on our Board of Directors. The foregoing
        voting provisions shall remain in effect so long as one holder of our Series
        B
        Shares, Leisurecorp LLC, is the owner of record of 25% or more of the number
        of
        Series B Shares that it purchased on December 2006 or that it subsequently
        may
        still purchase under the additional purchase right that we have extended
        to
        Leisurecorp. As a result of its investment in the Series B Shares and the
        voting
        agreements contained in a shareholders agreement Leisurecorp has entered
        into
        with the other holders of the Series B Shares, Leisurecorp LLC owns or controls
        the vote of approximately 84% of the currently issued and outstanding Series
        B
        Shares.




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





The
      holders of a majority of the outstanding Series B Shares have the right, voting
      as a separate class, to elect three of our five members of our board of
      directors, of which two shall be designated by the holders of a majority of
      the
      outstanding Series B Shares as the "Reviewing Preferred Directors." Our Board
      of
      Directors may not take certain actions, and none of such actions shall be valid
      and constitute an action of the Board of Directors unless such action is
      approved by a majority of the Board of Directors, which majority shall include
      at least one of the Reviewing Preferred Directors. The actions that must be
      approved by at least one Reviewing Preferred Director are as follows: (i)
      reorganize GPSI or voluntarily liquidate, dissolve or wind up GPSI, (ii) incur
      any new indebtedness or refinance any existing indebtedness for borrowed money
      other than trade payables and accrued expenses incurred in the ordinary
      course of business and indebtedness not to exceed at any time $500,000 in the
      aggregate, (iii) approve, adopt or amend our annual budget, (iv) incur any
      capital or operating expenditures (other than purchases of inventory purchased
      solely for, and specifically to fill signed purchase orders) in excess of
      $50,000 in one or a series of related expenditures, or in excess of $250,000
      in
      the aggregate unless included in our annual budget approved by the Board of
      Directors (including one of the Reviewing Preferred Directors), (v) hire or
      fire
      our Chief Executive Officer, the Chief Financial Officer, or any of our other
      officer or employee who, at the time, earns or is expected to earn a salary
      (excluding bonuses) of $100,000 or more per year, (vi) acquire any assets or
      equity securities of any other business or entity, or sell any of our assets
      (other than in the ordinary course of business), in each case if the transaction value
      of
      such acquisition or disposition is greater than $2,000,000, (vii) issue options
      or securities except under our stock compensation, bonus or other compensation
      plan, (viii) amend our stock compensation, bonus or other compensation plan,
      or
      (ix) enter into a transaction with a stockholder or an affiliate of ours or
      of a
      stockholder of ours. The foregoing restrictions will remain in effect until
      the
      earlier of (a) the date on which Leisurecorp is the owner of record of less
      than
      25% of the number of Series B Shares that it purchased on December 29, 2006
      pursuant to the Securities Purchase Agreement, or (b) we meet or exceed the
      approved annual budget for two consecutive fiscal years. Under a shareholder
      agreement entered into by, among others, the holders of approximately 84% of
      our
      currently outstanding Series B Shares, Leisurecorp LLC has the right to
      designate both Reviewing Preferred Directors.





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





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




8





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





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





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




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





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





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





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





·
            developments
                with respect to intellectual property
                rights,





·
            announcements
                of technological innovations by us or our
                competitors,





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





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





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





·
            new
                accounting standards,





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





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




**ITEM
      2. DESCRIPTION OF PROPERTY**





Our
      principal executive offices are located in Surrey, a suburb of Vancouver,
      British Columbia, Canada in a 6,158 square foot facility. The lease expired
      on
      January 31, 2008. We are currently operating on a month to month basis at a
      cost
      of $9,710 monthly. In September 2007 we leased an additional 8,512 square foot
      facility to house our development, major projects and manufacturing operations.
      This lease expires September 30, 2010 with a one year renewal option. This
      lease
      on this facility requires payment of approximately $85,000 annually. Subsequent
      to year end 2007, we acquired, through the UpLink acquisition, certain office
      and service repair facilities in Austin, Texas.




9





**ITEM
      3. LEGAL PROCEEDINGS**





On
      February 5, 2007 David Stratton filed a wrongful dismissal lawsuit against
      us in
      the Supreme Court of British Columbia, Vancouver, Canada. In March, 2008, GPSI
      and Mr. Stratton settled out of court for CAD $82,400 payable over 4 months
      beginning March 31, 2008.





On
      August
      1, 2007, CCG Investor Relations, Inc. ("CCG"), filed a complaint against the
      Company, in the Los Angeles Superior Court for alleged breach of contract.
      CCG
      claims that the Company breached a consulting agreement by failing to pay
      monthly consulting fees, and claims $101,470.00 in damages. On September 27,
      2007, the Company filed an answer to the complaint, generally denying liability,
      and asserting various affirmative defenses. The Company plans to defend the
      action vigorously, and contends that the consulting agreement could be, and
      was
      properly, terminated.





On
      November 1, 2007 ProLink Holdings, a provider of GPS golf course management
      systems and on-course advertising, filed a patent infringement lawsuit against
      the Company and Uplink Corporation, a company that the Company has agreed to
      purchase. The compliant alleges that Uplink and one of its customers have
      infringed U.S. Patent No. 6,525,690, which is directed to a method of
      determining locations and distances using specific GPS-based methodologies.
      The
      complaint also charged Uplink with infringement of U.S. Patent No. 6,236,940
      and
      6,470,242 which relate to a monitor for displaying distances and other golf
      course information. The complaint further alleges that the Company and one
      of
      its customers have infringed the 6,525,690 patent and further seeks a
      declaratory judgment that ProLink has not infringed U.S. Patent No. 5,685,786
      acquired by the Company as part of the UpLink acquisition and that this patent
      is invalid. ProLink seeks injunctive relief and damages against the Company
      and
      Uplink, enhanced damages for alleged willful infringement and recover of
      ProLink’s attorneys’ fees and litigation costs. By virtue of the Asset Purchase
      Agreement between the Company and UpLink effective January 18, 2008, the Company
      has assumed liability of Uplink and agreed to defend and indemnify UpLink at
      the
      Company’s expense. In addition, the Company intends to indemnify and defend both
      our customer and Uplink’s customer in connection with the litigation. The
      Company intends to vigorously defend this lawsuit. The Company filed a
      "counterclaim" alleging that the one patent asserted against it by Prolink
      is
      invalid and/or not infringed.  UpLink similarly filed counterclaims
      alleging that the three patents asserted against it by Prolink are invalid
      and/or not infringed.  Both GPSI and UpLink also filed a motion asking the
      court to dismiss the declaratory judgment action Prolink brought regarding
      the
      UpLink advertising patent.





On
      October 29, 2007, Optimal I.P. Holdings, L.P. initiated arbitration proceedings
      against the Company alleging breach of a Patent Enforcement Cooperation
      Agreement between the two companies. Optimal I.P. Holdings, L.P. seeks a
      declaration of the scope of its rights under the Agreement and actual damages,
      together with its costs and legal fees associated with the action. On November
      16, 2007 the Company responded to the arbitration demand by objecting to the
      jurisdiction of the American Arbitration Association over the dispute and
      further denying all material allegations of the demand. The matter is currently
      in an early stage awaiting appointment of a mutually acceptable arbitrator.
      The
      Company intends to contest the matters raised in the arbitration vigorously.





Our
      wholly owned subsidiary, Inforetech Golf Technology 2000 Inc. (IGT) is a
      defendant in a number of lawsuits principally arising from vendor debt, which
      in
      the aggregate are not material to us. IGT ceased operations in the fourth
      quarter of 2002 and filed a petition for relief under Chapter 7 of the United
      States Bankruptcy Code on December 19, 2002, which was subsequently
      granted.





We
      acquired ProShot Golf Inc. on January 12, 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.





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





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





No
      Matters were submitted to a vote of our security holders during
      2007.





10





PART
      II





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





Market
      Information





Our
      common stock is listed for trading on the OTC Bulletin Board under the symbol
      "GPSN." The following table sets forth the high and low closing prices per
      share
      of our common stock. The prices represent prices between dealers, exclusive
      of
      retail markup, markdown or commission and do not necessarily represent actual
      transactions. There is no trading market for our outstanding preferred
      stock.





Year
                ended December 31, 2007
            
            High
            
            LowFirst
                Quarter
            
            $
            0.13
            
            $
            0.07Second
                Quarter
            
            $
            0.16
            
            $
            0.10Third
                Quarter
            
            $
            0.11
            
            $
            0.08Fourth
                Quarter
            
            $
            0.09
            
            $
            0.05




Year
                ended December 31, 2006
            
            High
            
            LowFirst
                Quarter
            
            $
            0.09
            
            $
            0.04Second
                Quarter
            
            $
            0.06
            
            $
            0.04Third
                Quarter
            
            $
            0.09
            
            $
            0.04Fourth
                Quarter
            
            $
            0.10
            
            $
            0.06




As
      of
      December 31, 2007, there were 399,204,000 common shares outstanding and
      approximately 340 shareholders of record, not including holders who hold their
      stock in "street name".





Dividends





We
      have
      never paid any cash dividends on our common stock. We currently anticipate
      that
      we will retain all future earnings for use in our business. Consequently, we
      do
      not anticipate paying any cash dividends in the foreseeable future. The payment
      of dividends in the future will depend upon our results of operations, as well
      as our short-term and long-term cash availability, working capital, working
      capital needs and other factors, as determined by our Board of
      Directors.





Under
      the
      terms of the Series B Shares, we may not, without first obtaining the prior
      approval of the holders of a majority of the then outstanding Series B Shares,
      voting separately as a class, pay any dividends or distributions on any shares
      of our capital stock.





Repurchase
      of Securities





We
      did
      not repurchase any shares of our common stock during the fourth quarter
      of the year ended December 31, 2007.





Recent
      Sales of Unregistered Securities





In
      2007
      we issued the following unregistered securities:





·
            Preferred
                Stock and Warrants: On May 8, 2007, for an aggregate purchase price
                of
                $12,500,000 we sold a total of 1,250,000 Series B Shares and warrants
                to
                purchase up to 51,229,508 shares of our common stock to Great White
                Shark
                Enterprises, Inc. and Leisurecorp
                LLC.





Common
      Stock: We also issued the following shares of common stock:





·
            1,045,000
                shares valued at $127,725 for services
                rendered;





·
            11,000,000
                shares valued at $1,005,000 in relation to the acquisition of two
                companies;





·
            10,416,873
                shares valued at $1,093,611 in settlement of outstanding
                indebtedness;





·
            2,907,530
                shares valued at $305,291 in payment of interest and accrued interest;
                and





·
            30,392,082
                shares valued at $1,653,329 under terms of a contract for the purchase
                of
                certain patents; these shares were deemed to be issued in
                2006





11





All
      of
      the foregoing shares were sold pursuant to an exemption available under Section
      4(2) of the Securities Act of 1933 (the "Securities Act") because the issuance
      did not involve any public offering.





Equity
      Compensation Plan Information





The
      following table summarizes as of December 31, 2007, the number of securities
      to
      be issued upon the exercise of outstanding stock options the weighted-average
      exercise price of the outstanding Stock options; and the number of stock options
      remaining available for future issuance under our equity compensation
      plans.





Plan
                Category
            
            Number
                of securities
              to
                be issued upon
              exercise
                of outstanding options,
              and
                rights
            
            Weighted-average
              exercise
                price of
              outstanding
                options,
              and
                rights
            
            Number
                of securities
              remaining
                available for
              future
                issuance under
              equity
                compensation plans
              (excluding
                column (a))(a)
            
            (b)
            
            (c)Equity
                compensation plans approved by security holders
            
            
            7,360,000
            
            $
            0.060
            
            
            110,000Equity
                compensation plans not approved by security holders
            
            
            15,000,000
            
            $
            0.074
            
            
            020,000,000
            
            $
            0.060
            
            
            0Total
            
            
            42,360,000
            
            $
            0.065
            
            
            110,000





The
      equity compensation plans approved by the security holders consist of our 2000
      Stock Option Plan, as amended.





**ITEM
      6.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS**





You
      should read the information in this Item 6 together with our consolidated
      financial statements and notes thereto that appear elsewhere in this Annual
      Report. This Annual Report contains forward-looking statements that involve
      risks, uncertainties, and assumptions. Actual results may differ materially
      from
      those anticipated in these forward-looking statements as a result of various
      factors, including, but not limited to, those presented under "Risk Factors
      "
      included in Item 1 and elsewhere in this Annual Report.





**RESTATEMENT
      OF CONSOLIDATED 2007 QUARTERLY RESULTS**





As
      a
      result of an in-depth review of certain sales and installation agreements and
      course installations that occurred in 1st, 2nd and 3rd quarters of 2007, the
      company determined that it had incorrectly accounted for the related revenues,
      cost of goods sold, course assets, accrued liabilities and deferred revenues.
      Accordingly, the Company announced on April 15, 2008 that previously filed
      quarterly reports on Form 10-QSB for the quarters ended March 31, 2007, June
      30,
      2007 and September 30, 2007 initially filed with the Securities and Exchange
      Commission (the “SEC”) on May 21, 2007, August 14, 2007 and November 19, 2007
      (the “Original Filings”), should no longer be relied upon. The Company’s
      consolidated financial statements presented in this report as at and for the
      period ending December 31, 2007 reflect these restatements.




12





Effect
      on
      Financial Statements:





The
      following table summarizes the impact on the quarterly results for each
      period:


2007
                  Restatement of Financial ResultsIncrease
                  (decrease)Condensed
                  statement of operations:
              
              Quarter
                  1
              
              Quarter
                  2
              
              Quarter
                  3
              
              2007Revenue
              
              $
              (164,000
              )
              $
              (1,454,000
              )
              $
              61,000
              
              $
              (1,557,000
              )Expense
              
              
              148,000
              
              
              (1,032,000
              )
              
              24,000
              
              
              (860,000
              )Operating
                  income
              
              $
              (312,000
              )
              $
              (422,000
              )
              $
              37,000
              
              $
              (697,000
              )Condensed
                  balance sheets:Assets
              
              $
              -
              
              $
              (217,000
              )
              $
              996,000
              
              $
              779,000Liabilities
              
              
              312,000
              
              
              205,000
              
              
              959,000
              
              
              1,476,000Accumulated
                  deficit
              
              
              (312,000
              )
              
              (422,000
              )
              
              37,000
              
              
              (697,000
              )


The
      primary basis for the corrections is as follows:





1 st quarter
      2007: To recognize a further performance obligation whereby GPSI had sold the
      HDX Inforemer System to the customer, was unable to deliver and instead provided
      the HD Inforemer system. This created a further obligation to deliver the HDX
      when available. Additionally, the Company failed to recognize expense for
      1 st year
      warranty and service costs on sales during the period.





2 nd and
      3 rd quarters
      2007: To reverse revenue and cost of sales previously recognized during the
      quarters for system sales whereby GPSI has guaranteed the differential between
      the customers lease payments to its financier and the amount the customer
      receives from golf courses under rental contracts. Cost of sales for these
      sales
      have been set-up on the Company’s balance sheet as assets and are being
      amortized over the life of the golf courses rental contracts. Proceeds received
      on these sales have been set-up as deferred revenue on the Company’s balance
      sheet and are being recognized as revenue as the golf courses make their rental
      payments.





Management’s
      Discussion and Analysis of Results of Operations





Recently
      Issued Accounting Pronouncements





For
      recently issued accounting pronouncements that may affect us, see Note 1 of
      Notes to Financial Statements.





Overview





GPS
      Industries, Inc. is a global technology solutions provider with customizable,
      patent-protected applications in GPS and Wi-Fi software and hardware for use
      with golf course operations, residential community developments and other
      recreational and industrial applications. With the development of the Inforemer
      HDX largely complete, GPSI is transitioning away from a Research and Development
      focus. However, GPSI will continue to dedicate resources to new opportunities
      where market potential and economics justify investment. Our primary business
      is
      the development, manufacture and sale of the Inforemer HDX mobile display units
      (“MDU”) in both cart mounted and hand held product lines along with the related
      infrastructure.





In
      November 2007, the Board of Directors accepted the resignation of Robert Silzer
      Sr. as Chief Executive Officer of the company and replaced him with Douglas
      Wood
      on an interim basis. The Board also engaged the Carl Marks Advisory Group to
      oversee the acquisition of the assets of Uplink and to assist in the
      restructuring of the business. At the same time, GPSI reorganized its various
      product offerings and divisions to more accurately reflect how GPSI manages
      its
      internal operations whereby Inforemedia, Wi Stream and Fire at the Flag are
      peripheral to the core Inforemer product and hence the management of these
      divisions have been collapsed into our core Inforemer business.




13





GPSI
      also
      rescinded the “Golf IT’ Asset Purchase Agreement due to the nature of it being
      peripheral to the core business of GPSI and expensed the costs incurred to
      date
      in the period ending December 31, 2007. Additionally, the seller was unable
      to
      deliver the assets of Golf IT free and clear of encumbrances.





On
      January 18, 2008, the Company acquired the operations, assets and assumed
      certain liabilities of UpLink Corporation (“UpLink”), a Texas corporation that
      produces and sells global positioning satellite distance measuring systems,
      associated software, software development and service and maintenance contracts
      to golf course owners and operators. In consideration for the acquisition,
      the
      Company paid approximately $11,816,000 including Notes Payable of $1,521,000,
      142,100,000 Common Shares valued at $7,815,000, Series B Preferred Shares with
      a
      par value of $1,200,000 and 4,918,033 common stock warrants at an exercise
      price
      of $0.122 per share valued at $219,000. The Company also assumed approximately
      $9,244,000 in liabilities.





GPSI
      has
      offices in the United States, Canada and United Kingdom in order to focus on
      the
      geographic markets including North America, Europe and the Middle East with
      exclusive distributor arrangements covering Asia, South Africa, Australia and
      New Zealand.





Corporate
      activities are divided between our Vancouver, Canada and Austin, Texas offices
      with Software Development, Research and Development, Manufacturing and Finance
      located in Canada and Sales, Customer Service and Installation and Repairs
      and
      Maintenance in Austin, Texas.





Twelve-months
      ended December 31, 2007 compared to December 31, 2006





Revenue
      -
      Revenue during the past two years has been comprised of (i) sales generated
      from
      our Inforemer product,(ii) service contract fees we received in connection
      with
      the sale of the Inforemer, (iii) fees we received from certain of our
      distributors, and (iv) patent license fees received by us for the right to
      use
      certain of our patented technologies. In addition to these revenues, during
      the
      year ended December 31, 2007, the Company added new revenue streams from our
      Major Projects division, GPSI Europe and advertising.





The
      Major
      Projects division generated $684,781 in revenues for providing GPS tracking
      advisory and design services and Wi-Fi Network design services to Leisurecorp
      LLC, which is a related party through their investment in our Series B Preferred
      Shares. The revenue attributable to the Wi-Fi Network design service was
      recognized based on the completion of the first significant deliverable in
      a
      long-term contract to develop and deploy a wireless network infrastructure
      for a
      real estate and golf course development project.





The
      Company also recognized revenue from transactions with GPSI Asia, a related
      party, for the year ended December 31, 2007 in the amount of $694,869 ($295,681
      in 2006). These transactions were in the normal course of business and were
      for
      the sale of Inforemer Golf Management Systems.





As
      of
      October 2007, the Company also reported revenues from its newly acquired wholly
      owned subsidiary GPSI Europe (formerly Golf Academies Limited). For the
      year-ended December 31, 2007 revenues from GPSI Europe were $142,132. GPSI
      Europe generates revenues through the rental of GPS devices, operation of the
      the hole-in-one program Fire At the Flag (TM) and GPS System Sales throughout
      the United Kingdom, Europe, South Africa and the Middle East.





For
      the
      fiscal year ended December 31, 2007 ("fiscal 2007"), we recorded total revenue
      of $7,266,040, compared to $6,575,567 during the twelve months ended December
      31, 2006 ("fiscal 2006"). This 11% increase in revenue is primarily attributable
      to the Company’s new revenue streams and increased service contract fees offset
      by a decrease in revenues from sales generated from our Inforemer product.
      The
      Company completed 37 18-hole equivalent installations, in 2007, a 25% increase
      in comparison to 2006 installations of 29.5; however, revenue recognized did
      not
      reflect this increase for a number of reasons. Primarily, several of the
      Company’s 2007 sales were under agreements where the Company has guaranteed the
      end users rental lease payments to a third-party financing company. As a result
      of these guarantees, revenues from these agreements have been deferred to later
      periods. The Company is recognizing this revenue ratably as the end user makes
      their rental lease payments to the third-party. Additionally, during 2007,
      the
      Company implemented a two-tiered pricing strategy for our golf course sales.
      This strategy was not in effect during the 2006 fiscal period. This price
      strategy offered customers the ability to purchase our golf course management
      system at one of two prices. The lower price was available to golf course
      operators who granted the Company the right to provide advertising on the
      Inforemer units used at their golf course and the right to operate the Fire
      At
      The Flag(TM) program at their golf course. Although we generate less revenue
      and
      margin from the lower price sales, this was intended to be more than offset
      over
      the contract term through longer term recurring revenues from these sales
      through advertising and Fire At The Flag(TM)revenues. For the year ended
      December 31, 2007 neither the advertising nor Fire At The Flag(TM) program
      generated material revenues. In fourth quarter of 2007, the Company revisited
      this price strategy and subsequently no longer offers this pricing structure.
      Approximately one half of the sales during the 2007 fiscal period were sales
      at
      the lower price and therefore our sales revenues and gross margins declined
      accordingly.




14





Total
      patent license revenue earned by GPSI in fiscal 2007 was $794,326 compared
      to
      $796,826 in fiscal 2006. During fiscal 2007, we continued to realize patent
      revenue ($210,000 and $212,500 in 2007 and 2006 respectively) from the
      settlement of a patent infringement lawsuit we initiated against a competitor.
      We are scheduled to receive additional license payments under that
      settlement/license agreement of $210,000 per year, paid quarterly, until 2011,
      the last payment due August 2011.





Cost
      of
      Goods Sold - Cost of goods sold represents the costs associated with the
      production of our products and the appropriate percentage of costs associated
      with the completion of terms of contracts undertaken by the Major Projects
      division. Costs of goods sold increased both on a year over year basis and
      as a
      percentage of revenues. Year over year increase was 54% while cost of goods
      sold
      as a percentage of revenue increased from 52% to 72% during the twelve month
      periods ending December 31, 2006 to December 31, 2007 respectively.





The
      increase was due to higher cost of goods sold for each Inforemer system during
      the 2007 fiscal period and an impairment charge taken on course assets. The
      impairment charge was on course assets under System Sales whereby the Company
      guaranteed the end users rental lease payments to the third-party purchaser.
      The
      increase in cost of goods sold for each Informer system was a result of the
      Company’s manufacturing costs being higher during fiscal 2007 and accruals for
      maintenance, warranty and service expenses. Manufacturing costs were higher
      due
      to a significant ramp up in manufacturing labor in response to anticipated
      sales
      volumes that were not achieved. This resulted in over capacity within the
      manufacturing department. The department scaled back its labor component during
      the latter part of 2007. During fiscal 2007 the Company began recording an
      amount for the one year free maintenance, warranty and service component
      included in all of their System Sales agreements to cost of goods sold. This
      was
      not done during fiscal 2006 as the Company had insufficient history to make
      a
      reasonable estimate of these costs. In addition, because a majority of our
      sales
      were under our lower price program, as described above, cost of goods sold
      for
      each Inforemer system as a percentage of Inforemer related revenue was higher
      than in fiscal 2006.





The
      Company addressed the increases to cost of goods sold during the restructuring
      in the latter part of fiscal 2007 by reducing manufacturing costs to appropriate
      levels in relation to current production and estimated market demands and
      continues to seek ways to reduce its hardware costs for the Inforemer product.





Installation
      Costs - Installation costs represent our cost of delivering and installing
      our
      equipment at our customers' sites and costs of third party services we incur
      in
      the installation of systems that we sell to our customers. Since we install
      our
      system in various countries, we often need the assistance of local licensed
      trades to install those systems. Since the initiation of the Fire At The
      Flag(TM) program, installation costs also include the cost of installing the
      equipment necessary for this program. Since the installation of the Fire At
      The
      Flag(TM) equipment precedes any revenues generated from those programs, these
      costs increase our overall installation costs without any increase in revenues.
      Accordingly, as a percentage of sales, installation costs increased from 13
      % in
      the twelve month period ending December 31, 2006 to 15 % for the twelve month
      period ending December 31, 2007.





General
      and Administrative Expenses - General and administrative expenses increased
      to
      $4,812,152 in the 2007 fiscal period compared to $4,728,401 for the 2006 fiscal
      period. The increase was due to the company recording $1,091,011 in
      restructuring charges for the twelve month period ending December 31, 2007
      compared to $nil during the same period in 2006 and an increase in our general
      and administrative personnel related costs. Restructuring costs included
      $427,000 for accrued severance benefits and $664,000 in costs incurred to affect
      the Golf IT acquisition, subsequently rescinded. The Company’s restructuring
      activities involved the downsizing of current operations. The Company expects
      to
      incur additional expenses of approximately $200,000 during the first quarter
      of
      2008 to complete its restructuring plan. The Company rescinded the “Golf IT’
Asset Purchase Agreement and recognized the costs incurred in the period ending
      December 31, 2007. Personnel related costs increased during fiscal 2007 as
      we
      significantly increased the number of employees within this department in
      anticipation of increased sales and operations. As part of the restructuring
      headcount was reduced to appropriate levels to handle current sales and
      operations. These increases in general and administrative expenses were
      significantly offset by decreases in consulting fees paid to third parties,
      reduction in legal costs as well as a decrease in stock compensation expenses.





Depreciation
      and Amortization - Depreciation and amortization increased by 59% in the twelve
      month period ending December 31, 2007 compared to the 2006 fiscal period. The
      increase is a result of an increase in the assets being depreciated. The
      significant asset additions that occurred in fiscal 2007 were Fire At The Flag
      (TM) related assets and Course Assets under System Sales whereby the Company
      guaranteed the end users rental lease payments to the third-party purchaser.
      These assets are being depreciated over the term of the System Sales Agreements.
      Our patents are being amortized over the remaining life of the
      patents.





15





Selling
      and Marketing Expenses - Selling and marketing expenses increased by 38% for
      the
      twelve month period of 2007 compared to the comparable 2006 fiscal period due
      to
      a significant increased in sales and marketing initiatives and activities.
      Major
      increases in these expenses in the twelve month period December 31, 2007
      compared to the twelve month period
      ending December 31, 2006 included an increase in sales and marketing personnel
      costs, contractor fees paid to third-party’s and an increase in fees and
      expenses for trade shows. Our sales commissions (payable to both in-house and
      outside sales representatives and distributors) also increased in the 2007
      fiscal periods compared to the 2006 fiscal periods as the number of sales
      increased over the prior year. Sales and marketing personnel costs and
      contractor fees both increased as a result of additional employees and
      contractors employed by the Company to both drive and manage anticipated
      increased sales activity levels. Both employee headcount and number of
      contractors were subsequently reduced when anticipated sales activity levels
      were not achieved. We believe current staffing levels within the department
      are
      appropriate to achieve and manage 2008 targeted sales levels.





Operations,
      Engineering, Research & Development Expenses - Operations, engineering,
      research and development expenses for the twelve month period ending December
      31, 2007 increased by $708,708 (or 22 %) over the 2006 fiscal period as a result
      of an increase in the engineering and continuing development cost of the
      Inforemer product, which included increased costs in personnel, consultants
      and
      computer software development. Increased personnel expenses were partially
      the
      result of an increased number of engineers that were employed to support the
      additional anticipated sales due to the Company's increased marketing efforts
      and more aggressive pricing programs. Service costs also increased during the
      twelve month period of 2007 as a result of the increased number of Inforemer
      systems installed. At December 31, 2007 we had completed major improvements
      in
      the functionality of our Inforemer product, including upgrading the computing
      power, the visual appearance, and the product’s ability to stream video and play
      sound. The Company’s product development team is currently working on the
      software component of the product’s ability to remotely accept charge card
      payments. These improvements are expected to enhance the advertising that can
      be
      exhibited on the Inforemer units and, thereby, to increase the amount of
      advertising we will be able to sell for exhibition on those units.





Loss
      from
      Operations - The Company’s loss from operations increased by $3,449,759 in the
      2007 fiscal period over the loss from operations in the comparable 2006 fiscal
      period. The increase in loss from operations was due to the lower gross margins,
      increases in depreciation and amortization, sales and marketing and operations,
      engineering and research and development expenses.





Gross
      margins decreased from $2,287,133 to $927,120 for the twelve month periods
      ending December 31, 2006 and December 31, 2007 respectively. This decrease
      was a
      result of our lower sales price for our products under the two-tier pricing
      strategy, increase in sales requiring deferral of revenue whereby the sales
      were
      under agreements where the Company has guaranteed the end users rental lease
      payments to a third-party and increased cost of goods sold.





Finance
      Costs - Finance costs represent fees paid to a provider of a line of credit
      to
      the company and expenses recognized related to warrants we have issued. The
      value of the warrants is recorded as a discount on the debt financing raised
      or
      as a deferred financing cost and is amortized over the term of the respective
      debt or term of service. Finance costs decreased in 2007 twelve month fiscal
      periods as a result of a reduction in the use of the line of credit and a
      reduction in the number of warrants issued in the current fiscal
      periods.





Interest
      Expense - Interest expense decreased by 87 % in the twelve month period ending
      December 31, 2007 compared to the same twelve month period in 2006. This change
      was a result of a decrease in the amount interest-bearing debt that the Company
      was carrying. In September 2005, the Company issued $3,720,000 of Callable
      Secured Convertible Notes (the "Callable Notes") that bore interest at a rate
      of
      8% per annum. The Callable Notes created a derivative liability, which in turn
      created a debt discount of $3,720,000, or 100% against the
      Callable Notes. This debt discount was amortized over the term of the loan
      and
      also against any interim conversions of the Callable Notes. This amortization
      amounted to $1,675,449 in the twelve month period ending December 31, 2006,
      which was included in interest expense. We repaid the Callable Notes in November
      2006. Accordingly, during the 2007 fiscal period we did not incur interest
      on
      the Callable Notes. In addition, in December 2006 we (i) completed the sale
      of
      $15,740,890 of our preferred stock, which proceeds were also used to further
      reduce our interest bearing indebtedness, and (ii) cancelled $3.75 million
      of
      outstanding debt held by certain of our officers and directors in exchange
      for
      the issuance securities. In addition, in May 2007, we (i) received $1.5 million
      from the sale of additional Series B Shares and warrants
      (which was used to repay outstanding debt), and (ii) cancelled $1 million of
      outstanding indebtedness in consideration for the issuance of Series B Shares
      and warrants. As a result of the May 2007 Series B Preferred Shares sale and
      debt conversion, the amount of outstanding debt accruing interest was reduced
      during the balance of the fiscal year ending December 31, 2007 compared to
      the
      same period in 2006. Of the foregoing interest expense, a total of $42,383
      was
      paid in stock issuances rather than cash payments.




16





Derivative
      Liabilities - Our derivative financial instruments consist of embedded
      derivatives related to the issuance of the Callable Notes. The accounting
      treatment of derivative financial instruments requires that we record the
      derivatives at their fair values and record them at fair value as of each
      subsequent balance sheet date. Any change in fair value is recorded as
      non-operating, non-cash income or expense at each reporting date. During the
      twelve month fiscal period of 2006 we recorded an aggregate of $7,831,868
      non-operating, non-cash charge. Because we repaid the Callable Notes in November
      2006, we did not record any of these charges or income in the 2007 fiscal
      period.





Loss
      on
      Foreign Exchange - During the twelve month period ended December 31, 2007 we
      incurred a currency exchange loss of $618,548, compared to a currency exchange
      loss of $75,597 during the same period in 2006. The significant increase in
      our
      loss on foreign exchange is due to the fact that most of our revenues are
      collected in U.S. dollars, and many of our expenses are paid in Canadian
      dollars. Therefore we are subject to currency fluctuation risks. During 2007,
      the value of the U.S. dollar decreased significantly compared to the Canadian
      dollar, thereby causing us to realize a substantial loss on our currency
      exchange.





Gain
      on
      Extinguishment of Debt - Gain on extinguishment of debt increased to $1,968,414
      in fiscal 2007 from $448,459 in fiscal 2006. This gain is due to the write-off
      of debt guarantees of discontinued operations, offset by certain losses arising
      from the issuance of stock in settlement of debt.





Deemed
      Preferred Stock Dividend - We recorded a Deemed Preferred Stock Dividend of
      $12.5 million for the year end December 31, 2007 compared to $11.5 million
      for
      the year ended December 31, 2006. Both the 2007 and 2006 deemed dividends do
      not
      represent an actual dividend paid on shares but is the result of the GAAP
      accounting rules as applied to the issuance of the Series B Shares and warrants
      for the cash equity and debt conversion investment that occurred on May 8,
      2007
      and December 29, 2006. Under GAAP, a portion of the cash received and debt
      converted is assigned to the fair market valuation of the warrants issued with
      the Series B Shares. The remaining portion is compared to the fair market value
      of the Series B Shares acquired.
      Any difference arising from this comparison, together with the fair market
      value
      of the warrants, is treated as a deemed dividend issued on the Series B Shares.





Net
      Loss
      - Net loss was $ 24,092,483 for the twelve months ended December 31, 2007
      primarily as a result of the $12,500,000 Deemed Preferred Stock Dividend.
      Excluding the effect of the Deemed Preferred Stock Dividend, the net loss for
      the 2007 twelve month period was $11,592,483, a $6,150,720 increase from the
      net
      loss for the twelve month fiscal period in 2006. However, but for a non-cash
      gain related to derivative liabilities of $7,831,868 during the twelve month
      period of 2006, the net loss in the 2006 fiscal period would have been greater
      than the net loss before the Deemed Preferred Stock Dividend in the 2007 fiscal
      period. The Company believes that through its restructuring activities our
      continuing operating costs can be reduced.





Liquidity
      And Capital Resources





To
      date,
      we have incurred significant losses from operations. As of December 31, 2007,
      we
      had a working capital deficit of $3,882,777. Our operations currently do not
      generate sufficient cash to internally fund our working capital needs.
      Accordingly, to date, our operating deficits have been funded by outside sources
      of funding, including funds raised from (i) the sale of shares of our common
      stock and preferred stock, (ii) the issuance of debentures, (iii) the issuance
      of shares as payment for services and in satisfaction
      of indebtedness, (iv) bank lines of credit, and (v) short-term loans made to
      us
      by our affiliates and by third parties. For at least the next twelve months,
      the
      Company anticipates that such funding activities must continue in order for
      the
      Company to maintain its operations. Based on our currently projected revenues
      and our existing lines of credit the Company does not have sufficient capital
      resources to fund our anticipated working capital needs. The Company is
      currently working with its existing investors to obtain additional debt or
      equity funding. At this time, we are unable to determine if we will be
      successful in obtaining this funding or any other. Should the Company not be
      able to obtain sufficient funding, the Company will not be able to meet its
      working capital needs through the second quarter of 2008.





In
      connection with the December 2006 purchase of Series B Shares by GWSE and
      Leisurecorp, we agreed to grant each of GWSE and Leisurecorp the right,
      exercisable until the end of April 2007, to increase their investment in our
      shares of Series B Shares and warrants on the same terms as the securities
      sold
      to them on December 29, 2006. GWSE and Leisurecorp timely exercised the
      foregoing option in April 2007 to purchase a total of $12,500,000 of additional
      shares of Series B Shares and warrants, and the closing of the $12,500,000 purchase
      of additional Series B Shares and warrants was consummated on May 8, 2007.
      Leisurecorp purchased its Series B Shares and warrants by delivering to us
      a
      $10,000,000 interest-free promissory note (the "Note") that is secured by the
      securities we sold to Leisurecorp, and GWSE purchased its Series B Shares and
      warrants in exchange for cash ($1,500,000) and the cancellation of $1,000,000
      of
      outstanding indebtedness that we owed to GWSE. Leisurecorp's Note was payable
      as
      follows: $2,000,000 was due on or before June 30, 2007; $4,000,000 was due
      on or before
      October 31, 2007; and the remaining $4,000,000 was due on or before December
      31,
      2007. All payments on this Note had been received at December 31, 2007
      ($2,000,000 was received on July 9, 2007, $4,000,000 was received on October
      9,
      2007 and $4,000,000 was received on December 17, 2007).




17





Even
      with
      the proceeds from GWSE and Leisurecorp’s additional investment in Series A
      Preferred Shares in May 2007, our ability to repay our accounts payable and
      other outstanding indebtedness, and our ability to maintain sufficient liquidity
      to continue our operations, is significantly dependent upon our ability to
      generate sufficient sales in the first quarter of 2008 and beyond, supplemented
      by the Company’s ability to attract additional investment.





In
      October 2007, we purchased Direct Golf Services, Inc. and Golf Academies Limited
      for $320,000 in cash and 11,000,000 shares of our common stock. The cost of
      integrating these two companies into our company, and the additional overhead
      costs related to the operations of these two new businesses, negatively affected
      our liquidity.





The
      Company has recorded a charge of $1,091,011 in fiscal 2007 as a result of
      management’s plans to rescind and terminate the Asset Purchase Agreement related
      to Golf IT and to reduce staff levels at GPSI.





During
      2007 the Company entered into an Asset Purchase Agreement, dated August 31,
      2007, with UpLink Corporation (“UpLink”), a Texas corporation that produces and
      sells global positioning satellite distance measuring systems, associated
      software, software development and service and maintenance contracts to golf
      course owners and operators. Under terms of this agreement, for the year-ended
      December 31, 2007 the Company has made loans in the amount of $946,000 to cover
      UpLink’s operating cash flow shortfalls. These loans have been recorded as
      short-term corporate loans and classified as current assets in the Company’s
      balance sheet as at December 31, 2007. These loans have also negatively affected
      our liquidity during the period. On January 18, 2008, the Company and UpLink
      Corporation amended and closed the Asset Purchase Agreement dated August 31,
      2007. Under the Asset Purchase Agreement, as amended, the Company purchased
      the
      assets of UpLink effective January 18, 2008.  In consideration for the
      acquisition, the Company paid approximately $11,816,000 including Notes Payable
      of $1,521,000, 142,100,000 Common Shares valued at $7,815,000, Series B
      Preferred Shares with a par value of $1,200,000 and 4,918,033 common stock
      warrants at an exercise price of $0.122 per share valued at $219,000. The
      Company also assumed approximately $9,244,000 in liabilities. This purchase
      will
      also negatively impacted the Company’s on-going liquidity in 2008 as the Company
      has incurred costs to integrate the acquired assets and to meet the settlement
      terms of the promissory notes.





As
      a
      result of the two-tier pricing strategy we had implemented to sell our Inforemer
      golf course management systems earlier in 2007, revenues from certain sales
      of
      our systems were reduced, thereby reducing the liquidity benefit otherwise
      obtained from the sale and installation of a fully priced golf course system.
      We
      anticipated that the decrease in cash proceeds received from the sales of the
      lower priced golf course systems would be offset by higher advertising and
      other
      revenues that we will share with the golf course owners in the future. For
      the
      period ending December 31, 2007 these higher advertising and other revenues
      had
      yet to occur. The Company is currently revisiting both our advertising program
      and the Fire At The Flag (TM) product in order to improve results.





Operating
      Activities - During the 2007 fiscal period, our operations utilized cash of
      $11,704,000 as compared to $9,549,000 during the twelve months ended December
      31, 2006. The increase in cash utilized in operations in the 2007 fiscal period
      as compared to the 2006 fiscal period was primarily a result of the increase
      in
      the loss from operations, adjusted for non-cash items, partially offset by
      positive changes to operating assets and liabilities.





Investing
      Activities - Net cash used in investing activities was $3,645,000 and $745,091
      for the twelve months ending December 31, 2007 and 2006, respectively. In the
      2007 fiscal period, investing activities consisted of the purchase of equipment
      and patents, payments relating to the purchase of Optimal Golf Solutions, Inc.,
      payments for the acquisition of Direct Golf Services Limited and Golf Academies
      Limited, loans to UpLink to fund their operating cash flow shortfalls and
      deferred implementation, acquisition and development costs.





Financing
      Activities - Net cash provided by financing activities was $14,641,000 for
      the
      2007 fiscal period, as compared to $12,359,000 for fiscal 2006. Financing
      activities during 2007 consisted of receipt of equity investment, preferred
      stock subscription receivable, preferred stock issued for debt and proceeds
      of
      loans partially offset by repayment of bank indebtedness and loan. Equity
      investment consisted of issuance of Series B Preferred Shares for cash
      consideration of $11,500,000 and the settlement of debt of $1,000,000.





18





Contractual
      Obligations





The
      following table sets forth certain information regarding our contractual
      obligations as of December 31, 2007:




Contractual
                Obligations
            
            Total
            
            2008
            
            2009
            
            2010
            
            2011
            
            thereafterLong-Term
                Office Lease
              and
                Office Equipment
            
            
            258,663
            
            
            101,225
            
            
            81,545
            
            
            63,457
            
            
            9,193
            
            
            3,243Employment
                Agreements
            
            
            794,250
            
            
            469,250
            
            
            225,000
            
            
            100,000
            
            
            -
            
            
            -




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





We
      are
      not a party to any off-balance sheet arrangements and do not engage in trading
      activities involving non-exchange traded contracts.





In
      connection with certain of its Golf Course System Sales Agreements entered
      into
      in 2007, the Company has guaranteed that the Golf Courses would achieve minimum
      annual cash flows from rental of advertising space on their Inforemer product.
      If these minimum levels are not achieved during the period, the Company is
      required to compensate the golf courses for any shortfall. At December 31,
      2007
      the Company has recorded a liability of $75,000 and made payments of $30,000
      in
      relation to these guarantees. The future maximum liability associated with
      these
      guarantees is presented in the following table:





2008
            
            $
            45,0002009
            
            
            45,0002010
            
            
            45,0002011
            
            
            45,0002012
            
            
            45,000Total
            
            $
            225,000





During
      2007 the Company entered into certain System Sales agreements whereby the
      Company guaranteed the end users lease rental payment to a third-party financing
      company. The Company is recognizing revenue ratably over the term of the
      contracts as the end users make their rental lease payments. Should the end
      user
      default on their lease rental payments to the third-party financing company
      the
      Company could be obligated to make these payments. At December 31, 2007 the
      Company has guaranteed minimum lease rental payments of $1,081,714.





We
      have
      no other financial guarantees, debt or lease agreements or other arrangements
      that could trigger a requirement for an early payment or that could change
      the
      value of our assets.





Lines
      of
      Credit





As
      of
      December 31, 2007, the Company had borrowed $183,125 under a line of credit.
      The
      line of credit bears interest at prime plus 0.5%, is repayable in full on demand
      and is secured by a one year standby bank letter of credit for $1,500,000 that
      was provided by a third party, Hansen Inc. This standby letter of credit from
      Hansen Inc. has been renewed a number of times and was renewed to March 31,
      2008. At March 31, 2008 the standby bank letter of credit from Hansen Inc.
      expired at which point the line of credit was removed.





The
      Company’s 100% wholly owned subsidiary, GPSI Europe (formerly Golf Academies
      Limited)has an overdraft facility with their bank comprised of both a Sterling
      Overdraft, a Euro Overdraft and a USD Overdraft with a combined limit of
£35,000  (an
      amount equivalent to $70,000 USD at December 31, 2007). As of December 31,
      2007,
      GPSI Europe had drawn an amount equivalent to $66,707 USD on this facility.
      The
      bank may at anytime demand repayment as such amounts owing have been classified
      as current liabilities. Interest is to be charged at the rate of 3.75% per
      annum
      over the bank’s Base Rate as published from time to time. The facility is
      secured by a debenture comprising fixed and floating charges over all the assets
      and undertaking of GPSI Europe and personal guarantee limited to
£15,000  (an
      amount equivalent to $30,000 USD at December 31, 2007) given by GPSI Europe’s
      Directors.




19





On
      February 29, 2008, the Company and Silicon Valley Bank entered into a Loan
      and
      Security Agreement pursuant to which the Bank agreed to make available to the
      Company advances under a revolving line of credit of up to $3,000,000. At March
      31, 2008, the Company has drawn $3,000,000 on the line of credit. The Revolving
      Line terminates in February 2010 at which time all advances and unpaid interest
      are due. The principal amount outstanding accrues interest at a floating rate
      per annum of the greater of 1% above the prime rate or 6%, with interest payable
      monthly. The obligations of the Company under the Revolving Line (up to
      $1,500,000) are guaranteed by Douglas Wood, the Company’s interim Chief
      Executive Officer, director and a shareholder. On March 30, 2008, Douglas Wood
      passed away. On his passing, the Company is now in default of the terms of
      the
      Loan Agreement whereby the bank could demand repayment of $1,500,000 secured
      by
      Mr. Wood. The Company has not received formal notice of default currently.
      The
      obligations of the Company under the Revolving Line are also secured by a first
      priority security interest (subject to permitted liens) on the assets of the
      Company, and certificates of deposit in the principal amount of $1,500,000
      provided by Hansen, Inc. The Agreement provides for customary covenants. At
      March 31, 2008 the Company used $1,500,000 of the Revolving Line to repay a
      credit facility from HSBC Bank which is secured by a letter of credit from
      Hansen, Inc.





Short-term
      Loans





As
      of
      December 31, 2007 the Company has $3,092,165 owing on short term notes. These
      amounts are repayable on demand and bear interest at rates varying from 8%
      to
      18%. The largest of these, amounting to $1,572,165, is from Douglas Wood, the
      Company’s interim Chief Executive Officer, director and a shareholder who passed
      away on March 30, 2008. The Company has not received demand for repayment from
      Mr. Wood’s estate currently.





**ITEM
      7. FINANCIAL STATEMENTS**





Our
      consolidated financial statements and notes thereto and the related report
      of
      Sherb & Co., LLP are attached to this Annual Report beginning at page F-1
      and are incorporated herein by reference.





Filed
      herewith are the following financial statements:





GPS
      INDUSTRIES, INC.


FINANCIAL
      STATEMENTS





INDEX





Page
                NumberREPORT
                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            
            
            F-1CONSOLIDATED
                FINANCIAL STATEMENTS:Balance
                Sheets
            
            
            F-2Statements
                of Operations
            
            
            F-3Statements
                of Stockholders' Deficit
            
            
            F-4Statements
                of Cash Flows
            
            
            F-5Notes
                to Financial Statements
            
            
            F-6
                to F-27




20




REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





The
      Board
      of Directors and Stockholders


GPS
      Industries Inc. and Subsidiaries





We
      have
      audited the accompanying consolidated balance sheets of GPS Industries Inc.
      as
      of December 31, 2007 and 2006, and the related consolidated statements of
      operations, stockholders' deficit and cash flows for the years ended December
      31, 2007 and 2006. These consolidated financial statements are the
      responsibility of the Company's management. Our responsibility is to express
      an
      opinion on these consolidated financial statements based on our
      audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. The Company
      has determined that it is not required to have, nor were we engaged to perform,
      an audit of its internal control over financial reporting. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements.
      An audit also includes assessing the accounting principles used and significant
      estimates made by management, as well as evaluating the overall financial
      statement presentation. We believe that our audits provide a reasonable basis
      for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of GPS Industries Inc. at
      December 31, 2007 and 2006 and the results of its operations and its cash flows
      for the years ended December 31, 2007 and 2006 in conformity with accounting
      principles generally accepted in the United States.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. The Company has incurred
      significant losses and has a working capital deficiency as more fully described
      in Note 3. The Company anticipates that additional funding will be necessary
      to
      sustain the Company's operations through the fiscal year ending December
      31,2008. These conditions raise substantial doubt about the Company's ability
      to continue
      as a going concern. Management's plans in regard to these matters are also
      described in Note 3. The consolidated financial statements do not include any
      adjustments that might result from the outcome of this uncertainty.


/s/
              Sherb &
              Co., LLPSherb
                & Co., LLP
              Certified
                Public Accountants


April
      14,
      2008


New
      York,
      NY




F-1




**GPS
                  INDUSTRIES INC. AND SUBSIDIARIES****CONSOLIDATED
                  BALANCE SHEETS**
 **December
                    31,**
                  **2007**
                
                **December
                    31,**
                  **2006****Assets****Current**Cash
                
                $
                1,487,596
                
                $
                2,196,220Accounts
                    receivable
                
                
                1,493,492
                
                
                1,113,452Subscription
                    receivable - preferred "B" shares
                
                
                -
                
                
                5,000,000Inventories
                
                
                2,982,650
                
                
                1,473,545Short-term
                    corporate loan
                
                
                945,745
                
                
                -Prepaid
                    expenses and other current assets
                
                
                459,309
                
                
                388,156Total
                    current assets
                
                
                7,368,792
                
                
                10,171,373**Long-term
                    accounts receivable**
                
                
                223,988
                
                
                273,743**Property
                    and equipment, net**
                
                
                1,446,758
                
                
                108,894**Patents**
                
                
                1,053,741
                
                
                1,265,993**Deferred
                    production costs**
                
                
                413,367
                
                
                -**Deferred
                    implementation costs**
                
                
                28,664
                
                
                116,347**Deferred
                    Acquisition Costs**
                
                
                95,731
                
                
                -**Goodwill**
                
                
                1,359,385
                
                
                -$
                11,990,426
                
                $
                11,936,350**Liabilities
                    and Stockholders' Deficit****Current
                    liabilities**Bank
                    indebtedness
                
                $
                249,833
                
                $
                2,384,319Bank
                    loan
                
                
                37,449
                
                
                1,450Short
                    term deferred revenue
                
                
                847,438
                
                
                427,374Short
                    term loans
                
                
                1,520,000
                
                
                2,636,634Short
                    term loan from related party
                
                
                1,572,165
                
                
                1,572,165Accounts
                    payable and accrued liabilities
                
                
                7,024,684
                
                
                5,690,831Liability
                    associated with Optimal Golf acquisition
                
                
                -
                
                
                2,459,981Promissory
                    notes - related parties
                
                
                -
                
                
                27,72311,251,569
                
                
                15,200,477Liabilities
                    related to discontinued operations(Chapter
                    7 proceedings filed in 2002)Promissory
                    note payable
                
                
                -
                
                
                1,274,757Accounts
                    payable and accrued liabilities
                
                
                -
                
                
                746,491Loans
                    payable to related parties
                
                
                -
                
                
                258,000Capital
                    lease obligations (in default)
                
                
                -
                
                
                29,467Total
                    current liabilities
                
                
                11,251,569
                
                
                17,509,192Deferred
                    revenue
                
                
                1,252,405
                
                
                -Total
                    liabilities
                
                
                12,503,974
                
                
                17,509,192**Stockholders'
                    deficit**Series
                    B Convertible Preferred Shares, $10 par value, 4,000,000authorized,
                    3,124,089 issued and outstanding
                
                
                31,240,890
                
                
                18,740,890Class
                    A common stock, $.001 par value, 1,600,000,000 authorized399,203,369
                    issued and outstanding
                
                
                399,204
                
                
                343,442Accumulated
                    other comprehensive income
                
                
                722,295
                
                
                722,295Additional
                    paid-in capital
                
                
                70,051,589
                
                
                53,455,575Accumulated
                    deficit
                
                
                (102,927,526
                )
                
                (78,835,044
                )Total
                    Stockholder's Deficit
                
                
                (513,548
                )
                
                (5,572,842
                )$
                11,990,426
                
                $
                11,936,350
 
 *See
                  accompanying notes to these consolidated financial
                  statements*
 
 F-2
  **GPS
                    INDUSTRIES INC. AND SUBSIDIARIES**
                  **CONSOLIDATED
                    STATEMENTS OF OPERATIONS**
 
 **For
                    the Twelve Months Ended December 31**
                
                **2007**
                
                **2006****Revenue**
                
                $
                7,266,040
                
                $
                6,575,567**Cost
                    of goods sold**
                
                
                5,239,984
                
                
                3,405,972**Installation
                    costs**
                
                
                1,098,936
                
                
                882,462**Gross
                    profit**
                
                
                927,120
                
                
                2,287,133**Operating
                    Expenses**General
                    and administrative expenses
                
                
                4,812,152
                
                
                4,728,401Depreciation
                    and amortization
                
                
                526,561
                
                
                331,798Sales
                    and marketing
                
                
                4,026,758
                
                
                2,924,234Operations,
                    engineering and research and development
                
                
                3,868,254
                
                
                3,159,54613,233,725
                
                
                11,143,979**Loss
                    Before Other Income (Expense)**
                
                
                (12,306,605
                )
                
                (8,856,846
                )**Other
                    Income (Expense)**Finance
                    costs
                
                
                (94,100
                )
                
                (464,847
                )Interest
                    expense
                
                
                (541,644
                )
                
                (4,324,801
                )Derivative
                    liabilities - decrease in fair value
                
                
                -
                
                
                7,831,868Gain/(Loss)
                    on foreign exchange
                
                
                (618,548
                )
                
                (75,597
                )(Loss)/Gain
                    on extinguishment of debt
                
                
                1,968,414
                
                
                448,459714,122
                
                
                3,415,082**Net
                    Loss Before Deemed Preferred Stock Dividend**
                
                $
                (11,592,483
                )
                $
                (5,441,764
                )Deemed
                    preferred stock dividend
                
                
                (12,500,000
                )
                $
                (11,509,127
                )**Net
                    Loss**
                
                $
                (24,092,483
                )
                $
                (16,950,891
                )**Loss
                    per common share****-
                    basic and diluted**
                
                $
                (0.06
                )
                $
                (0.06
                )**Weighted
                    average number of common shares outstanding -****basic
                    and diluted**
                
                
                385,484,908
                
                
                303,319,213
 
 *See
                    accompanying notes to these consolidated financial
                    statements*
 
 F-3
  **GPS
                      INDUSTRIES INC. AND SUBSIDIARIES**
                    **CONSOLIDATED
                      STATEMENT OF STOCKHOLDERS'
                      DEFICIT**
 **Series
                        A**
                    
                    **Series
                        B**
                    
                    **Class
                        A****Preferred
                        Shares**
                    
                    **Preferred
                        Shares**
                    
                    **Common
                        Stock****Number**
                      **of**
                      **Shares**
                    
                    **Amount**
                    
                    **Number**
                      **of**
                      **Shares**
                    
                    **Amount**
                    
                    **Number**
                      **of**
                      **Shares**
                    
                    **Amount**
                    
                    **Additional
                        Paid-In Capital**
                    
                    **Other
                        Comprehensive Income**
                    
                    **Accumulated
                        Deficit**
                    
                    **Total
                        Stockholders' Deficit****Balance
                        January 1, 2006**
                    
                    
                    375,000
                    
                    $
                    375,000
                    
                    
                    -
                    
                    $
                    -
                    
                    
                    265,405,136
                    
                    $
                    265,405
                    
                    $
                    36,079,184
                    
                    $
                    722,295
                    
                    $
                    (61,884,152
                    )
                    $
                    (24,442,268
                    )Common
                        stock issued for compensation expense
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    5,916,071
                    
                    
                    5,916
                    
                    
                    411,317
                    
                    
                    -
                    
                    
                    -
                    
                    
                    417,233Common
                        stock issued for settlement of debt
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    41,545,508
                    
                    
                    41,545
                    
                    
                    2,742,726
                    
                    
                    -
                    
                    
                    -
                    
                    
                    2,784,271Common
                        stock issued on conversion of debt
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    15,500,000
                    
                    
                    15,500
                    
                    
                    452,363
                    
                    
                    -
                    
                    
                    -
                    
                    
                    467,863Common
                        stock issued for cash
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    5,155,595
                    
                    
                    5,156
                    
                    
                    24,844
                    
                    
                    -
                    
                    
                    -
                    
                    
                    30,000Common
                        stock issued for investment in subsidiary
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (128,981
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    (128,981
                    )Common
                        stock issued for interest
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    4,026,537
                    
                    
                    4,027
                    
                    
                    297,546
                    
                    
                    -
                    
                    
                    -
                    
                    
                    301,573Series
                        A Preferred Shares converted to common stock
                    
                    
                    (375,000
                    )
                    
                    (375,000
                    )
                    
                    -
                    
                    
                    -
                    
                    
                    5,893,038
                    
                    
                    5,893
                    
                    
                    369,107
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Warrants
                        issued for debt financing
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    108,315
                    
                    
                    -
                    
                    
                    -
                    
                    
                    108,315Stock
                        options issued
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    968,425
                    
                    
                    -
                    
                    
                    -
                    
                    
                    968,425Preferred
                        shares issued for cash
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,300,000
                    
                    
                    13,000,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    13,000,000Preferred
                        shares issued for debt
                    
                    
                    -
                    
                    
                    -
                    
                    
                    574,089
                    
                    
                    5,740,890
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    5,740,890**Comprehensive
                        Loss**Net
                        loss
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (16,950,891
                    )
                    
                    (16,950,891
                    )Deferred
                        compensation expense
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    225,263
                    
                    
                    -
                    
                    
                    -
                    
                    
                    225,263Subscriptions
                        receivable
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Deferred
                        financing costs
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    396,340
                    
                    
                    -
                    
                    
                    -
                    
                    
                    396,340Deemed
                        dividend on preferred shares
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    11,509,127
                    
                    
                    -
                    
                    
                    -
                    
                    
                    11,509,127Total
                        Comprehensive Loss
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (4,820,161
                    )**Balance
                        December 31, 2006**
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,874,089
                    
                    
                    18,740,890
                    
                    
                    343,441,885
                    
                    
                    343,442
                    
                    
                    53,455,574
                    
                    
                    722,295
                    
                    
                    (78,835,043
                    )
                    
                    (5,572,842
                    )Common
                        stock issued for compensation expense
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,045,000
                    
                    
                    1,045
                    
                    
                    126,680
                    
                    
                    -
                    
                    
                    -
                    
                    
                    127,725Common
                        stock issued for settlement of debt
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    40,808,955
                    
                    
                    40,809
                    
                    
                    2,706,131
                    
                    
                    -
                    
                    
                    -
                    
                    
                    2,746,940Common
                        stock issued for investment in subsidiary
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    11,000,000
                    
                    
                    11,000
                    
                    
                    994,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,005,000Common
                        stock issued for interest
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    2,907,529
                    
                    
                    2,908
                    
                    
                    302,383
                    
                    
                    -
                    
                    
                    -
                    
                    
                    305,291Stock
                        options issued
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    66,236
                    
                    
                    -
                    
                    
                    -
                    
                    
                    66,236Preferred
                        shares issued for cash
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,150,000
                    
                    
                    11,500,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    11,500,000Preferred
                        shares issued for debt
                    
                    
                    -
                    
                    
                    -
                    
                    
                    100,000
                    
                    
                    1,000,000
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1,000,000**Comprehensive
                        Loss**Net
                        loss
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (24,092,483
                    )
                    
                    (24,092,483
                    )Deferred
                        compensation expense
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    225,264
                    
                    
                    -
                    
                    
                    -
                    
                    
                    225,264Subscriptions
                        receivable
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Deferred
                        financing costs
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    6,696
                    
                    
                    -
                    
                    
                    -
                    
                    
                    6,696Deemed
                        dividend on preferred shares
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    12,168,625
                    
                    
                    -
                    
                    
                    -
                    
                    
                    12,168,625Total
                        Comprehensive Loss
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (11,691,898
                    )**Balance
                        December 31, 2007**
                    
                    
                    -
                    
                    $
                    -
                    
                    
                    3,124,089
                    
                    $
                    31,240,890
                    
                    
                    399,203,369
                    
                    $
                    399,204
                    
                    $
                    70,051,589
                    
                    $
                    722,295
                    
                    $
                    (102,927,526
                    )
                    $
                    (513,548
                    )
 
 *See
                      accompanying notes to these consolidated financial
                      statements*
 
 F-4
  **GPS
                        INDUSTRIES INC. AND SUBSIDIARIES**
                      **CONSOLIDATED
                        STATEMENTS OF CASH FLOWS**
 
 **For
                        the Twelve Months Ended December 31**
                    
                    **2007**
                    
                    **2006****Cash
                        Flow From Operating Activities**Net
                        loss from operations
                    
                    $
                    (11,592,483
                    )
                    $
                    (5,441,764
                    )Adjustments
                        to reconcile net loss tonet
                        cash used in operating activities:Depreciation
                        and amortization
                    
                    
                    526,561
                    
                    
                    331,798Amortization
                        of deferred compensation
                    
                    
                    225,263
                    
                    
                    225,263Warrants
                        issued for debt financing
                    
                    
                    -
                    
                    
                    108,315Loss
                        on extinguishment of debt
                    
                    
                    340,301
                    
                    
                    -Gain
                        on extinguishment of debt
                    
                    
                    (2,308,715
                    )
                    
                    -Expenses
                        paid by issuance of stock
                    
                    
                    128,919
                    
                    
                    417,233Expenses
                        paid by issuance of stock options
                    
                    
                    66,236
                    
                    
                    968,425Interest
                        converted to stock
                    
                    
                    42,791
                    
                    
                    301,573Decrease
                        in fair value of derivative liabilities
                    
                    
                    -
                    
                    
                    (9,460,366
                    )Common
                        stock issued for debt
                    
                    
                    -
                    
                    
                    3,252,134Unrealized
                        foreign exchange losses
                    
                    
                    327,438
                    
                    
                    -Writedown
                        of Inventory
                    
                    
                    166,591
                    
                    
                    -Writedown
                        of fixed assets
                    
                    
                    365,646
                    
                    
                    -Deferred
                        implementation costs
                    
                    
                    87,683
                    
                    
                    11,567Deferred
                        production costs
                    
                    
                    (413,367
                    )
                    
                    -Amortization
                        of finance costs
                    
                    
                    6,696
                    
                    
                    396,340Changes
                        in operating assets and liabilities:Inventories
                    
                    
                    (1,663,758
                    )
                    
                    (372,838
                    )Accounts
                        receivable
                    
                    
                    (235,348
                    )
                    
                    (409,354
                    )Long-term
                        accounts receivable
                    
                    
                    49,755
                    
                    
                    (155,934
                    )Prepaid
                        expenses and deposits
                    
                    
                    (71,153
                    )
                    
                    (187,017
                    )Accounts
                        payable and accrued liabilities
                    
                    
                    678,360
                    
                    
                    922,250Discontinued
                        operations - accounts payable and accrued liabilities
                    
                    
                    -
                    
                    
                    (659,867
                    )Deferred
                        Revenue
                    
                    
                    1,568,450
                    
                    
                    203,388**Net
                        Cash Used In Operating Activities**
                    
                    
                    (11,704,134
                    )
                    
                    (9,548,854
                    )**Cash
                        Flow From Investing Activities**Purchase
                        of property and equipment
                    
                    
                    (1,461,989
                    )
                    
                    (111,091
                    )Investment
                        in Optimal Golf Solutions Inc.
                    
                    
                    (806,652
                    )
                    
                    (634,000
                    )Acquisitions
                        of Subsidiaries, Net of cash acquired
                    
                    
                    (290,186
                    )
                    
                    -Short-term
                        corporate loan
                    
                    
                    (945,745
                    )
                    
                    -Investments
                        in Subsidiaries - Deferred acquisition costs
                    
                    
                    (95,731
                    )
                    
                    -Investment
                        in Patents
                    
                    
                    (44,970
                    )
                    
                    -**Net
                        Cash Flow Used In Investing Activities**
                    
                    
                    (3,645,273
                    )
                    
                    (745,091
                    )**Cash
                        Flow From Financing Activities**Common
                        Stock issued for cash
                    
                    
                    -
                    
                    
                    30,000Preferred
                        Stock issued for cash (Net of costs)
                    
                    
                    11,168,626
                    
                    
                    13,000,000Preferred
                        Stock issued for debt
                    
                    
                    1,000,000
                    
                    
                    5,740,890Subscription
                        receivable - Preferred Stock
                    
                    
                    5,000,000
                    
                    
                    (5,000,000
                    )Proceeds
                        (payments) - loans and bank indebtedness
                    
                    
                    (2,126,210
                    )
                    
                    1,606,248Proceeds
                        of loans
                    
                    
                    1,520,000
                    
                    
                    -Repayments
                        of loans
                    
                    
                    (1,921,633
                    )
                    
                    (3,018,147
                    )**Net
                        Cash Flow Provided By Financing Activities**
                    
                    
                    14,640,783
                    
                    
                    12,358,991**Net
                        (Decrease)/Increase In Cash**
                    
                    
                    (708,624
                    )
                    
                    2,065,046**Cash,
                        Beginning Of Year**
                    
                    
                    2,196,220
                    
                    
                    131,174**Cash,
                        End Of Year**
                    
                    $
                    1,487,596
                    
                    $
                    2,196,220(0)**Supplemental
                        disclosure of cash flow information:**Cash
                        paid for interest
                    
                    $
                    499,261
                    
                    $
                    771,094Cash
                        paid for taxes
                    
                    $
                    21,856
                    
                    $
                    -**Non-Cash
                        Investing And Financing Activities**Common
                        stock issued on conversion of convertible notes
                    
                    $
                    -
                    
                    $
                    467,863Common
                        stock issued to settle debt
                    
                    $
                    1,090,385
                    
                    $
                    621,231Common
                        stock issued in settlement of accounts payable
                    
                    $
                    264,500
                    
                    $
                    2,022,602Common
                        stock issued for investments
                    
                    $
                    2,658,329
                    
                    $
                    128,981Deemed
                        dividends on issuance of preferred stock
                    
                    $
                    12,500,000
                    
                    $
                    11,509,127
 
 *See
                        accompanying notes to these consolidated financial
                        statements*
 
 F-5
 GPS
                industries Inc. and Subsidiaries
 Notes
                to
                Consolidated Financial Statements
 
 For
                the
                years ended December 31, 2007 and 2006
 
 1.
                NATURE
                OF OPERATIONS
 
 GPS
                Industries, Inc. (the “Company” or “GPSI”) was originally incorporated as
                Diversified Marketing Services Ltd. in 1996, subsequently changed
                its name to
                Inforetech Wireless Technology Inc. in 1999 and then GPS Industries,
                Inc in
                2004. GPSI common stock was first publicly traded on the OTC Bulletin
                Board
                trading system in January 2000 as Inforetech Wireless Technology
                and is
                currently trading on the OTC Bulletin Board under the symbol "GPSN."
 
 In
                January 2001, Inforetech Wireless Technology Inc. acquired 100% of
                the
                outstanding capital stock in ProShot Golf, Inc. through a wholly
                owned
                subsidiary, Inforetech Golf Technology 2000 Inc. IGT filed for relief
                under
                Chapter 7 of the U.S. Bankruptcy Court on December 19, 2002 and ProShot
                filed
                for relief under Chapter 7 of the U.S Bankruptcy Court on May 31,
                2002.
 
 In
                October 2007, GPSI acquired 100% of the outstanding capital stock
                of Direct Golf
                Services Inc. and Golf Academies Ltd., now operating as GPSI Europe
                and owns 17%
                of GPSI Asia; our Asian distributor.
 
 On
                January 18, 2008, GPSI’s wholly owned subsidiary GPS IT, LLC acquired the assets
                and assumed certain liabilities of UpLink Corporation.
 
 GPS
                Industries, Inc. is a global technology solutions provider with customizable,
                patent-protected applications in GPS and Wi-Fi software and hardware
                for use
                with golf course operations, residential community developments and
                other
                recreational and industrial applications. With the development of
                the Inforemer
                HDX largely complete, GPSI is transitioning away from a Research
                and Development
                focus; However, GPSI will continue to dedicate resources to new opportunities
                where market potential and economics justify investment. Our primary
                business is
                the development, manufacture and sale of the Inforemer HDX mobile
                display units
                (“MDU”) in both cart mounted and hand held product lines along with the
                related
                infrastructure.
 
 In
                late
                2007, GPSI reorganized its various product offerings and divisions
                to more
                accurately reflect how GPSI manages its internal operations whereby
                Inforemedia,
                Wi Stream and Fire at the Flag are peripheral to the core Inforemer
                product and
                hence the management of these divisions have been collapsed into
                our core
                Inforemer business.
 
 GPSI
                has
                offices in the United States, Canada and United Kingdom in order
                to focus on the
                geographic markets including North America, Europe and the Middle
                East with
                exclusive distributor arrangements covering Asia, South Africa, Australia
                and
                New Zealand.
 
 Corporate
                activities are divided between our Vancouver, Canada and Austin,
                Texas offices
                with Software Development, Research and Development, Manufacturing
                and Finance
                located in Canada and Sales, Repair and Maintenance in Austin,
                Texas.
 
 Restatement
                of Quarterly Consolidated Financial Statements (Unaudited)
 
 As
                a
                result of an in-depth review of certain sales and installation agreements
                and
                course installations that occurred in the first three quarters of
                2007, the
                Company determined that it had incorrectly accounted for the related
                revenues,
                cost of goods sold, course assets, accrued liabilities and deferred
                revenues.
                Therefore, the Company’s management, its Audit Committee and its Board of
                Directors determined that, the Company’s financial statements for the quarters
                ended March 31, 2007, June 30, 2007 and September 30, 2007 initially
                filed with
                the Securities and Exchange Commission (the “SEC”) on May 21, 2007, August 14,
                2007 and November 19, 2007 (the “Original Filings”), should no longer be relied
                upon. The Company’s financial statements presented in this report as at and for
                the period ending December 31, 2007 reflect these restatements. See
                Note 19,
“Selected Quarterly Consolidated Financial Data (unaudited)” to our Consolidated
                Financial Statements for selected unaudited consolidated statement
                of operations
                information for the quarters ended March 31, 2007, June 30, 2007
                and September
                30,2007 as previously reported and as restated.
  F-6
 
 The
                following table summarizes the impact on the quarterly results for
                each period:
 
 2007
                          Restatement of Financial ResultsIncrease
                          (decrease)Condensed
                          statement of operations:
                      
                      Quarter
                          1
                      
                      Quarter
                          2
                      
                      Quarter
                          3
                      
                      2007Revenue
                      
                      $
                      (164,000
                      )
                      $
                      (1,454,000
                      )
                      $
                      61,000
                      
                      $
                      (1,557,000
                      )Expense
                      
                      
                      148,000
                      
                      
                      (1,032,000
                      )
                      
                      24,000
                      
                      
                      (860,000
                      )Operating
                          income
                      
                      $
                      (312,000
                      )
                      $
                      (422,000
                      )
                      $
                      37,000
                      
                      $
                      (697,000
                      )Condensed
                          balance sheets:Assets
                      
                      $
                      -
                      
                      $
                      (217,000
                      )
                      $
                      996,000
                      
                      $
                      779,000Liabilities
                      
                      
                      312,000
                      
                      
                      205,000
                      
                      
                      959,000
                      
                      
                      1,476,000Accumulated
                          deficit
                      
                      
                      (312,000
                      )
                      
                      (422,000
                      )
                      
                      37,000
                      
                      
                      (697,000
                      )
 The
                primary basis for the corrections is as follows:
 
 Quarter
                1
                - to recognize a further performance obligation whereby GPSI had
                sold the HDX
                Inforemer System to the customer, was unable to deliver and instead
                provided the
                HD Inforemer system. This created a further obligation to deliver
                the HDX when
                available. Additionally, the Company failed to recognize expense
                for 1st year
                warranty and service costs on sales during the period.
 
 Quarter
                2
                and 3 - to reverse revenue and cost of sales previously recognized
                during the
                quarter for system sales whereby GPSI has guaranteed the differential
                between
                the customers lease payments to its financier and the amount the
                customer
                receives from golf courses under rental contracts. Cost of sales
                for these sales
                have been set-up on the Company’s balance sheet as assets and are being
                amortized over the life of the golf courses rental contracts. Proceeds
                received
                on these sales have been set-up as deferred revenue on the Company’s balance
                sheet and are being recognized as revenue as the golf courses make
                their rental
                payments.
 
 2.
                ACQUISITIONS
 
 Inforetech
                Golf Technology 2000 Inc,
 
 The
                Company's wholly owned subsidiary, Inforetech Golf Technology 2000
                Inc. (IGT),
                which had participated with the Company in the development of its
                technology,
                filed petition for relief under Chapter 7 of the federal bankruptcy
                laws of the
                United States Bankruptcy Court on December 19, 2002 and ceased operations.
                These
                financial statements reflect the operations of the Company and of
                IGT up until
                the time it ceased operations.
 
 In
                prior
                years all remaining liabilities of IGT were reflected as liabilities
                related to
                discontinued operations. In 2007, resolution of liabilities related
                to IGT are
                reflected as a gain on extinguishment of debt - discontinued
                operations.
 
 ProShot
                Golf, Inc.
 
 The
                Company acquired ProShot Golf Inc., ("ProShot") on January 12, 2001.
                In prior
                years, all remaining unresolved liabilities of ProShot were reflected
                as
                liabilities related to discontinued operations. In 2007, resolution
                of
                liabilities related to IGT are reflected as a gain (loss) on extinguishment
                of
                debt - discontinued operations.
  Direct
                Golf Services Limited
 
 Effective
                October 18, 2007, the Company purchased 100% of the outstanding shares
                of
                capital stock of Direct Golf Services Limited (“DGS”). The results of DGS
                operations have been included in the consolidated financial statements
                since
                that date. DGS is a registered company in England and Wales whose
                principal
                activity is to be that of corporate golf day organization which included
                the
                operation of a hole-in one contest similar to GPSI’s Fire At The Flag (TM)
                product. As a result of the acquisition, GPSI expects to build the
                Fire At The
                Flag (TM) product into the leading hole-in one contest throughout
                Europe.
 
 The
                aggregate purchase price was $800,000 payable $200,000 in cash and
                6,000,000
                restricted shares of the Company’s Common Stock. The value of the 6,000,000
                restricted shares issued was determined based on the average market
                price of
                GPSI’s common stock over the 2-day period before and after the stock was
                issued.
  F-7
 
 The
                following table summarizes the estimated fair values of the assets
                acquired and
                liabilities assumed at the date of acquisition.
 
 Cash
                      
                      $
                      29,734Goodwill
                      
                      
                      678,675Total
                          assets acquired
                      
                      $
                      708,409Current
                          liabilities
                      
                      $
                      (28,409
                      )Total
                          liabilities assumed
                      
                      
                      (28,409
                      )Net
                          assets acquired
                      
                      
                      680,000Less:Value
                          of restricted shares issued
                      
                      
                      (480,000
                      )Cash
                          of DGS
                      
                      
                      (29,734
                      )Cash
                          paid net of cash acquired
                      
                      $
                      170,266
 
 Pro
                forma
                information has not been presented showing the effect of a January
                1, 2007
                acquisition on the current year results as the effect is not material.
 
 Golf
                Academies Limited
 
 Effective
                October 18, 2007, the Company purchased 100% of the outstanding shares
                of
                capital stock of Golf Academies Limited (“GAL”). The results of GAL’s operations
                have been included in the consolidated financial statements since
                that date. GAL
                is a registered company in England and Wales whose principal activity
                is sales
                and rental of golf equipment specifically golf distance measuring
                devices using
                GPS technology. As a result of the acquisition, GPSI expects to significantly
                increase sales of the Company’s cart mounted GPS golf distance measuring product
                throughout Europe.
 
 The
                aggregate purchase price was $500,000 payable in 5,000,000 restricted
                shares of
                the Company’s Common Stock. The value of the 5,000,000 restricted shares issued
                was determined based on the average market price of GPSI’s common stock over the
                2-day period before and after the stock was issued.
 
 The
                following table summarizes the estimated fair values of the assets
                acquired and
                liabilities assumed at the date of acquisition.
 
 Cash
                      
                      $
                      6,684Accounts
                          receivable
                      
                      
                      153,643Inventory
                      
                      
                      11,938Fixed
                          assets
                      
                      
                      511,260Goodwill
                      
                      
                      680,711Total
                          assets acquired
                      
                      $
                      1,364,236Current
                          liabilities
                      
                      $
                      (342,625
                      )Long-term
                          debt
                      
                      
                      (370,006
                      )Total
                          liabilities assumed
                      
                      
                      (712,631
                      )Net
                          assets acquired
                      
                      
                      651,605Less:Value
                          of restricted shares issued
                      
                      
                      (525,000
                      )Cash
                          of GAL
                      
                      
                      (6,684
                      )Cash
                          paid net of cash acquired
                      
                      $
                      119,921
  F-8
  The
                following pro forma condensed combined Statements of Income and notes
                thereto,
                assume the Acquisition occurred at the beginning of the periods presented
                except
                for the application of FASB Statement 141. These condensed financial
                statements
                should be read in conjunction with the consolidated financial statements
                of GPSI
                for the 12 months ended December 31, 2007 and the year ended December
                31, 2006.
 
 The
                following pro forma financial information is presented for illustrative
                purposes
                only and is not necessarily indicative of:
 
 i.
                      The
                          results of operations that would have occurred had the
                          acquisition taken
                          place on the dates indicated or,ii.
                      The
                          future operations of the combined
                          business.
 
 The
                following information should be relied on only for the limited purpose
                of
                presenting what the financial results of operations of the combined
                businesses
                might have looked like had the Acquisition taken place at an earlier
                date.
 
 Golf
                          Academies
                      
                      Pro
                          Forma
                      
                      
                      
                      Pro
                          FormaGPSI
                      
                      Limited
                      
                      Combined
                      
                      
                      
                      CombinedFor
                          the 12 Month Period Ended,
                      
                      2007
                      
                      2007
                      
                      Adjustments
                      
                      
                      
                      2007(Audited)
                      
                      (Unaudited)
                      
                      (Unaudited)
                      
                      
                      
                      (Unaudited)Revenue
                      
                      $
                      7,199,407
                      
                      $
                      528,571
                      
                      $
                      (133,874
                      )
                      
                      (a)
                      
                      $
                      7,594,104Cost
                          of goods sold
                      
                      
                      6,253,685
                      
                      
                      252,117
                      
                      
                      (133,874
                      )
                      
                      (a)
                      
                      
                      6,371,928Gross
                          profit
                      
                      $
                      945,723
                      
                      $
                      276,454
                      
                      $
                      -
                      
                      
                      
                      
                      $
                      1,222,176Operating
                          ExpenseGeneral
                          and administrative
                      
                      
                      3,468,273
                      
                      
                      531,280
                      
                      
                      
                      
                      
                      
                      
                      
                      3,999,553Sales
                          and marketing
                      
                      
                      4,026,758
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      4,026,758Operations
                          and engineering
                      
                      
                      3,868,254
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      3,868,254Depreciation
                          and amortization
                      
                      
                      278,688
                      
                      
                      122,837
                      
                      
                      102,252
                      
                      
                      (b)
                      
                      
                      503,777Total
                          Operating Expense
                      
                      $
                      11,641,973
                      
                      $
                      654,117
                      
                      $
                      102,252
                      
                      
                      
                      
                      $
                      12,398,342Operating
                          Loss
                      
                      $
                      (10,696,251
                      )
                      $
                      (377,663
                      )
                      $
                      (102,252
                      )
                      
                      
                      
                      $
                      (11,176,166
                      )
 
 
 Golf
                          Academies
                      
                      Pro
                          Forma
                      
                      
                      
                      ProformaGPSI
                      
                      Limited
                      
                      Combined
                      
                      
                      
                      CombinedFor
                          the 12 Month Period Ended,
                      
                      2006
                      
                      2006
                      
                      Adjustments
                      
                      
                      
                      2006(Audited)
                      
                      (Unaudited)
                      
                      (Unaudited)
                      
                      
                      
                      (Unaudited)Revenue
                      
                      $
                      6,575,567
                      
                      $
                      661,446
                      
                      $
                      (567,941
                      )
                      
                      (a)
                      
                      $
                      6,669,072Cost
                          of goods sold
                      
                      
                      4,288,434
                      
                      
                      134,915
                      
                      
                      (473,193
                      )
                      
                      (a)
                      
                      
                      3,950,156Gross
                          profit
                      
                      $
                      2,287,133
                      
                      $
                      526,531
                      
                      $
                      (94,748
                      )
                      
                      
                      
                      $
                      2,718,916Operating
                          ExpenseGeneral
                          and administrative
                      
                      
                      4,728,401
                      
                      
                      221,684
                      
                      
                      
                      
                      
                      
                      
                      
                      4,950,085Sales
                          and marketing
                      
                      
                      2,924,234
                      
                      
                      
                      
                      
                      (94,748
                      )
                      
                      (a)
                      
                      
                      2,829,486Operations
                          and engineering
                      
                      
                      3,159,546
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      3,159,546Depreciation
                          and amortization
                      
                      
                      331,798
                      
                      
                      111,212
                      
                      
                      102,252
                      
                      
                      (b)
                      
                      
                      545,262Total
                          Operating Expense
                      
                      $
                      11,143,979
                      
                      $
                      332,897
                      
                      $
                      7,504
                      
                      
                      
                      
                      $
                      11,484,380Operating
                          Loss
                      
                      $
                      (8,856,846
                      )
                      $
                      193,634
                      
                      $
                      (102,252
                      )
                      
                      
                      
                      $
                      (8,765,464
                      )
 
 (a)
                      Elimination
                          of inter-company revenues and
                          expenses
 
 (b)
                      Amortization
                          of the estimated amount of value ascribed to fixed assets.
                          For this
                          purpose, it was assumed that approximately $511,260 would
                          be allocated
                          under FASB Statement 141 to such assets. It was further
                          estimated that the
                          useful life of these acquired assets would approximate
                          5 years. As such,
                          for the purpose of the pro forma presentation, we estimated
                          amortization
                          expense of $102,252 for both the twelve months ended December
                          31, 2007 and
                          December 31, 2006.
 
 F-9
  Optimal
                Golf Solutions, Inc.
 
 On
                November 19, 2004 the Company acquired 100% of the common shares
                of Optimal Golf
                Solutions, Inc. ("Optimal"), a Texas corporation for a total of $5,250,000
                plus
                interest of 4.75% on the principal balance outstanding payable by
                a combination
                of cash and stock.
 
 In
                January 2007 the Company paid $806,852 cash and issued 30,392,082
                shares to
                satisfy the remaining liability for the purchase. Full satisfaction
                of this
                liability will depend on the Optimal Shareholders receiving sufficient
                funds
                from the sale of the issued shares to pay down the remaining liability
                in full.
                Assuming that the remaining shares are sold at the market price of
                the Company's
                stock at December 31, 2007, the remaining liability would be satisfied
                in full
                from the sale of the shares issued for the second stock payment.
                However should the
                price
                of the Company's stock fall below the per share price of $0.054 necessary
                to
                satisfy the liability the Company could be required to issue further
                shares or
                pay the shortfall in cash.
 
 Optimal
                was primarily engaged in the business of holding patents relating
                to GPS
                technology for the golf industry. Optimal held an important U.S.
                patent no.
                5,364,093 (the “093 Patent”) which was issued on November 15, 1994 for a Golf
                Distance Measuring System and Method. They also owned U.S. Patent
                No. 5,751,244
                which was for the Method and Apparatus for Calibration of a GPS Receiver.
                Optimal had also made a Canadian patent application no 2,134,737
                entitled Method
                and Apparatus for Message Display on a Golf Course. The 093 Patent
                has been
                licensed to six companies,
                of which two currently pay annual licensing fees. All license payments
                received
                were required to be forwarded to Great White Shark Enterprises until
                their loan
                in the amount of $3,000,000, plus interest owing of 10% per annum,
                was fully
                repaid. This loan was converted to Series B Convertible Preferred
                Shares on
                December 29, 2006. Great White Shark is entitled to 20% of all patent
                license
                payments received through December 31, 2008, at which time their
                share of these fees will be increased to 40% for the remaining life
                of the
                patents. The Company has accrued this liability to December 31, 2007.
                The
                Company expects to license the 093 Patent on a non-exclusive basis
                to other GPS
                based golf system providers.
  3.
                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 December 31, 2007. The successful commercialization of the Company's technology
                is dependent on the Company's ability to successfully finance its
                cash
                requirements through a combination of equity financings and payments
                from
                potential strategic partners. The Company's independent registered
                public
                accounting firm, in their report on the consolidated financial statements
                as of
                and for the year ended December 31, 2007, 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.
 
 4.
                SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 These
                consolidated financial statements have been prepared in accordance
                with
                generally accepted accounting principles in the United States. The
                significant
                accounting policies used in the preparation of these financial statements
                are
                summarized below.
 
 F-10


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
        collectability is probable. When other significant obligations remain after
        products are delivered, associated revenue is recognized
        only after such obligations are fulfilled.
 
 System
        sales are derived from the sales of the Company’s product lines directly to
        end-user customers and third-party equipment lessors. Recurring revenues
        consist
        of (i) transactions which are recognized ratably over the end-user contract
        term
        from equipment sales to third parties that have a recourse component to the
        Company (as described below), (ii) revenues realized from the rental of Company
        owned equipment through either fixed rental payments or actual usage (iii)
        advertising revenues and (iv) service revenues. Major projects revenues consist
        of transactions involving long-term contracts. The company recognizes revenue
        on
        long-term contracts using the percentage of completion method and measures
        the
        extent of work accomplished by performance of critical project milestones.
 
 Rental
        income arises from the leasing of the Company’s golf equipment to customers.
        Lease terms are generally 60 months and are operating leases. Depreciation
        expense for assets subject to these operating leases is provided primarily
        on
        the straight-line method over the term of the lease in amounts necessary
        to
        reduce the carrying amount to its estimated residual value.
 
 For
        certain long-term equipment lease contracts, the Company utilizes third-party
        financing entities to which the Company sells the equipment for a purchase
        price. The Company evaluates the rights of the financing entity in these
        transactions to determine the proper revenue recognition treatment. For
        instances where the Company has guaranteed the lease rental payments in the
        event of customer default, revenue is recognized ratably over the contract
        term.
 
 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 labor, travel and accommodation expenses, are recorded
        as
        Installation Costs. The cost of developing the equipment and the software
        installed in the equipment on the customer's site is recorded as an operating
        expense in the category "Operations, Engineering, Research and Development",
        and
        all such costs are expensed as they are incurred. Production expenses
        incurred prior to the commercial introduction of products are capitalized
        as
        "Deferred Production Costs" and amortized over the useful economic life of
        the
        product.
 
 Impairment
        of Long-Lived Assets
 
 The
        Company's long-lived assets consist of patents, property and equipment. In
        assessing the impairment of patents, property and equipment, the Company
        makes
        assumptions regarding the estimated future cash flows and other factors to
        determine the fair value of the respective assets. The Company recorded an
        impairment charge for property and equipment at December 31, 2007 of $365,646.
 
 Consolidation
 
 The
        consolidated financial statements include the operations of GPS Industries
        Inc.
        (formerly Inforetech Wireless Technology, Inc.) and its wholly-owned
        subsidiaries (the "Company"), including Optimal Golf Solutions, Inc., GPSI
        Europe (formerly Golf Academies Limited and Direct Golf Services Limited).
        All
        significant intercompany transactions and balances have been eliminated in
        consolidation.
  Loss
        Per
        Share
 
 Basic
        loss per share is based on net loss divided by the weighted average common
        shares outstanding or deemed to be outstanding during the period. Diluted
        loss
        per share assumes exercise of in-the-money stock options and warrants
        outstanding into common stock at the beginning of the year or date of issuance,
        unless they are anti-dilutive. A total of 92,906,910 potential shares were
        excluded from the fully diluted calculation as their effect would be
        anti-dilutive.




F-11




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 affect would have been anti-dilutive. Accordingly, basic and
      diluted loss per common share is the same for all periods
      presented.





Use
      of
      Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and 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.





Financial
      Instruments





The
      fair
      value of financial instruments approximates their carrying value except as
      otherwise disclosed in the financial statements.





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 operating in foreign countries are translated
      into U.S. dollars using the exchange rate in effect at the balance sheet date
      or
      historical rate, as applicable. Results of operations are translated using
      the
      average exchange rates prevailing throughout the year. Both the effects of
      exchange rate fluctuations on translating foreign currency assets and
      liabilities into U.S. dollars and gains and losses resulting from
      foreign


currency
      transactions are included in operations.





Allowance
      for Doubtful Accounts





The
      allowance for doubtful accounts is based on our assessment of the collectability
      of specific customer accounts and the aging of the accounts receivable. If
      there
      is a deterioration of a major customer's credit worthiness or actual defaults
      are higher than our historical experience, our estimates of the recoverability
      of amounts due us could be adversely affected. As of December 31, 2007 the
      allowance for doubtful accounts was $97,439.





Property
      and Equipment





Property
      and equipment are recorded at cost. Depreciation is provided using the
      straight-line method over the following estimated useful lives:





Office
      equipment and furnishings 3-5 years


Computer
      Software 3 years


Leasehold
      improvements Lease term


Tooling
      3
      years


Course
      assets 3-5 years


Patents
      Patent life




F-12







Cash
      and
      Cash Equivalents





Cash
      and
      cash equivalents include all highly liquid investments with maturities of three
      months or less when purchased.





Concentration
      of Credit Risks





The
      Company is subject to concentrations of credit risk primarily from cash and
      cash
      equivalents.





The
      Company's cash and cash equivalents accounts are held at financial institutions
      and are insured by the Federal Deposit Insurance Corporation ("FDIC") up to
      $100,000. During the year ended December 31, 2007, the Company has reached
      bank
      balances exceeding the FDIC insurance limit. To reduce its risk associated
      with
      the failure of such financial institutions, the Company’s accounts are held at
      financial institutions with the highest credit ratings.





Inventories





Inventories
      are stated at the lower of cost or market, determined on an average cost basis,
      and consist of raw material parts, work in process and finished products ready
      to ship to customers.





Shipping
      and handling costs





The
      Company accounts for shipping and handling costs as a component of "Cost of
      Sales".





Stock
      Based Compensation





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





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





The
      Company expenses stock options and warrants under the provisions of Statement
      of
      Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment" (SFAS
      123(R)). Stock-based compensation represents the cost related to stock-based
      awards granted to employees and others. The Company measures stock-based
      compensation cost at grant date, based on the estimated fair value of the award,
      and recognizes the cost as expense on a straight-line basis (net


of
      estimated forfeitures) over the requisite service period. The Company estimates
      the fair value of stock options using a Black-Scholes valuation model. The
      expense is recorded in the Consolidated Statements of Operations.




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





Because
      the Company's stock options have characteristics significantly different from
      those of traded options, and because changes in the subjective input assumptions
      can materially affect the fair value estimate, in management's opinion, the
      existing models may not provide a reliable single measure of the fair value
      of
      its stock options.





Income
      Taxes





On
      January 1, 2007 the Company adopted the provisions of Financial Accounting
      Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109,
“Accounting for Income Taxes”. FIN 48 prescribes a recognition threshold and
      measurement attribute for the financial statement recognition and measurement
      of
      a tax position taken or expected to be taken in a tax return. The interpretation
      requires that the Company recognize the impact of a tax position in the
      financial statements if that position is more likely than not being sustained
      on
      audit, based on the technical merits of the position. FIN 48 also provides
      guidance on derecognition, classification, interest and penalties, accounting
      in
      interim periods and disclosure. In accordance with the provisions of FIN 48,
      any
      cumulative effect resulting from the change in accounting principle is to be
      recorded as an adjustment to the opening balance of deficit. The adoption of
      FIN
      48 did not result in material impact on the Company’s financial position or
      results of operations. Should the Company incur any interest and penalties
      related to unrecognized tax benefits, these amounts will be recorded in income
      tax expense.




F-13





The
      Company follows the liability method of accounting for income taxes. Under
      this
      method, deferred tax assets and liabilities are determined based on the
      difference between the financial reporting and tax bases of assets and
      liabilities using enacted tax rates that will be in effect for the year in
      which
      the differences are expected to reverse.





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.





Warranty
      Obligations





The
      Company generally provides the ultimate consumer a warranty with each product
      and accrues warranty expense at the time of the sale based on the Company's
      prior claims history.





Concentrations





The
      Company relies a small number of vendors to provide the goods and service
      required for the manufacturing of our product. Certain of these goods are
      specifically designed for our product. In some cases, our vendors maintain
      ownership of the manufacturing rights to these products. The Company has
      attempted to mitigate the risks of not owning the manufacturing rights by
      entering into contracts whereby the Company can purchase these rights from
      the
      vendor. However, should the Company be unable to purchase these rights we would
      likely incur significant delays and expenses to be able continue to manufacture
      our product.





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
      December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business
      Combinations. This Statement replaces FASB Statement No. 141, Business
      Combinations. This Statement retains the fundamental requirements in
      Statement 141 that the acquisition method of accounting (which Statement
      141 called the purchase method) be used for all business combinations and for
      an
      acquirer to be identified for each business combination. This Statement defines
      the acquirer as the entity that obtains control of one or more businesses in
      the
      business combination and establishes the acquisition date as the date that
      the
      acquirer achieves control. This Statement’s scope is broader than that of
      Statement 141, which applied only to business combinations in which control
      was
      obtained by transferring consideration. By applying the same method of
      accounting—the acquisition method—to all transactions and other events in which
      one entity obtains control over one or more other businesses, this Statement
      improves the comparability of the information about business combinations
      provided in financial reports. This
      Statement requires an acquirer to recognize the assets acquired, the liabilities
      assumed, and any non-controlling interest in the acquiree at the acquisition
      date, measured at their fair values as of that date, with limited exceptions
      specified in the Statement. That replaces Statement 141’s cost-allocation
      process, which required the cost of an acquisition to be allocated to the
      individual assets acquired and liabilities assumed based on their estimated
      fair
      values. This Statement applies to all transactions or other events in which
      an
      entity (the acquirer) obtains control of one or more businesses (the acquirer),
      including those sometimes referred to as “true mergers” or “mergers of equals”
and combinations achieved without the transfer of consideration, for example,
      by
      contract alone or through the lapse of minority veto rights. This Statement
      applies to all business entities, including mutual entities that previously
      used
      the pooling-of-interests method of accounting for some business combinations.
      It
      does not apply to: (a) The formation of a joint venture, (b) The acquisition
      of
      an asset or a group of assets that does not constitute a business, (c) A
      combination between entities or businesses under common control, (d) A
      combination between not-for-profit organizations or the acquisition of a
      for-profit business by a not-for-profit organization. This Statement applies
      prospectively to business combinations for which the acquisition date is on
      or
      after the beginning of the first annual reporting period beginning on or after
      December 15, 2008. An entity may not apply it before that date. We are currently
      evaluating the potential impact of Statement 141 (revised 2007) on our financial
      statements.




F-14





In
      December 2007, the FASB issued FASB Statement No. 160 - Noncontrolling Interests
      in Consolidated Financial Statements - an amendment of ARB No. 51. This
      Statement applies to all entities that prepare consolidated financial
      statements, except not-for-profit organizations, but will affect only those
      entities that have an outstanding noncontrolling interest in one or more
      subsidiaries or that deconsolidate a subsidiary. This Statement amends ARB
      51 to
      establish accounting and reporting standards for the noncontrolling interest
      in
      a subsidiary and for the deconsolidation of a subsidiary. It clarifies that
      a
      noncontrolling interest in a subsidiary is an ownership interest in the
      consolidated entity that should be reported as equity in the consolidated
      financial statements. Before this Statement was issued, limited guidance existed
      for reporting noncontrolling interests. As a result, considerable diversity
      in
      practice existed. So-called minority interests were reported in the consolidated
      statement of financial position as liabilities or in the mezzanine section
      between liabilities and equity. This Statement improves comparability by
      eliminating that diversity.A noncontrolling interest, sometimes called a
      minority interest, is the portion of equity in a subsidiary not attributable,
      directly or indirectly, to a parent. The objective of this Statement is to
      improve the relevance, comparability, and transparency of the financial
      information that a reporting entity provides in its consolidated financial
      statements by establishing accounting and reporting standards that require:
      (a)
      The ownership interests in subsidiaries held by parties other than the parent
      be
      clearly identified, labeled, and presented in the consolidated statement of
      financial position within equity, but separate from the parent’s equity, (b) The
      amount of consolidated net income attributable to the parent and to the
      noncontrolling interest be clearly identified and presented on the face of
      the
      consolidated statement of income, (c) Changes in a parent’s ownership interest
      while the parent retains its controlling financial interest in its subsidiary
      be
      accounted for consistently. A parent’s ownership interest in a subsidiary
      changes if the parent purchases additional ownership interests in its subsidiary
      or if the parent sells some of its ownership interests in its subsidiary. It
      also changes if the subsidiary reacquires some of its ownership interests or
      the
      subsidiary issues additional ownership interests. All of those transactions
      are
      economically similar, and this Statement requires that they be accounted for
      similarly, as equity transactions, (d) When a subsidiary is deconsolidated,
      any
      retained noncontrolling equity investment in the former subsidiary be initially
      measured at fair value. The gain or loss on the deconsolidation of the
      subsidiary is measured using the fair value of any noncontrolling equity
      investment rather than the carrying amount of that retained investment, (e)
      Entities provide sufficient disclosures that clearly identify and distinguish
      between the interests of the parent and the interests of the noncontrolling
      owners. This Statement is effective for fiscal years, and interim periods within
      those fiscal years, beginning on or after December 15, 2008 (that is, January
      1,
      2009, for entities with calendar year-ends). Earlier adoption is prohibited.
      This Statement shall be applied prospectively as of the beginning of the fiscal
      year in which this Statement is initially applied, except for the presentation
      and disclosure requirements. The presentation and disclosure requirements shall
      be applied retrospectively for all periods presented. We are currently
      evaluating the potential impact of Statement 141 (revised 2007) on our financial
      statements.




In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (Statement
      157), which addresses how companies should measure fair value when they
      are
      required to use a fair value measure for recognition or disclosure purposes
      under generally accepted accounting principles. Statement 157 defines fair
      value, establishes a framework for measuring fair value in generally accepted
      accounting principles and expands disclosures about fair value measurements.
      Statement 157 is effective for financial statements issued for fiscal
      years beginning after November 15, 2007 and should be applied prospectively,
      except in the case of a limited number of financial instruments that
      require retrospective application. We are currently evaluating the potential
      impact of Statement 157 on our financial statements.





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





5.
      SHORT-TERM CORPORATE LOAN





During
      2007 the Company entered into an Asset Purchase Agreement, dated August 31,
      2007, with Uplink Corporation (“UpLink”), a Texas corporation that produces and
      sells global positioning satellite distance measuring systems, associated
      software, software development and service and maintenance contracts to golf
      course owners and operators. Under terms of this agreement, for the year-ended
      December 31, 2007 the Company has made loans in the amount of $946,000 to cover
      Uplink’s operating cash flow shortfalls. These loans have been recorded as
      short-term corporate loans and classified as current assets in the Company’s
      balance sheet as at December 31, 2007. Subsequently, on January 18, 2008, the
      Asset Purchase Agreement closed and the intercompany transactions in 2008 were
      eliminated.





F-15




5.
      PROPERTY AND EQUIPMENT





At
      December 31, 2007 and 2006 property and equipment consisted of the
      following:





2007
            
            2006Office
                Equipment
            
            $
            534,244
            
            $
            409,293Course
                Assets
            
            
            1,350,879
            
            
            -Computer
                Software
            
            
            155,949
            
            
            77,708Leasehold
                Improvements
            
            
            179,751
            
            
            127,333Tooling
            
            
            31,257
            
            
            30,958$
            2,252,080
            
            $
            645,292Less:
                Accumulated Depreciation
            
            
            (805,322
            )
            
            (536,398
            )$
            1,446,758
            
            $
            108,894




Course
      assets represent all costs associated directly with the sale of the assets
      to a
      third-party financing entity where the Company has guaranteed the end users
      lease rental payment to that entity. These costs are amortized pro-ratably
      over
      the life of the third-party lease. Costs capitalized are the associated
      manufactured equipment and installation expenses. Amortization related to course
      assets for the years ended December 31, 2007 and 2006 was $131,055 and $nil
      respectively.




Depreciation
      expense for the years ended December 31,
      2007 and 2006 was $268,924 and $80,807 respectively.





6.
      PATENTS





In
      June
      2004, the Company acquired the patent for installation of GPS golf systems
      in
      eleven European
      countries as well as Japan and Australia, referred to as the "Pinranger" patent.
      These patents are being amortized over approximately 8.5 years, the expected
      future life of these patents. In addition to the above acquisition costs, the
      Company has capitalized related legal and acquisition fees of
      $12,400.





The
      following is a reconciliation of all patents owned as of December 31,
      2007:





2007
            
            2006Patents
            
            $
            1,856,970
            
            $
            1,812,400Less:
                Accumulated Depreciation
            
            
            (803,229
            )
            
            (546,407
            )$
            1,053,741
            
            $
            1,265,993




Future
      amortization of patents is expected to be as follows:





Year
                Ended December 31,2008
            
            $
            258,9602009
            
            
            258,9602010
            
            
            258,9602011
            
            
            232,1862012
            
            
            44,676$
            1,053,741




7.
      DEBT





The
      Company and its subsidiaries have significant debt liabilities. The following
      table is a summary of debt at December 31, 2007.





2007
            
            2006Bank
                Indebtedness (a)
            
            $
            249,833
            
            $
            2,384,319Bank
                Loan (b)
            
            
            37,449
            
            
            1,450Short
                term loans (c)
            
            
            3,092,165
            
            
            4,208,799Liability
                for Optimal Golf acquisition (d)
            
            
            -
            
            
            2,459,981Note
                payable - related parties (e)
            
            
            -
            
            
            27,723Promissory
                notes (f)
            
            
            -
            
            
            1,274,757Loan
                to related party (g)
            
            
            -
            
            
            258,000Total
                Debt
            
            $
            3,379,447
            
            $
            10,615,029





F-16




a)
      Bank
      Indebtedness





As
      of
      December 31, 2007, the Company had borrowed $183,125 under a line of credit.
      The
      line of credit bears interest at prime plus 0.5%, is repayable in full on demand
      and is secured by a one year standby bank letter of credit for $1,500,000 that
      was provided by a third party, Hansen
      Inc. This standby letter of credit from Hansen Inc. has been renewed a number
      of
      times and was currently renewed to March 31, 2008. 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. At March 31, 2008 the standby bank letter
      of credit from Hansen Inc. expired at which point the line of credit was
      removed.





The
      Company’s 100% wholly owned subsidiary, GPSI Europe (formerly Golf Academies
      Limited)has an overdraft facility with their bank comprised of both a Sterling
      Overdraft, a Euro Overdraft and a USD Overdraft with a combined limit of
£35,000  (an
      amount equivalent to $50,000 USD at December 31, 2007). As of December 31,
      2007,
      GPSI Europe had drawn an amount equivalent to $66,707 USD on this facility.
      The
      bank may at anytime demand repayment as such amounts owing have been classified
      as current liabilities. Interest is to be charged at the rate of 3.75% per
      annum
      over the bank’s Base Rate as published from time to time. The facility is
      secured by a debenture comprising fixed and floating charges over all the assets
      and undertaking of GPSI Europe and personal guarantee limited to
£15,000  (an
      amount equivalent to $30,000 USD at December 31, 2007) given by GPSI Europe’s
      Directors.





(b)
      As
      part of the Company’s acquisition of Golf Academies (now GPSI Europe), the
      Company assumed current liabilities which included a Small Firms Loan. Loan
      is a
      four year fixed term facility with principal balance of £18,750  (an
      amount equivalent to $37,500 USD at December 31, 2007) outstanding at December
      31, 2007. The principal and interest under the term loan is payable in monthly
      installments of £3,125 (an amount equivalent to $6,200 USD at December 31,
      2007). Interest is to be charged at the rate of 2.5% per annum over the lender’s
      base rate. The facility is secured by a debenture including legal mortgage
      over
      specified property; fixed equitable charge over all present and future freehold
      and leasehold property; first fixed charge over among other things books and
      debts, chattels, goodwill and uncalled capital both present and future; and
      first floating charge over all the assets and undertaking both present and
      future of GPSI Europe.





(c)
      Short-Term Loans





As
      of
      December 31, 2007 the Company has $3,092,165 owing on short term notes. These
      amounts are repayable on demand and bear interest at rates varying from 8%
      to
      18%. The largest of these, amounting to $1,572,165, is from a director and
      shareholder.





(d)
      Liability Associated with Acquisition of Optimal Golf Solutions,
      Inc.





In
      January 2007 the Company paid $806,852 cash and issued 30,392,082 shares to
      satisfy the remaining liability for the purchase. Full satisfaction of this
      liability will depend on the Optimal Shareholders receiving sufficient funds
      from the sale of the issued shares to pay down the remaining liability in full.
      Assuming that the remaining shares are sold at the market price of the Company's
      stock at December 31, 2007, the remaining liability would be satisfied in full
      from the sale of the shares issued for the second stock payment. However should the
      price
      of the Company's stock fall below the per share price of $0.054 necessary to
      satisfy the liability the Company could be required to issue further shares
      or
      pay the shortfall in cash.





(e)
      At
      December 31, 2007 all promissory notes payable to an officer of the Company
      were
      settled.




F-17





(f)
      At
      December 31, 2007 the balance of this promissory note for $1,274,757, which
      was
      entered into by the Company's discontinued, ProShot subsidiary in January 2001
      has been fully amortized to Gain on Extinguishment of Debt.





(g)
      At
      December 31, 2007, the balance of the promissory note dated December 11, 1998
      in
      the amount of $258,000 due to a party related to ProShot, a discontinued
      operation, has been fully amortized to Gain on Extinguishment of Debt.





8.
      DEFERRED REVENUE





Deferred
      revenue consists of the following:





2007
            
            2006Deposits
                Received from Customers
            
            $
            372,702
            
            $
            406,974Deferred
                Maintenance Revenue
            
            
            341,232
            
            
            20,400Deferred
                Upgrade Revenue
            
            
            244,900Deferred
                Revenue from
            
            
            59,295Third
                Party Lease Rental Payment Guarantees
            
            
            1,081,714Total
                Deferred Revenue
            
            $
            2,099,843
            
            $
            427,374Less:
                Current Portion
            
            
            (847,438
            )
            
            (427,374
            )Total
                Long-term Deferred Revenue
            
            $
            1,252,405
            
            $
            -





During
      2007 the Company entered into certain System Sales agreements whereby the
      Company guaranteed the end users lease rental payment to a third-party financing
      company. The Company is recognizing revenue ratably over the term of the
      contracts as the end users make their rental lease payments.





9.
      RELATED PARTY TRANSACTIONS





The
      Company has engaged in transactions with persons who were directors, officers
      or
      affiliates at the time of the transaction, and persons known by us to be the
      beneficial owners of 5% or more of our common stock since January 1, 2007.
      These
      transactions involve the provision of loans and promissory notes, debt financing
      and services provided to the Company by such related parties and services
      provided by the Company to such related parties.





As
      of
      December 31, 2007, we owed approximately $2,263,382 to Doug Wood and the Wood
      Family Trust. This amount includes $125,773 recorded as interest expense during
      the year. Interest is payable at 8% per annum. This interest was earned on
      loans
      provided to the Company by Mr. Wood and also on a Line of Credit (which expired
      on February 28, 2007) that was partially funded by Mr. Wood. Mr. Wood was the
      Company’s Chief Executive Officer and Chairman of the Board.





Promissory
      notes payable to its officers and directors or companies controlled by its
      officers and directors are unsecured and repayable on demand





On
      November 5, 2007, the Company entered into a contract with Leisurecorp LLC,
      a
      major stockholder of the Company that has the ability to exercise significant
      influence over the Company, to design, supply, deliver and install a Wi-Fi
      network and GPS Management System for a Golf Estates project in Dubai. The
      contract calls for payments from Leisurecorp LLC in excess of $2,000,000 upon
      achievement of specific milestones as defined in the contract. This transaction
      is in the normal course of operations and will be measured at the exchange amount,
      which is the amount of consideration established and agreed to by the related
      parties. For the period ending December 31, 2007, the Company has recognized
      $383,681 in revenue for completion and delivery of the first milestone in the
      contract.





During
      the period the Company completed a project for Leisurecorp LLC. This transaction
      has been measured at its exchange amount. As a result of the transaction,
      $301,000 has been recognized as revenue for the period ended December 31,
      2007.





The
      Company has entered into an International Distributor Agreement with GPSi Asia
      Inc. pursuant to which the Company agreed to sell Inforemer Golf Management
      Systems to GPSi Asia Inc. At the time the agreement was entered into the
      Company's Chief Executive Officer was an immediate family member to a GPSi
      Asia
      Inc. stockholder. Pursuant to this agreement, GPS Industries Inc. received
      17.5%
      of common stock of GPSi Asia Inc. As part of terms of the agreement, the Company
      has agreed to pay certain costs of GPSi Asia by way of common shares should
      they
      reach certain sales milestones. At December 31, 2007 none of these sales
      milestones had been reached. During the year, $694,869 ($295,681 in 2006) has
      been included in revenue for transactions between the Company and GPSi Asia
      Inc.
      These transactions were in the normal course of operations and involved the
      purchase of our Inforemer product for distribution in Asia.




F-18





Sales
      commissions and consulting fees in the amount of $344,677 were paid to
      individuals or companies controlled by immediate family members of the former
      Chief Executive Officer of the Company in the twelve months ended December
      31,
      2007. Sales commissions were paid on the basis of distributor agreements which
      are consistent with distributor agreements the Company has entered into with
      non-related parties. Consulting and Contractor fees were paid for services
      rendered consistent with fees paid to consultants and contractors that are
      not
      related parties. Accounts payable at December 31, 2007 includes $30,523 due
      to
      these parties.





For
      the
      year ended December 31, 2007, the Company has recorded $193,826 in interest
      expense due to Great White Shark Enterprises for purchase order financing
      provided by Great White Shark Enterprises, and for interest on balances owing
      to
      Great White Shark Enterprises. Additionally the Company has recorded $500,000
      in
      sales commissions due to Great White Shark Enterprises, which
      have been charged to Sales and Marketing expense, pursuant to an endorsement
      agreement between the two parties dated April 2003. Great White Shark
      Enterprises is a stockholder of the Company and has appointed a member of the
      Company's Board of Directors. Included in accounts payable and accrued
      liabilities at December 31, 2007 is $1,109,003 due to Great White Shark Enterprises.





10.
      RESTRUCTURING COSTS





During
      the year the company recorded $1,091,011 in restructuring charges for the twelve
      month period ending December 31, 2007 compared to $nil during the same period
      in
      2006. These charges have been included in general and administrative expenses
      in
      the consolidated statement of operations. Restructuring costs included $427,000
      for accrued severance benefits resulting from the downsizing of current
      operations. The Company expects to incur additional charges to income of
      approximately $200,000 during the first quarter of 2008 to complete its
      restructuring plan. Also included in restructuring costs are $664,000 incurred
      related to the Golf IT acquisition. The Company rescinded the “Golf IT’ Asset
      Purchase Agreement and recognized the costs incurred in the period ending
      December 31, 2007.





11.
      GAIN
      ON EXTINGUISHMENT OF DEBT





During
      the year ended December 31, 2007 the Company wrote off debts arising from
      discontinued operations under Chapter 7 relief of the federal bankruptcy laws
      amounting to $2,308,715. This was based upon management's belief that these
      debts will not result in the future transfer of assets by the Company to the
      debt holders.





The
      Company also settled various other trade debts and loans payable in the year
      by
      issue of common stock. These transactions resulted in a net loss on
      extinguishment of debt amounting to $355,927.





12.
      DERIVATIVE LIABILITIES





The
      Company repaid the Secured Convertible Notes which triggered the derivative
      liability in November 2006, including a penalty interest payment of $272,397.
      The repayment of the Notes removed the need to recognize derivative liabilities
      and the balance of the liability at that point was recorded as other
      income.





13.
      STOCKHOLDERS' DEFICIT





On
      December 28, 2006 the Company held a Special Meeting of Shareholders to amend
      the Articles of Incorporation to increase the number of shares of capital stock
      authorized from 550,000,000 shares (500,000,000 shares of common stock and
      50,000,000 shares of preferred stock) to 1,650,000,000 shares (1,600,000,000
      shares of common stock and 50,000,000 shares of preferred
      stock).





Series
      B
      Convertible Preferred Stock Financing





On
      November 13, 2006, we entered into a Securities Purchase Agreement with Great
      White Shark Enterprises, Inc. ("GWSE") and Leisurecorp LLC, pursuant to which
      GPSI agreed, subject to certain closing conditions, to sell for an aggregate
      purchase price of $15,740,890 a total of 1,574,089 shares of newly authorized
      Series B Convertible Preferred Stock (the "Series B Shares") and warrants to
      purchase up to 59,885,186 shares of common stock. The warrants will be exercisable
      for five years, beginning after the closing under the Securities Purchase
      Agreement, at an initial exercise price of $0.122 per share. The 1,574,089
      Series B Preferred shares are convertible into 258,047,377 shares of common
      stock. The purchase price of the foregoing Series B Shares was payable in cash
      and by the cancellation of loans previously made to GPSI by GWSE and Leisurecorp
      LLC. The closing of the sale of the foregoing Series B Shares and warrants
      occurred on December 29, 2006.




F-19





Concurrently
      with the closing of the sale of the Series B Shares to GWSE and Leisurecorp
      LLC,
      Douglas Wood, one of GPSI's directors, converted $3,000,000 of cash loans he
      had
      previously made to the Company for 300,000 Series B Shares and warrants to
      purchase 49,180,328 shares of common stock, and Robert C. Silzer, our former
      Chief Executive Officer and a member of our Board of Directors at the time,
      cancelled $750,000 of obligations owed to him by GPSI in exchange for 12,295,082
      shares of our common stock and warrants to purchase 3,073,770 shares of common
      stock. The warrants issued to Mr. Wood and Mr. Silzer are identical to those
      issued GWSE and
      Leisurecorp LLC (i.e., are exercisable for five years at an initial exercise
      price of $0.122 per share).





In
      May
      2007, the Company sold additional shares of Series B Convertible Preferred
      Stock. In connection
      with the December 2006 purchase of Series B Shares by GWSE and Leisurecorp,
      the
      Company agreed to grant GWSE and Leisurecorp each the right, exercisable until
      the end of April 2007, to increase their investment, or make an additional
      investment in the Series B Shares and warrants on the same terms as the
      securities sold to them on December 29, 2006. GWSE and Leisurecorp timely
      exercised the foregoing option in April 2007 to purchase 1,250,000 Series B
      Shares and warrants to purchase up to 51,229,508 shares of common stock for
      a
      total purchase price of $12,500,000. The closing of the purchase of the
      $12,500,000 additional Series B Shares and warrants was consummated on May
      8,
      2007. Leisurecorp purchased its Series B Shares and warrants by delivering
      a
      $10,000,000 interest-free promissory note (the "Note") that is secured by the
      securities sold to Leisurecorp, and GWSE purchased its Series B Shares and
      warrants in exchange for cash ($1,500,000) and the cancellation of $1,000,000
      of
      outstanding indebtedness the Company owed to GWSE. Leisurecorp was required
      to
      repay the Note as follows: $2,000,000 on or before June 30, 2007; $4,000,000
      on
      or before October 31, 2007; and the remaining $4,000,000 on or before December
      31, 2007. The first payment under the Note of $2,000,000 was received by the
      Company on July 9, 2007, the second payment of $4,000,000 was received by the
      Company on October 9, 2007 and the third payment of $4,000,000 was received
      by
      the Company on December 17, 2007.





During
      the years ended December 31, 2007 and 2006 the Company recorded a Deemed
      Preferred Stock Dividend of $12,500,000 and $11,500,000, respectively. Both
      the
      2007 and 2006 deemed dividends do not represent an actual cash dividend paid
      on
      shares but is the result of the issuance of the Preferred Series B Shares and
      warrants for the cash equity and debt conversion investment that occurred on
      May
      8, 2007 and December 29, 2006 which are convertible at a favorable rate as
      compared to the market price of the stock on the date of issuance. A portion
      of
      the cash received and debt converted has been assigned to the fair market
      valuation of the warrants issued with the Series B Shares. The remaining portion
      is compared to the fair market value of the Series B Shares acquired. The
      difference arising from this comparison, together with the fair market value
      of
      the warrants, has been treated as a deemed dividend issued on the Series B
      Shares.





The
      Series B Shares provide the holders thereof with significant rights, including
      the right to elect three of GPSI's five members of the Board of Directors and
      the right to approve various corporate and business actions of GPSI. At the
      closing, we also entered into a Registration Rights Agreement and a Shareholder
      Agreement with GWSE, Leisurecorp LLC, Robert C. Silzer, Sr. and Douglas
      Wood.





Details
      Of Shares Issued:





In
      2006
      the Company issued the following unregistered securities.





We
      issued
      5,499,405 shares of common stock valued at $374,866 for services rendered.
      We
      issued 416,666 shares of common stock valued at $29,167 in payment of
      commission. We issued 41,545,508 shares of common stock valued at $2,784,271
      in
      settlement of debt. We issued 4,026,537 shares of common stock valued at
      $301,573 in payment of interest. We issued 5,893,038 shares of common stock
      to
      convert $375,000 of Series A Convertible Preferred Shares. We issued 15,500,000 shares
      of
      common stock valued at $467,863 with respect to a $1,860,000 8% convertible
      note
      due September 20, 2008. The resale of these securities was covered by an SB2
      Registration Statement declared effective December 7, 2005. We issued 600,000
      shares of common stock for $30,000 cash on the exercise of an employee stock
      option and 4,555,595 shares of common stock on the exercise of cashless employee
      options. All of the above securities were issued pursuant to an exemption
      from the registration requirements of the Securities Act 1933, as amended,
      pursuant to Section 4(2) thereof.





In
      2007
      we issued the following unregistered securities.





We
      issued
      1,045,000 shares of common stock valued at $127,725 for services rendered.
      We
      issued 10,416,873 shares of common stock valued at $1,093,611 in settlement
      of
      debt. We issued 2,907,530 shares of common stock valued at $305,291 in payment
      of interest and accrued interest. We issued 11,000,000 shares valued at
      $1,005,000 in relation to the acquisition of two other companies. We issued
      30,392,082 shares of common stock valued at $1,653,329 under the terms of a
      contract for the purchase of certain patents during year end 2004. All of the
      above securities were issued pursuant to an exemption from the registration
      requirements of the Securities Act 1933, as amended, pursuant to Section 4(2)
      thereof.




F-20





14.
      STOCK
      PURCHASE WARRANTS





During
      the year ended December 31, 2007, the Company issued 51,229,509 warrants at
      $0.122 associated with the sale of 1,250,000 Series B Preferred Shares and
      various debt conversions. (see Note 12) These warrants have been included in
      the
      calculation of the deemed preferred stock dividend arising on the issuance
      of
      these shares and are accounted for in the deemed preferred stock dividend.
      The
      valuation was based upon a Black-Scholes calculation, assuming a five year
      life,
      a risk free rate of return of 5.00% and a volatility of 159.00%.





During
      the year ended December 31, 2006, the Company issued 310,227,705 warrants at
      $0.122 associated with the sale of 1,300,000 Series B Preferred Shares and
      various debt conversions. (see Note 12) These warrants have been included in
      the
      calculation of the deemed preferred stock dividend arising on the issuance
      of
      these shares and are accounted for in the deemed preferred stock dividend.
      The
      valuation was based upon a Black-Scholes calculation, assuming a five year
      life,
      a risk free rate of return of 4.58% and a volatility of 119.11%.





During
      the year ended December 31, 2006, the Company extended for two years and
      repriced to $0.05 warrants to purchase 2,000,000 shares of common stock which
      had previously been issued for financing services. The Company valued these
      warrants at $75,416, and accounted for this as an operating expense. The
      valuation was based upon a Black-Scholes calculation, assuming a life of two
      years, a risk free rate of return of 4.58% and a volatility of
      119.11%.





A
      reconciliation of warrant activity is as follows:





Number
                of
              Shares
              Issuable
            
            Weighted
              Average
              Exercise
                PriceBalance
                at January 1, 2006
            
            
            29,950,907
            
            $
            0.947Granted
            
            
            80,254,038
            
            
            0.120Exercised
            
            
            -
            
            
            -Expired
            
            
            (5,750,000
            )
            
            4.085Balance
                at December 31, 2006
            
            
            104,454,945
            
            $
            0.139Granted
            
            
            51,229,509
            
            
            0.122Exercised
            
            
            -
            
            
            -Expired
            
            
            (5,637,544
            )
            
            6.684Balance
                at December 31, 2007
            
            
            150,046,910
            
            $
            0.133





The
      following table summarized warrants outstanding and exercisable as of December
      31, 2007:





Exercise
                Price
            
            Number
                of
              shares
              underlying
              Warrants
            
            Weighted-average
              remaining
              contractual
              life
              (in
                Years)
            
            Number
                of
              shares
              exercisable$0.32
                - $0.15
            
            
            15,634,792
            
            
            0.53
            
            
            15,634,792$0.124
                - $0.055
            
            
            134,912,118
            
            
            4.04
            
            
            134,912,118150,546,910
            
            
            3.54
            
            
            150,546,910




15.
      STOCK
      OPTIONS





We
      have
      adopted the 2000 Stock Option Plan (the "Option Plan"). Under the 2000 Stock
      Option Plan we are authorized to issue a total of 10,000,000 shares as either
      incentive stock options within the meaning of Section 422 of the Internal
      Revenue Code of 1986, as amended (the "Code"), or nonqualified stock options
      to
      our officers, directors, employees, consultants and others performing services
      for us. The Option Plan is administered by our Board of Directors (or by our
      Compensation Committee, if the Board elects to delegate these responsibilities).
      The Compensation Committee/Board of Directors designates the optionees, number
      of options, exercise prices, dates of grant, exercise period and other terms
      and
      conditions.




F-21





The
      purchase price to be paid upon exercise of each incentive stock option granted
      pursuant to the Option Plan shall be no less than the fair market value of
      the
      Common Stock on the date the option is granted, or 110% of such fair market
      value in the case of any optionee holding in excess of 10% of the combined
      voting power of all classes of our capital stock as of the date of grant.
      Provided that our Common Stock is publicly traded on an exchange or on an over
      the
      counter market, the fair market value will equal to the closing price of our
      Common Stock on such exchange or market on the date of grant (or on the last
      date preceding such date on which a sale was reported). The purchase price
      and
      method of exercise of each nonqualified option granted to officers and other
      key
      employees shall be determined by the Compensation Committee/Board of Directors.
      The purchase price is payable in full by cash, check, and if approvedby the
      Compensation Committee/Board of Directors, by the surrender of shares of our
      Common Stock having a market value equal to the option price of the shares
      to be
      purchased, or by any other manner of cashless exercises permitted by
      law.





Options
      granted under the Option Plan become exercisable and shall expire on such dates
      as determined by the Compensation Committee/Board of Directors, provided,
      however, that no term may exceed ten years from the date of grant, or five
      years
      from the date of grant in the case of any optionee holding more than 10 percent
      of the combined voting power of all classes of our capital stock as of the
      date
      of grant. After options become exercisable they may be exercised at any time
      or
      from time to time as to any part thereof. The Compensation Committee/Board
      of
      Directors may, at any time after grant of the option and from time to time
      increase the number of shares purchasable in any installment, subject to certain
      limitations.





Options
      granted under the Option Plan expire on such date as the Compensation
      Committee/Board of Directors has determined. Options are not transferable except
      by will or by the laws of descent and distribution; during the life of the
      person to whom the option is granted, that person alone may exercise them.
      All
      rights to exercise options terminate 90 days from the date a grantee ceases
      to
      be an employee for any reason other than termination for cause,
      death or disability.





If
      an
      option grantee is terminated for cause, the option terminates on the date of
      such termination of employment. If a grantee dies while in our employ, his
      or
      her option may be exercised at any time within one year following the grantee's
      death by his or her estate or by the person or persons to whom the grantee's
      rights under the option passed by will or operation of law, but only to the
      extent such option was exercisable by the grantee at the time of his or her
      death. Except for certain stated provisions covering termination, disability
      or
      death, no option may be exercised after the expiration of its original term.





To
      date,
      since we had not established a Compensation Committee, the Option Plan has
      been
      administered by the entire Board. As of December 31, 2007, there were
      outstanding options under the Option Plan to purchase approximately 7,360,000
      shares of our common stock at a weighted- average exercise price of
      approximately $0.060 per share.





In
      2007,
      outside of its Option Plan, the Company granted to its former Chief Executive
      Officer four year options to purchase on a cashless exercise basis up to
      20,000,000 shares of the Company’s common stock. These options were issued at an
      exercise price of $0.06 and vest upon the achievement of a specific performance
      milestone. At December 31, 2007 performance had yet to be achieved. These
      options resulted in an administrative cost of $nil for the year ended December
      31, 2007. No options were exercised during the year ended December 31, 2007
      and
      2,330,000 options were cancelled in the year upon termination of various
      employees.





The
      weighted average fair value of stock options granted for the years ended
      December 31, 2007
      and
      2006 was $901,248, and $1,028,825, respectively.





A
      total
      of 17,700,000 options were issued to employees in the year ended December 31,
      2006 of which 2,700,000 were issued under the Option Plan. These options were
      issued at exercise prices ranging from $0.05 to $0.074. 15,000,000 of these
      options were issued to our former Chief Executive Officer outside of the Option
      Plan and vested immediately; the remainder vest over periods ranging from one
      to
      four years. These option issues resulted in an administrative cost of $968,425.
      5,155,595 options were exercised during the year ended December 31, 2006 at
      an
      average exercise price of $0.0124, and 1,150,000 options were cancelled
      in the year upon termination of various employees.




F-22





Stock
      option activity is summarized as follows:





Weighted
              number
                of shares
              Issuable
            
            Weighted
              average
              exercise
              price
            
            Aggregate
              intrinsic
              value#
            
            
            $
            
            
            $Balance
                December 31, 2005
            
            
            12,995,595
            
            $
            0.0448Granted
            
            
            18,000,000
            
            
            0.0711Exercised
            
            
            (5,155,595
            )
            
            0.0124Expired
            
            
            (1,150,000
            )
            
            0.0765Balance
                December 31, 2006
            
            
            24,690,000
            
            $
            0.0694Granted
            
            
            20,000,000
            
            
            0.0600Exercised
            
            
            0
            
            
            -Expired
            
            
            (2,330,000
            )
            
            0.0648Balance
                December 31, 2007
            
            
            42,360,000
            
            $
            0.0650
            
            $
            -




The
      following table summarizes the outstanding and exercisable options as at
      December 31, 2007:





Exercise
              Prices
              $
            
            Number
              Outstanding
              #
            
            Weighted-average
              Remaining
              Contractual
                Life
            
            Number
              Exercisable
              #0.05
                - 0.08
            
            
            6,060,000
            
            
            1.92
            
            
            6,060,0000.05
                -0.074
            
            
            16,300,000
            
            
            3.91
            
            
            16,180,0000.06
            
            
            20,000,000
            
            
            3.92
            
            
            -42,360,000
            
            
            
            
            
            22,240,000





In
      late
      2007 the Board of Directors approved an additional 40,000,000 options for
      issuance under a new Stock Option Plan. As of December 31, 2007, the new Plan
      has not been developed as such none of these options have been issued to any
      officers, directors, employees, consultants and others performing services
      for
      the Company.





16.
      COMMITMENTS AND CONTINGENCIES





Lease
      Commitments





The
      Company leases office premises and certain of its office equipment under
      operating leases with various expiration dates to 2009. Rent expense for the
      years ended December 31, 2007 and December 31, 2006 was $185,638 and $154,638
      respectively. This table shows future minimum lease commitments under the leases
      at December 31, 2007:





Total2008
            
            $
            101,2252009
            
            
            81,5452010
            
            
            63,4572011
            
            
            9,1932012
            
            
            3,243Total
            
            $
            258,663





F-23




Guarantees





The
      Company has guaranteed within certain of its Golf Course System Sales Agreements
      entered into in 2007 that the Golf Courses would achieve minimum annual cash
      flows from rental of advertising space on their Inforemer product. If these
      minimum levels are not achieved during the period, the Company is required
      to
      compensate the golf courses for any shortfall. At December 31, 2007 the Company
      has recorded a liability of $75,000 and made payments of $30,000 in relation
      to
      these guarantees. The future maximum liability associated with these guarantees
      is presented in the following table:





Total2008
            
            $
            45,0002009
            
            
            45,0002010
            
            
            45,0002011
            
            
            45,0002012
            
            
            45,000Total
            
            $
            225,000




Employment
      Agreements





The
      Company has entered into employment agreements with Mr. Joe Miller, Chief
      Financial Officer, Mr. Alex Doaga, Executive Vice President and Chief Technical
      Officer and Mr. Robert C Silzer.





The
      agreement with Mr. Miller commenced on 31 August 2007 for a period of three
      years and stipulates a minimum salary of Cdn$ 150,000 per annum and other
      discretionary payments and compensation.





The
      agreement with Mr. Doaga provides for a salary of Cdn$ 160,000 and expires
      in 2008.
      Discretionary payments and other compensation may also be made.





The
      agreement with Mr. Silzer commenced on 29 November 2007 and confirms the terms
      and conditions of his continued employment pursuant to his resignation as
      Chairman and Chief Executive Officer of the Company. This agreement replaces
      in
      its entirety Mr. Silzer’s prior employment agreement with the Company. Term of
      employment is through December 31, 2009 and stipulates a minimum salary of
      US$
      159,250 in 2008 and $75,000 in 2009 subject to discontinuance pursuant to
      Special Projects Agreement between Mr Silzer and the Company. Mr Silzer is
      entitled to receive additional compensation of $150,000 if certain performance
      milestones are achieved as set out in the Special Projects Agreement. The
      Company also granted Mr. Silzer four year options to purchase on a cashless
      exercise basis up to 20,000,000 shares of the Company’s common stock at an
      exercise price of $0.06 per share, such options to vest if certain performance
      milestones are achieved as set out in the Special Projects Agreement.





Under
      the
      terms of these employment agreements, the Company is committed to the following
      payments:





Total2008
            
            $
            469,2502009
            
            
            225,0002010
            
            
            100,000Total
            
            $
            794,250




Legal
      Proceedings





On
      August
      1, 2007, CCG Investor Relations, Inc. ("CCG"), filed a complaint against the
      Company., in the Los Angeles Superior Court for alleged breach of contract.
      CCG
      claims that the Company breached a consulting agreement by failing to pay
      monthly consulting fees, and claims $101,470.00 in damages. On September 27,
      2007, the Company filed an answer to the complaint, generally denying liability,
      and asserting various affirmative defenses. The Company plans to defend
      the action vigorously, and contends that the consulting agreement could be,
      and
      was properly, terminated.





On
      February 5, 2007, David Stratton filed a lawsuit against the Company in the
      Supreme Court of British Columbia, Vancouver, Canada. Mr. Stratton entered
      into
      a written employment agreement with us on June 12, 2006 pursuant to which we
      employed Mr. Stratton as our Vice President, Sales. On March 20, 2008 the
      Company and David Stratton agreed to terms of settlement of the dispute between
      the parties. The Company has agreed to pay Mr. Stratton an amount of $82,400
      to
      resolve the matter. This amount was recorded in Accounts Payable and Accrued
      Liabilities in the Company’s balance sheet as at December 31,
      2007.





On
      November 1, 2007, ProLink Holdings, a provider of GPS golf course management
      systems and on-course advertising, filed a patent infringement lawsuit against
      the Company and Uplink Corporation, a company that the Company has agreed to
      purchase. The compliant alleges that Uplink and one of its customers have
      infringed U.S. Patent No. 6,525,690, which is directed to a method of
      determining locations and distances using specific GPS-based methodologies.
      The
      complaint also charged Uplink with infringement of U.S. Patent No. 6,236,940
      and
      6,470,242 which relate to a monitor for displaying distances and other golf
      course information. The complaint further alleges that the Company an one of
      its
      customers have infringed the 6,525,690 patent and further seeks a declaratory
      judgment that ProLink has not infringed U.S. Patent No. 5,685,786 acquired
      by
      the Company as a result of the UpLink acquisition and that this patent is
      invalid. ProLink seeks injunctive relief and damages against the Company and
      Uplink, enhanced damages for alleged willful infringement and recover of
      ProLink’s attorneys’ fees and litigation costs. By virtue of the Asset Purchase
      Agreement between the Company and Uplink, as amended effective January 18,
      2008,
      the Company has assumed liability of Uplink and has agreed to defend and
      indemnify Uplink at the Company’s expense. In addition, the Company intends to
      indemnify and defend both our customer and Uplink’s customer in connection with
      the litigation. The Company intends to vigorously defend this
      lawsuit.




F-24





On
      October 29, 2007, Optimal I.P.. Holdings, L.P. initiated arbitration proceedings
      against the Company alleging breach of a Patent Enforcement Cooperation
      Agreement between the two companies. Optimal I.P. Holdings, L.P. seeks a
      declaration of the scope of its rights under the Agreement and actual damages,
      together with its costs and legal fees associated with the action. On November
      16, 2007 the Company responded to the arbitration demand by objecting to the
      jurisdiction of the American Arbitration Association over the dispute and
      further denying all material allegations of the demand. The matter is currently
      in an early stage awaiting appointment of a mutually acceptable arbitrator.
      The
      Company intends to contest the matters raised in the arbitration vigorously.





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





17.
      INCOME TAXES





The
      Company adopted the provisions of FIN 48 on January 1, 2007. The implementation
      of FIN 48 did not result in any adjustment to the Company’s beginning tax
      positions. The Company is subject to United States Federal income taxes at
      an
      approximate rate of 35% and is subject to Canadian federal and provincial
      combined tax rates of approximately 36%. It is eligible for a credit against
      its
      US taxes of amounts approximating its Canadian taxes.





The
      reconciliation of the provision (recovery) for income taxes before the
      extraordinary loss, at the United States federal statutory rate compared to
      the
      Company's income tax expense as reported is as follows:





2007
            
            2006$
                000's
            
            $
                000'sExpected
                (Benefit) at U.S. Statutory Rates
            
            
            (4,057
            )
            
            (1,905
            )Non-deductible
                Expenses:Change
                in FMV of Derivative
            
            
            -
            
            
            (3,311
            )Beneficial
                Conversion Feature Interest
            
            
            -
            
            
            686Other
            
            
            104
            
            
            371Change
                in Valuation Allowance
            
            
            3,953
            
            
            4,159Income
                Tax Provision (Benefit)
            
            
            -
            
            
            -




Deferred
      income taxes reflect the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes. The Company has recognized a valuation
      allowance for those deferred tax assets for which it is more likely than not
      that realization will not occur. Significant components of the Company's
      deferred tax assets as of December 31, 2007 are as follows:





2007
            
            2006$
                000's
            
            $
                000'sNet
                Operating Loss Carryforwards
            
            
            19,452
            
            
            16,309Research
                Expenditures for Canadian Tax Purposes
            
            
            1,170
            
            
            1,170Stock
                Option Expense
            
            
            599
            
            
            350Deferred
                Revenue
            
            
            379
            
            
            -Other
            
            
            432
            
            
            25Valuation
                Allowance
            
            
            (22,032
            )
            
            (17,854
            )-
            
            
            -





F-25





The
      Company has scientific research expenditures for Canadian income tax purposes
      in
      the amount of $3,655,000 that may be applied to reduce taxable income of future
      years for Canadian income tax purposes.





The
      Company has net operating losses for United States and Canadian income tax
      purposes of approximately $55,579,000, which will expire in the year 2027.
      Pursuant to Section 382 of the Internal Revenue Code, use of the Company's
      net
      operating loss carryforwards may be limited if the Company experiences a
      cumulative change in ownership of greater than 50% in a moving three-year
      period. Ownership changes could impact the Company's ability to utilize net
      operating losses and credit carryforwards remaining at the ownership change
      date. The limitation will be determined by the fair market value of common
      stock
      outstanding prior to the ownership change, multiplied by the applicable federal
      rate.





18.
      SUBSEQUENT EVENTS (UNAUDITED)





On
      January 18, 2008, the Company acquired the operations, assets and assumed
      certain liabilities of UpLink Corporation (“UpLink”), a Texas corporation that
      produces and sells global positioning satellite distance measuring systems,
      associated software, software development and service and maintenance contracts
      to golf course owners and operators. In consideration for the acquisition,
      the
      Company paid approximately $11,816,000 including Notes Payable of $1,521,000,
      142,100,000 Common Shares valued at $7,815,000, Series B Preferred Shares with
      a
      par value of $1,200,000 and 4,918,033 common stock warrants at an exercise
      price
      of $0.122 per share valued at $219,000. The Company also assumed approximately
      $9,244,000 in liabilities.





On
      February 29, 2008, the Company and Silicon Valley Bank entered into a Loan
      and
      Security Agreement pursuant to which the Bank agreed to make available to the
      Company advances under a revolving line of credit of up to $3,000,000. At March
      31, 2008, the Company has drawn $3,000,000 on the line of credit. The Revolving
      Line terminates in February 2010 at which time all advances and unpaid interest
      are due. The principal amount outstanding accrues interest at a floating rate
      per annum of the greater of 1% above the prime rate or 6%, with interest payable
      monthly. The obligations of the Company under the Revolving Line (up to
      $1,500,000) are guaranteed by Douglas Wood, the Company’s interim Chief
      Executive Officer, director and a shareholder. On March 30, 2008, Douglas Wood
      passed away. On his passing, the Company triggered an event of default in the
      Loan Agreement whereby the bank could demand repayment of $1,500,000 secured
      by
      Mr. Wood. Silicon Valley Bank is currently forbearing such demand as it
      negotiates with the estate of Mr. Wood. The obligations of the Company under
      the
      Revolving Line are also secured by a first priority security interest (subject
      to permitted liens) on the assets of the Company, and certificates of deposit
      in
      the principal amount of $1,500,000 provided by Hansen, Inc. The Agreement
      provides for customary covenants. On March 31, 2008, the Company used $1,500,000
      of the Revolving Line to repay a credit facility from HSBC Bank which is secured
      by a letter of credit from Hansen, Inc.





Effective
      June 27, 2003, the Company obtained a bank line of credit for $1,485,000 to
      fund
      its operations. The line of credit is secured by a one year standby bank letter
      of credit for $1,500,000 that was provided by a third party, Hansen Inc. This
      standby letter of credit from Hansen Inc. has been renewed a number of times
      and
      was currently renewed to March 31, 2008. At March 31, 2008 the standby bank
      letter of credit from Hansen Inc. expired at which point the line of credit
      was
      terminated.





In
      January 2007 as part of the settlement to satisfy the remaining liability for
      the purchase of Optimal the Company issued 30,392,082 shares. Full satisfaction
      of this liability is dependent on the Optimal Shareholders receiving sufficient
      funds from the sale of the issued shares to pay down the remaining liability
      in
      full. Subsequent to year-end the market price of the Company’s stock is below
      the price per share of $0.054 at which the liability would be fully settled.
      The
      Company may be required to issue additional shares or pay cash to settle any
      shortfall and additional interest earned on the outstanding balance. The
      company’s potential liability is estimated to range from $nil to
      $1,800,000.




F-26





On
      March
      20, 2008 the Company and David Stratton agreed to terms of settlement of the
      dispute between the parties. The Company has agreed to pay Mr. Stratton an
      amount of $82,400 to resolve the matter. This amount was recorded in Accounts
      Payable and Accrued Liabilities in the Company’s balance sheet as at December
      31, 2007.





19.
      SELECTED QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)





The
      following tables present selected unaudited consolidated statement of operations
      information for the quarters ended March 31, 2007, June 30, 2007 and September
      30, 2007 as previously reported and as restated:





Year
                Ended December 31, 2007
            
            31-Mar
            
            30-Jun
            
            30-Sep
            
            31-Dec
            
            TotalReported
            
            Reported
            
            Reported
            
            Reported
            
            ReportedTotal
                revenue
            
            $
            2,256,887
            
            $
            3,668,655
            
            $
            988,887
            
            $
            351,611
            
            $
            7,266,040Total
                cost of goods sold
            
            
            1,656,723
            
            
            2,636,544
            
            
            875,497
            
            
            1,170,156
            
            
            6,338,920Gross
                margin (loss)
            
            
            600,164
            
            
            1,032,111
            
            
            113,390
            
            
            (818,545
            )
            
            927,120Operating
                expense
            
            
            3,286,160
            
            
            2,354,163
            
            
            3,188,009
            
            
            4,405,393
            
            
            13,233,725Loss
                from operations
            
            
            (2,685,996
            )
            
            (1,322,052
            )
            
            (3,074,619
            )
            
            (5,223,938
            )
            
            (12,306,605
            )Net
                loss
            
            
            (2,880,087
            )
            
            (14,140,469
            )
            
            (3,531,134
            )
            
            (3,540,793
            )
            
            (24,092,483
            )Basic
                and diluted loss per share
            
            $
            (0.01
            )
            $
            (0.04
            )
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.06
            )




Year
                Ended December 31, 2007
            
            31-Mar
            
            30-Jun
            
            30-Sep
            
            31-Dec
            
            TotalAdjustments
                [1]
            
            Adjustments
                [1]
            
            Adjustments
                [1]
            
            Adjustments
                [1]
            
            Adjustments
                [1]Total
                revenue
            
            $
            (164,000
            )
            $
            (1,454,000
            )
            $
            61,000
            
            $
            -
            
            $
            -Total
                cost of goods sold
            
            
            148,000
            
            
            (1,024,500
            )
            
            16,800
            
            
            -
            
            
            -Gross
                margin (loss)
            
            
            (312,000
            )
            
            (429,500
            )
            
            44,200
            
            
            -
            
            
            -Operating
                expense
            
            
            -
            
            
            (7,500
            )
            
            7,200
            
            
            -
            
            
            -Loss
                from operations
            
            
            (312,000
            )
            
            (422,000
            )
            
            37,000
            
            
            -
            
            
            -Net
                loss
            
            
            (312,000
            )
            
            (422,000
            )
            
            37,000
            
            
            -
            
            
            -Basic
                and diluted loss per share
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -




Year
                Ended December 31, 2007
            
            31-Mar
            
            30-Jun
            
            30-Sep
            
            31-Dec
            
            TotalRestated
            
            Restated
            
            Restated
            
            Restated
            
            RestatedTotal
                revenue
            
            $
            2,092,887
            
            $
            2,214,655
            
            $
            1,049,887
            
            $
            351,611
            
            $
            7,266,040Total
                cost of goods sold
            
            
            1,804,723
            
            
            1,612,044
            
            
            892,297
            
            
            1,170,156
            
            
            6,338,920Gross
                margin (loss)
            
            
            288,164
            
            
            602,611
            
            
            157,590
            
            
            (818,545
            )
            
            927,120Operating
                expense
            
            
            3,286,160
            
            
            2,346,663
            
            
            3,195,209
            
            
            4,405,393
            
            
            13,233,725Loss
                from operations
            
            
            (2,997,996
            )
            
            (1,744,052
            )
            
            (3,037,619
            )
            
            (5,223,938
            )
            
            (12,306,605
            )Net
                loss
            
            
            (3,192,087
            )
            
            (14,562,469
            )
            
            (3,494,134
            )
            
            (3,540,793
            )
            
            (24,092,483
            )Basic
                and diluted loss per share
            
            $
            (0.01
            )
            $
            (0.04
            )
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.06
            )





[1]
      See
      Note 1, “Restatement of Quarterly Consolidated Financial Statements
      (Unaudited)”




F-27




**ITEM
              8.**
            **CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND****FINANCIAL
                DISCLOSURE**





Not
      applicable.





**ITEM
              8A.**
            **CONTROLS
                AND PROCEDURES**





Disclosure
      Controls and Procedures





We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in the reports that we file with the SEC
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in the SEC's rules and forms and that such
      information is accumulated and communicated to our management, including our
      principal executive and financial officers, as appropriate, to allow for timely
      decisions regarding required disclosure. In designing and evaluating the
      disclosure control procedures, no matter how well designed and operated, can
      provide only reasonable assurance of achieving the desired control objectives,
      and management is required to apply its judgment in evaluating the cost-benefit
      relationship of controls and procedures.





Management’s
      Report on Internal Control Over Financial Reporting





As
      of the
      date of this report, The Company’s management, including the Principal Executive
      Officer and the Chief Financial Officer, carried out an evaluation of the
      effectiveness of the design and operation of the Company’s disclosure controls
      and procedures pursuant to Exchange Act Rule 13a - 15(b). Based upon the
      evaluation, the Principal Executive Officer and the Chief Financial Officer
      concluded that the Company’s disclosure controls and procedures are not
      effective in timely alerting them to material information required to be
      included in periodic SEC filings.





Our
      management, with the participation of our Principal Executive Officer and Chief
      Financial Officer, has assessed the effectiveness of our internal control over
      financial reporting as of December 31, 2007, based on the control criteria
      established in a report entitled Internal Control - Integrated Framework, issued
      by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
      That framework defines a material weakness as a control deficiency, or
      combination of control deficiencies, that results in more than a remote
      likelihood that a material misstatement of the annual or interim financial
      statements will not be prevented or detected. Based on such evaluation, we
      have
      concluded that our internal control over financial reporting was not effective
      and contained significant deficiencies which represent a material weakness
      in
      the Company’s internal control over financial reporting as of December 31,
      2007.





Management’s
      Discussion of Material Weakness





Management
      has identified the following groups of control deficiencies, each of which,
      in
      the aggregate, represents a material weakness in the Company’s internal control
      over financial reporting as of December 31, 2007:





·
            The
                Company’s accounting records, policies and procedures were not adequately
                maintained or documented, and the accounting and finance department
                lacked
                resources and sufficient technical accounting
                knowledge.


·
            The
                Company did not analyze financial and operating results in a timely
                manner, including expenditures by certain management and others.
                Additionally, the company did not proactively review legal contracts
                and
                sales orders entered into for financial
                implications.


·
            Departments
                did not always work cohesively, particularly in regards to required
                disclosures, due diligence and
                acquisitions.


·
            The
                Company has engaged in a number of related-party transactions.
                Additionally, certain of the Company’s executive, directors and
                shareholders have outside business interests that could conflict
                with the
                priorities of the Company.


·
            The
                Company has not widely circulated a code of ethics beyond the Company’s
                directors and officers, and has just recently drafted and implemented
                a
                whistle blower channel.


·
            The
                Company did not design and implement controls to communicate and
                monitor
                corporate strategy and objectives or compliance with policies and
                procedures, including expenditure policies at its operation in the
                United
                Kingdom.


·
            The
                Company has no independent directors on the Board of
                Directors.




21




Management
      of the Company takes very seriously the strength and reliability of the of
      the
      internal control environment for the Company. During the fourth quarter of
      2007
      and continuing in 2008, the Company has undertaken steps necessary to improve
      the control environment that include:





·
            Hired
                new accounting and finance staff with experience and skills more
                appropriate for a publicly traded
                company.


·
            The
                Company has plans to implement a new accounting system to more effectively
                manage expenditures and analyze results against budgets and
                plans.


·
            Engaged
                Deloitte Touche LLP to assist in the assessment, development and
                implementation of internal controls and business process documentation.
                The Company developed a top-down, risk based approach to SOX compliance
                that focuses on key controls and high risk
                areas.


·
            The
                Company has plans to hire a permanent Chief Executive Officer to
                change
                the “tone at the top” with the necessary expertise for a publicly traded
                company.


·
            Initiation
                of a cascading sub-certification process among process owners and
                managers.


·
            More
                actively engaging the Board of
                Directors.





Management
      acknowledges its responsibility for internal controls over financial reporting
      and seeks to continually improve these controls. In order to achieve compliance
      with Section 404 of the Sarbanes Oxley Act, we are performing system and process
      documentation and evaluation needed to comply with Section 404, which is both
      costly and challenging. We believe our process for documenting, evaluating
      and
      monitoring our internal control over financial reporting is consistent with
      the
      objectives of Section 404 of the Act.





This
      annual report does not include an attestation report of the Company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by the Company’s registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange Commission that permit the Company to provide only management’s report.





Changes
      in Internal Controls





The
      Company has begun taking remediation steps to enhance its internal control
      over
      financial reporting and reduce control deficiencies. We are working to eliminate
      the control weaknesses and deficiencies noted by strengthening management and
      by
      documenting and testing the control environment and process
      controls.





**ITEM
      8B. OTHER INFORMATION**





Item
      2.05
      Costs Associated with Exit or Disposal Activities.




In
      December 2007, the Company’s senior management including its officers committed
      to a restructuring plan involving the downsizing of the Company. This plan
      included a process to terminate employees under a plan of termination and the
      rescinding of the “Golf IT’ Asset Purchase Agreement. This restructure plan was
      executed in January 2008 and resulted in one-time termination expenses of
      $427,000 and recognition of $664,000 in costs incurred to affect the Golf IT
      acquisition. Both the one-time termination benefits of $427,000 and the $664,000
      in costs incurred to affect the Golf IT acquisition have been included in
      General and Administration expenses in the consolidated statement of operations
      for the period ending December 31, 2007. The Company expects to incur additional
      charges to income of $200,000 during the first quarter of 2008 to complete
      its
      downsizing plan.




22




PART
      III





**ITEM
              9.**
            **DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE **WITH
                SECTION 16(a) OF THE EXCHANGE
                ACT****





Executive
      Officers and Directors





The
      following table sets forth the name, age and position held by each of
      our
      executive officers and directors. Directors are elected for a period of one
      year
      and thereafter serve until the next annual meeting at which their successors
      are duly elected by the stockholders.





Name
            
            Age
            
            PositionVacant
            
            
            
            Chairman
                of the Board of Directors and acting Chief Executive
                OfficerRoger
                Paradis
            
            63
            
            Interim
                Chief Operating OfficerAlex
                Doaga
            
            41
            
            Executive
                Vice President, Chief Technical OfficerJoe
                Miller
            
            45
            
            Chief
                Financial OfficerMarc
                Potter
            
            32
            
            Executive
                Vice President, Business Planning and DevelopmentBart
                Collins (1)
            
            46
            
            DirectorRobert
                Linn
            
            54
            
            DirectorGeoff
                Hunter
            
            41
            
            Director(1)
                Member of our Audit Committee





23





Vacant,
      Chairman, and Chief Executive Officer. Mr. J. Douglas Wood was serving as the
      Company’s acting Chairman, President and Chief Executive Officer until his
      sudden passing on March 30, 2008. The Company’s Board of Directors
      has initiated plans to find a a new Chief Executive Officer.





Roger
      Paradis, Interim Chief Operating Officer. Mr. Paradis was appointed as Interim
      Chief Operating Officer pursuant to a Consulting Agreement entered into by
      the
      Company with the Carl Marks Advisory Group on November 30, 2007.  Mr.
      Paradis is a Managing Director of CMAG and has served in that capacity for
      the
      past five years.  Mr. Paradis has extensive experience in a broad range of
      industries and in particular as a senior executive in high technology
      companies.  He was the President and CEO of Programmer’s Paradis, Inc. (now
      Wayside Technology Group NASDAQ:WSTG) for the period of 1988 through 1998,
      having taken that company public as the CEO and Chairman of the Board in
      1995.  He is a graduate of the U.S. Naval Academy and the Harvard Business
      School.





Alex
      Doaga, Executive Vice President, Chief Technical Officer. Mr. Doaga joined
      the
      Company in 1999 and has served as Vice President since 2003. From 2001-2002,
      Mr.
      Doaga was Vice President, Engineering for Synapse Global Development, a GPS
      wireless asset management company. From 1996-1999, Mr. Doaga was President
      and
      Chief Executive Officer of Westgate Digital Corporation, a telecommunication
      voice, video and data services company. From 1991 to 1996, Mr. Doaga
      was
      President and Chief Executive Officer of the Net Group of Companies, a cable
      TV
      and data communication systems group in Romania. Mr. Doaga received his MSc.
      Degree in Automotive Engineering from the Bucharest Polytechnic University
      in
      Romania.





Joe
      Miller, Chief Financial Officer. Mr. Miller was hired as the Company’s Chief
      Financial Officer in July 2007. Mr. Miller earned his Certified Management
      Accounting (CMA) designation in 1992 and has established considerable financial
      management and strategic planning experience with publicly traded firms in
      the
      energy sector. He came to GPS Industries from TransAlta Corporation of Calgary,
      Alberta where he was Director of Financial Operations for that company’s
      Corporate Development and Energy Marketing division. Mr. Miller was employed
      with TransAlta from 1999 until 2007 in progressively more senior financial
      management positions. At TransAlta, he was accountable for providing overall
      financial management, strategic and financial planning, maintenance and
      development of internal controls, investment and acquisition analysis and
      Sarbanes Oxley compliance for several of the business units within the company
      over that period.  Prior to TransAlta, he was employed in the Oil & Gas
      industry in Calgary in a variety of accounting and finance positions since
      1989.





Marc
      L.
      Potter, Executive Vice President and Acting Principal Executive Officer since
      the passing of Douglas Wood on March 30, 2008. Mr. Potter is employed by
      Leisurecorp LLC (a wholly owned subsidiary of Dubai World). Mr Potter joined
      the
      Dubai World Group beginning in 2005 and has worked as Senior Manager -
      Operations for Leisurecorp where he was responsible to direct operations at
      all
      of the group’s Leisure related assets. In August 2007, Mr Potter was seconded to
      GPS Industries from Leisurecorp as Executive Vice President. He began his career
      in private golf clubs, managing club operations at some of the countries premier
      facilities within Australia. His rapid growth in the golf industry saw him
      join
      Troon Golf in late 2001 where he was employed until the end of 2004. He
      graduated from La Trobe University in 1996 with a B. Bus (H.M.). Prior to him
      relocating overseas, Marc served on the University’s Academic Board and now
      resides in Vancouver, Canada.





Bart
      Collins, Director. Bart Collins has served as a Director of GPSI since January
      26, 2005. Mr. Collins is President of Great White Shark Enterprises, Inc.
      ("GWSE"), a multi-national corporation founded by Greg Norman in 1993. GWSE
      is
      involved in the areas of golf course design, residential development, turfgrass
      development, golf events, golf equipment, merchandising and licensing. Having
      worked in some capacity with Greg Norman since 1987, Mr. Collins was retained
      on
      a full time basis by GWSE in 1995 as an International Vice President based
      in
      Sydney, Australia, overseeing GWSE's interests in the Asia-Pacific region.
      In
      1997 Mr. Collins
      moved into his current position in Jupiter, Florida. Prior to joining GWSE,
      he
      spent 12 years with the sports conglomerate International Management Group
      ("IMG") that he joined in 1983 and became a Vice President. At the age of 31
      he
      established and managed IMG's operation in Southeast Asia from their offices
      in
      Singapore. Mr. Collins graduated from Wittenberg University in
      1983.




24




Robert
      Linn, Director. Mr. Linn was elected as a Director of GPSI in December 2006.
      Mr.
      Linn has been the Senior Manager-Commercial of Leisurecorp LLC since May 2005.
      Prior thereto, from 1988 to May 2005, Mr. Linn was a project director/project
      manager of Associated Consulting Engineers/Sir Frederick Snow & Partners
      Ltd. Mr. Linn holds a B.Sc. in Civil Engineering from University of Strathclyde
      in his native city of Glasgow, and is a chartered member of the Institution
      of
      Civil Engineers and the Institution of Highways and Transportation.





Geoff
      Hunter, Director. Mr. Hunter Was elected as a Director of GPSI in June 2007.
      Mr
      Hunter is the Director-Commercial Operations of Leisurecorp LLC. Prior thereto,
      Mr. Hunter has been involved in various senior management positions within
      the
      Sports Industry. He was employed from January 1999 as General Manager of a
      retail/distribution/lifestyle company where he was responsible for over 30
      brands, including Reebok, Speedo, Umbro, Rockport and Quiksilver. In 2004 he
      was
      appointed as General Manager for a Golf distribution company who distributed
      exclusively throughout the Middle East and had many of the top golf brands,
      including Callaway, Mizuno and Cleveland, and Ashworth and Cutter & Buck
      apparel.





Audit
      Committee





In
      January, 2005 our Board of Directors established an Audit Committee. Our Board
      of Directors has instructed the Audit Committee to meet periodically with our
      management and independent accountants to, among other things, review the
      results of the annual audit and quarterly reviews and discuss the financial
      statements, select the independent accountants to be retained, and receive
      and
      consider the accountants' comments as to controls, adequacy of staff and
      management performance and procedures in connection with audit and financial controls.
      The Audit Committee is also authorized to review related party transactions
      for
      potential conflicts of interest. Since the passing of Douglas Wood on March
      30,
      2008, the Audit Committee is singularly composed of Mr. Bart Collins. Mr.
      Collins is a non-employee director. Although Mr. Collins was, in December 2006,
      appointed as a part-time Executive Vice President, Mr. Collins is not an
      employee and is not compensated by us. However, because Mr. Collins, directly
      or
      indirectly, has made loans to, and is otherwise party to financial transactions
      with GPSI, he is not an "independent" member of the Audit


Committee.





The
      Company does not currently have a audit committee member designated as the
      "audit committee financial expert," as defined under Item 401(h)(2) of
      Regulation S-K of the Securities Act of 1933, of the Audit Committee. This
      is
      due to the passing of Douglas J. Wood on March 30, 2008. Prior to his passing
      Mr. Douglas J. Wood also served on the audit committee and was designated as
      the
“audit committee financial expert,” as defined under Item 401 (h) (2) of
      Regulation S-K of the Securities Act of 1933.





Special
      Management Provisions





On
      December 29, 2006, we sold to Great White Shark Enterprises, Inc. and
      Leisurecorp LLC 1,574,089 Series B Shares and warrants to purchase up to
      59,885,186 shares of common stock. Under the Securities Purchase Agreement
      we
      entered into with Great White Shark Enterprises, Inc. and Leisurecorp LLC,
      we
      agreed to elect two persons designated by Leisurecorp LLC to our Board of
      Directors, which persons shall serve as "Preferred Directors" under the Series
      B Shares
      Certificate of Designation. Leisurecorp LLC designated Mr. Marc Potter and
      Mr.
      Robert Linn as the new additional directors. Accordingly, in anticipation of
      the
      sale of the Series B Shares and warrants, on December 28, 2006 our Board of
      Directors increased the size of the Board of Directors to five and conditionally
      elected Mr. Potter and Mr. Linn as additional directors. The election of Mr.
      Potter and Mr. Linn became effective on December 29, 2006 immediately
      after the closing of the sale of the Series B Shares and warrants to Great
      White
      Shark Enterprises, Inc. and Leisurecorp LLC. In June 2007, Mr. Hunter replaced
      Mr. Potter on the Board of Directors.





Under
      the
      Securities Purchase Agreement we entered into with Great White Shark
      Enterprises, Inc. and Leisurecorp LLC, we agreed to create the office of
      "Executive Vice President," and agreed to elect Mr. Collins to that office.
      Accordingly, pursuant to the Securities Purchase Agreement, in November 2006,
      our Board of Directors amended our bylaws to create the new part-time office
      (designated as the office of the "Executive Vice President") and elected Bart
      Collins, one of Directors, to that office. In August 2007, Mr. Potter replaced
      Mr. Collins as Executive Vice President. This office was established for the
      purposes of monitoring and controlling specific operations or functions. In
      establishing the new executive office, the Board of Directors decided that
      GPSI
      may not make any payment (or series of related payments) or agree to make any
      payment (or series of related payments) or issue or agree to issue any of our
      securities in lieu of any payment to be made by us or on our behalf (a "Securities
      Issuance") (a) in excess of $25,000, without the express written approval of
      the
      new Executive Vice President and (b) in excess of $100,000, without having
      the
      signature of the Executive Vice President on (x) the check or other financial
      instrument pursuant to which such payment will be made, on (y) the wire transfer
      instructions authorizing the wire transfer pursuant to which such payment will
      be made or (z) in the case of a Securities Issuance, specific authorization
      for
      such Securities Issuance including the number of shares or securities
      to be issued and the terms thereof. Pursuant to the Securities Purchase
      Agreement, Mr. Potter must remain the Executive Vice President until such time
      as our Common Stock is listed on either the NASDAQ Global Market or the NASDAQ
      Capital Market. Mr. Potter's obligations as the Executive Vice President are
      limited to providing the foregoing services on a full-time basis. Mr. Potter
      currently is not paid by the Company for his services as the Executive Vice
      President.




25





Code
      of
      Ethics





Our
      Board
      of Directors has adopted a business code of ethics for directors and officers
      and has also adopted an Insider Trading Policy. A copy of our code of ethics
      will be furnished without charge to any person upon written request. Requests
      should be sent to: Secretary, 5500 152nd Street, Suite 214 Surrey, B.C. V3S
      5J9
      Canada.





There
      are
      no family relationships between any of our officers and directors.





Section
      16(a) Beneficial Ownership Reporting Compliance





Section
      16(a) of the Exchange Act requires our directors and executive officers, and
      persons who own more than 10% of the outstanding shares of our common stock
      (collectively, "Reporting Persons") to file reports of ownership and changes
      in
      ownership with the SEC. Reporting Persons are required by SEC regulations to
      furnish us with copies of all Section 16(a) forms that they file.





Based
      solely on our review of the copies of such forms received or written
      representations from the Reporting Persons, we believe that, with respect to
      the
      fiscal year ended December 31, 2007, all of the Reporting Persons complied
      with
      all applicable Section 16 filing requirements on a timely basis.





**ITEM
      10. EXECUTIVE COMPENSATION**





Compensation
      of Executive Officers





The
      following table summarizes compensation paid or, or earned by our Chief
      Executive Officer and the other two most highly compensated executive officers
      (the "Named Executive Officers") whose annual compensation exceeded $100,000
      as
      of December 31, 2007. All amounts were paid in Canadian dollars as these
      officers live in British Columbia, Canada and are converted in U.S. dollars
      based on the conversion rate in effect on December 31, 2007.





SUMMARY
                COMPENSATION TABLEName
                and Principal Position
            
            Year
            
            Salary
              ($)
            
            Option
                Awards
              ($)
                (4)
            
            
            
            All
                Other
              Compensation
              ($)
                (3)
            
            Total
              ($)Douglas
                J. Wood, Interim Chief Executive Officer (1)
            
            
            2007
            
            
            -
            
            
            -
            
            
            
            
            
            -
            
            
            -Robert
                C. Silzer, Sr., Former Chief Executive Officer and President
                (2)
            
            
            2007
            
            
            291,568
            
            
            -
            
            
            
            
            
            3,190
            
            
            294,7582006
            
            
            208,419
            
            
            929,796
            
            
            (5)
            
            
            15,841
            
            
            1,154,056Alex
                Doaga, Executive Vice President & CTO
            
            
            2007
            
            
            150,334
            
            
            -
            
            
            
            
            
            3,190
            
            
            153,5242006
            
            
            137,316
            
            
            41,137
            
            
            
            
            
            6,364
            
            
            184,817




1.
            On
                November 29, 2007, Douglas J. Wood was appointed by the Company’s Board of
                Directors as Interim Chief Executive Officer and Chairman of the
                Board.
                Mr. Wood was not compensated by the Company for this role.


2.
            On
                November 29, 2007, Robert Silzer, Sr. resigned as a director, Chairman
                of
                the Board and Chief Executive Officer.






26




3.
            Amounts
                primarily represent medical insurance premiums and payments for automobile
                and electronic communication device
                expenses.





4.
            This
                column represents the dollar amount recognized for financial statement
                reporting purposes with respect to the 2007 fiscal year for the fair
                value
                of stock options granted to the named executive, in 2007 as well
                as prior
                fiscal years, in accordance with SFAS 123R. Pursuant to SEC rules,
                the
                amounts shown exclude the impact of estimated forfeitures related
                to
                service-based vesting conditions. For additional information on the
                valuation assumptions with respect to the 2006 grants, refer to Note
                15 of
                our financial statements in this Annual Report. These amounts reflect
                our
                accounting expense for these awards, and do not correspond to the
                actual
                value that will be recognized by the named executive from these
                awards.





5.
            Represents
                a five-year option to purchase 15,000,000 shares of our common stock
                granted on December 19, 2006 at an exercise price of $0.074 per share
                (the
                closing price of our stock on December 19,
                2006).





Stock
      Option Grants





The
      following table sets forth information as of December 31, 2007 concerning
      unexercised options, unvested stock and equity incentive plan awards for the
      executive officer named in the Summary Compensation Table.




OUTSTANDING
                EQUITY AWARDS AT YEAR ENDED DECEMBER 31, 2007Option
                AwardsEquity
                Incentive Plan Awards:Name
            
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            
            Number
                of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            
            Option
              Exercise
              Price
              ($)
            
            Option
              Expiration
              DateRobert
                C. Silzer, Sr., Chief Executive Officer, President and Chief Financial
                Officer
            
            
            15,000,000
            (1)
            
            
            
            
            
            
            $
            0.074
            
            
            12/18/201120,000,000
            (2)
            $
            0.060
            
            
            11/29/2011Alex
                Doaga, Executive Vice President & CTO
            
            
            1,250,000
            
            
            
            
            
            
            
            $
            0.050
            
            
            12/25/20091,000,000
            
            
            
            
            
            
            
            $
            0.060
            
            
            5/31/2011





(1)
      Vested upon grant, December 19, 2006.




(2)
      Vest
      upon achievement of specific performance milestones




Compensation
      of Directors





During
      the fiscal year ended December 31, 2006, we did not pay any of our directors
      any
      compensation (neither cash nor stock options) for serving on the Board of
      Directors.




27




Employment
      Agreements and Severance Agreements





Robert
      C.
      Silzer, Sr. On December 19, 2006, we entered into an employment agreement with
      Robert C. Silzer, Sr. Mr. Silzer has been our Chief Executive Officer since
      1996. Under the employment agreement, Mr. Silzer agreed to continue to act
      as
      our Chief Executive Officer during the three-year period commencing January
      1,
      2007. In connection with the execution of the employment agreement, we granted
      stock options to Mr. Silzer for the purchase of 15,000,000 shares.
      The options have a five-year term and an exercise price of $0.074 per share
      (the
      closing price of our stock on December 19, 2006). Under the employment
      agreement, Mr. Silzer will initially receive a base salary of US$250,000 per
      annum through September 30, 2007. Thereafter, Mr. Silzer's annual base salary
      will be as determined by the Compensation Committee of our Board of Directors,
      provided that the annual salary shall not be less than $250,000. The employment
      agreement provides that GPSI will review with Mr. Silzer, at least once a year
      and prior to September 30, his annual salary, bonus payments and benefits
      provided by us to him to determine the basis for any increases thereto with
      the
      objective of ensuring that the remuneration is at least at market level. Mr.
      Silzer will also be entitled to our company's medical and other insurance
      benefits, which benefits will be provided to Mr. Silzer and his family even
      if
      the employment agreement is terminated for any reason other than for "just
      cause" (as determined under the common law of British Columbia). Mr. Silzer
      will
      also be entitled to a car allowance of CDN$1,200 per month, an annual bonus
      grant, benefits, and stock options, as determined and awarded by the Board
      from
      time to time in its sole discretion. Mr. Silzer's employment agreement may
      be
      terminated by us at any time during the three-year term by paying
      to
      Mr. Silzer a lump sum amount equal to the present value (calculated using an
      8%
      discount factor) of his salary for the unexpired period of the term, and by
      providing to him the amount of any performance bonus and common stock grants
      and
      options to which he is or becomes entitled. Notwithstanding the foregoing,
      Mr.
      Silzer will be entitled to a minimum payment of $1,000,000 if GPSI terminates
      Mr. Silzer's employment under the employment agreement without just cause.
      Mr.
      Silzer may terminate the employment agreement if a "change of control" event
      occurs (defined to exclude the effects of the sale of the Series B Shares on
      December 29, 2006) or if there is a material alteration of his duties and
      responsibilities without his prior written consent. A change in the location
      of
      GPSI's headquarters outside of the Vancouver, B.C. is deemed to be a material
      alteration unless the company provides at its expense reasonable accommodation
      to allow Mr. Silzer to retain his personal residence in the Vancouver, B.C.
      area. If Mr. Silzer is permitted to terminate the employment agreement for
      the
      foregoing reasons, Mr. Silzer shall be entitled to receive a lump sum amount
      equal to the present value (calculated using an 8% discount factor) of his
      salary for the unexpired period of the three-year term and (as well has any
      performance bonus and common stock grants and options to which he is or becomes
      entitled under the agreement); provided, however, that such payment shall be
      no
      less than $1,000,000, or $1,500,000 in the case of a change of
      control.




On
      November 29, 2007, Mr. Silzer resigned as director, Chairman of the Board and
      Chief Executive Officer of the Company. Mr. Silzer will continue to be
      employed by the Company in the capacity of Advisor to the Company’s Chief
      Executive Officer. Pursuant to his resignation Mr. Silzer signed a new
      employment which commenced on 29 November 2007 and replaces in its entirety
      Mr
      Silzer’s prior employment agreement with the Company. Term of employment is
      through December 31, 2009 and stipulates a minimum salary of US$ 159,250 in
      2008
      and $75,000 in 2009 subject to discontinuance pursuant to Special Projects
      Agreement between Mr. Silzer and the Company. Mr. Silzer is entitled to receive
      additional compensation of $150,000 if certain performance milestones are
      achieved as set out in the Special Projects Agreement. The Company also granted
      Mr. Silzer four year options to purchase on a cashless exercise basis up to
      20,000,000 shares of the Company’s common Stock at an exercise price of $0.06
      per share, such options to vest if certain performance milestones are achieved
      as set out in the Special Projects Agreement.





Alex
      Doaga. We entered into an employment agreement with Alex Doaga, our current
      Executive Vice President, on September 1, 2002 for a five-year term, which
      was
      renegotiated after December 31, 2003. The agreement called for an annual salary
      of $80,000. This agreement was subsequently renegotiated and in 2004 Mr. Doaga
      earned a base salary of Cdn$140,000 per year. In January, 2005 a commitment
      was
      made to Doaga to increase this base salary to Cdn$151,000 per year effective
      January 1, 2005, plus to provide an annual bonus of up to 25% of his base
      salary, and stock options. In December 2005 Mr. Doaga was granted options to
      purchase 1,250,000 shares of common stock at a price of $0.05 per share. On
      January 1, 2006 Mr. Doaga's salary was increased to Cdn$160,000. In June, 2006
      Mr. Doaga was granted options to purchase 1,000,000 shares of common stock
      at a
      price of $0.06 per share.





Stock
      Option Plan





We
      have
      adopted the 2000 Stock Option Plan (the "Option Plan"). Under the 2000 Stock
      Option Plan we are authorized to issue a total of 10,000,000 shares as either
      incentive stock options within the meaning of Section 422 of the Internal
      Revenue Code of 1986, as amended (the "Code"), or nonqualified stock options
      to
      our officers, directors, employees, consultants and others performing services
      for us. The Option Plan is administered by our Board of Directors (or by our
      Compensation Committee, if the Board elects to delegate these responsibilities).
      The Compensation Committee/Board of Directors designates the optionees, number
      of options, exercise prices, dates of grant, exercise period and other terms
      and
      conditions.





The
      purchase price to be paid upon exercise of each incentive stock option granted
      pursuant to the Option Plan shall be no less than the fair market value of
      the
      Common Stock on the date the option is granted, or 110% of such fair market
      value in the case of any optionee holding in excess of 10% of the combined
      voting power of all classes of our capital stock as of the date of grant.
      Provided that our Common Stock is publicly traded on an exchange or on an over
      the
      counter market, the fair market value will equal to the closing price of our
      Common Stock on such exchange or market on the date of grant (or on the last
      date preceding such date on which a sale was reported). The purchase price
      and
      method of exercise of each nonqualified option granted to officers and other
      key
      employees shall be determined by the Compensation Committee/Board of Directors.
      The purchase price is payable in full by cash, check, and if approved by the
      Compensation Committee/Board of Directors, by the surrender of shares of our
      Common Stock having a market value equal to the option price of the shares
      to be
      purchased, or by any other manner of cashless exercises permitted by
      law.




28





Options
      granted under the Option Plan become exercisable and shall expire on such dates
      as determined by the Compensation Committee/Board of Directors, provided,
      however, that no term may exceed ten years from the date of grant, or five
      years
      from the date of grant in the case of any optionee holding more than 10 percent
      of the combined voting power of all classes of our capital stock as of the
      date
      of grant. After options become exercisable they may be exercised at any time
      or
      from time to time as to any part thereof. The Compensation Committee/Board
      of
      Directors may, at any time after grant of the option and from time to time
      increase the number of shares purchasable in any installment, subject to certain
      limitations.





Options
      granted under the Option Plan expire on such date as the Compensation
      Committee/Board of Directors has determined. Options are not transferable except
      by will or by the laws of descent and distribution; during the life of the
      person to whom the option is granted, that person alone may exercise them.
      All
      rights to exercise options terminate 90 days from the date a grantee ceases
      to
      be an employee for any reason other than termination for cause,
      death or disability.





If
      an
      option grantee is terminated for cause, the option terminates on the date of
      such termination of employment. If a grantee dies while in our employ, his
      or
      her option may be exercised at any time within one year following the grantee's
      death by his or her estate or by the person or persons to whom the grantee's
      rights under the option passed by will or operation of law, but only to the
      extent such option was exercisable by the grantee at the time of his or her
      death. Except for certain stated provisions covering termination, disability
      or
      death, no option may be exercised after the expiration of its original
      term.





To
      date,
      since we had not established a Compensation Committee, the Option Plan has
      been
      administered by the entire Board. As of December 31, 2007, there were
      outstanding options under the Option Plan to purchase approximately 7,360,000
      shares of our common stock at a weighted- average exercise price of
      approximately $0.060 per share.





Indemnification
      of Directors and Officers





Our
      bylaws authorize the corporation to indemnify its directors, officers, employees
      and agents of the Registrant to the fullest extent permitted by the laws of
      the
      State of Nevada. Section 78.7502 of the Nevada General Corporation Law permits
      a
      corporation to indemnify any of its directors, officers, employees or agents
      against expenses actually and reasonably incurred by such person in connection
      with any threatened, pending or completed action, suit or proceeding, whether
      civil, criminal, administrative or investigative (except
      for an action by or in right of the corporation) by reason of the fact that
      such
      person is or was a director, officer, employee or agent of the corporation,
      provided that it is determined that such person acted in good faith and in
      a
      manner which he reasonably believed to be in, or not opposed to, the best
      interests of the corporation and, with respect to any criminal action or
      proceeding, had no reasonable cause to believe his conduct was unlawful. Section
      78.751 of the Nevada General Corporation Law requires that the determination
      that indemnification is proper in a specific case must be made by:





·
            the
                stockholders,





·
            the
                board of directors by majority vote of a quorum consisting of directors
                who were not parties to the action, suit or proceeding
                or





·
            independent
                legal counsel in a written opinion if a majority vote of a quorum
                consisting of disinterested directors is not possible or if such
                an
                opinion is requested by a quorum consisting of disinterested
                directors.





Insofar
      as indemnification for liabilities arising under the Securities Act of 1933
      may
      be permitted to directors, officers and controlling persons of the registrant
      pursuant to the foregoing provisions, or otherwise, the registrant has been
      advised that in the opinion of the Securities and Exchange Commission such
      indemnification is against public policy as expressed in the Act and is,
      therefore, unenforceable.





**ITEM
              11.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND****RELATED
                STOCKHOLDER MATTERS**





The
      following table sets forth certain information regarding beneficial ownership
      of
      our common stock as of March 31, 2008 (a) by each person known by us to own
      beneficially 5% or more of any class of our common stock, (b) by each of our
      executive officers named in the Summary Compensation Table under "Executive
      Compensation" and our directors and (c) by all executive officers and directors
      of this company as a group. As of March 31, 2008 there were 544,386,703
      shares of our common stock issued and outstanding. Unless otherwise noted,
      we
      believe that all persons named in the table have sole voting and investment
      power with respect to all the shares beneficially owned by them. Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to securities. Shares of common stock subject to options, warrants
      and convertible securities currently exercisable or convertible, or exercisable
      or convertible within 60 days, are deemed outstanding, including for purposes
      of
      computing the percentage ownership of the person holding such option, warrant
      or
      convertible security, but not for purposes of computing the percentage of any
      other holder.




29




As
      a
      result of (i) Shareholder Agreement, dated December 29, 2006, described below
      (the "Shareholder Agreement") entered into certain of the principal stockholders
      these stockholders are deemed to beneficially own significantly more shares
      than
      they current own. Accordingly, the parties to these agreements (and their
      affiliates)appear to beneficially own more shares of common stock than we are
      authorized to issue or that are currently outstanding. For example, Leisurecorp
      LLC, Dubai World’s subsidiary, currently owns 2,000,000 Series B shares (which
      shares are convertible into 327,868,852 shares of common stock) and warrants
      to
      purchase up to 81,967,213 shares of common stock. However, because it is a
      party
      to the Shareholders Agreement (and therefore is deemed to beneficially own
      the
      shares of the other parties to that agreement Leisurecorp LLC is deemed to
      beneficially own 574,080,104 shares (even though we currently only have
      544,386,703 shares of our common stock issued and outstanding). Further
      information on the effect of these agreements is provided in the footnotes
      below
      and is summarized in the "Supplementary Table on 5% Beneficial
      Owners"





Unless
      otherwise indicated, the address for each shareholder listed in the following
      table is c/o GPS Industries, Inc., Suite 214, 5500 152nd St., Surrey, British
      Columbia V3S 5J9 Canada. This table is based upon information supplied by
      directors, officers and principal shareholders and reports filed with the
      Securities and Exchange Commission.





Name
                and Address of Beneficial Owner (1)
            
            Shares
                Beneficially
              Owned
            
            
            Percentage
                of Total
              Common
                Stock5%
                Beneficial OwnersGregory
                John Norman
            
            
            589,990,417
            
            
            (1)
            
            52.66
            %501
                North A1A, JupiterFlorida,
                33477Great
                White Shark Enterprises, Inc
            
            
            574,080,104
            
            
            (2)
            
            51.33
            %501
                North A1A, JupiterFlorida,
                33477Istithmar
                PJSC
            
            
            574,080,104
            
            
            (3)
            
            51.33
            %P.O.
                Box 17000,Dubai,
                UAEUpLink
                Corporation
            
            
            166,673,498
            
            
            (4)
            
            29.29
            %6500
                River Place Blvd IV, Suiite 201Austin,
                TX 78730Robert
                C. Silzer, Sr.
            
            
            36,740,158
            
            
            (5)
            
            6.53
            %Directors
                and OfficersAlex
                Doaga
            
            
            3,336,000
            
            
            (6)
            
            0.61
            %Doug
                Wood
            
            
            73,040,547
            
            
            (7)
            
            12.04
            %Joe
                Miller
            
            
            500,000
            
            
            (8)
            
            0.09
            %Roger
                Paradis
            
            
            0
            
            
            
            
            0.00
            %Marc
                Potter
            
            
            0
            
            
            
            
            0.00
            %Bart
                Collins
            
            
            166,667
            
            
            (9)
            
            0.03
            %Robert
                Linn
            
            
            0
            
            
            
            
            0.00
            %Geoff
                Hunter
            
            
            0
            
            
            
            
            0.00
            %Total
                Directors and Officers as a Group (8 persons)
            
            
            77,043,214
            
            
            
            
            12.64
            %




(1)
      Consists of (i) 13,822,007 shares of Common Stock held in the name of the Greg
      Norman Intangible Trust 12/01/2004, (ii) 188,306 shares of Common Stock held
      in
      the name of the Greg Norman Intangible Trust 12/01/2005, (iii) warrants to
      purchase 1,900,000 shares, which warrants are held in the name of the Greg
      Norman Intangible Trust 12/01/2004, and (iii) 164,244,038 shares beneficially
      owned by Great White Shark Enterprises, Inc. (see, footnote (2) below).
      Greg Norman is the principal and sole beneficiary of the Greg Norman Intangible
      Trust 12/01/2004, which owns all of the issued and outstanding capital stock
      of
      Great White Shark Enterprises, Inc. ("GWSE"). Mr. Norman also is the sole
      Director and Chief Executive Officer of GWSE. In addition, GWSE is a party
      to a
      Shareholder Agreement, dated December 29, 2006, with Leisurecorp LLC and certain
      other parties (the "Shareholder Agreement"). Under the Shareholder Agreement,
      GWSE and Leisurecorp LLC have agreed to vote their Series B Shares in favor
      of
      the election to the GPSI Board of Directors of two designees of Leisurecorp
      LLC
      and one designee of GWSE. See, "Description of Capital Stock—Shareholder
      Agreement." Accordingly, GWSE is deemed to have shared voting power with respect
      to the 409,836,066 shares of Common Stock beneficially owned by Leisurecorp
      LLC.




30





(2)
      Consists of (i) 824,089 Series B Shares (convertible into 135,096,557 shares
      of
      Common Stock), and (ii) warrants to purchase up to 29,147,481 shares of Common
      Stock, and (iii) the right, exercisable until April 28, 2007, to purchase
      additional Series B Shares and warrants that collectively are
      convertible/exercisable for an additional 61,475,410 shares of Common Stock.
      In
      addition, as a result of the voting agreement under the Shareholder Agreement, GWSE
      is
      deemed to have shared voting power with respect to the 409,836,066 shares of
      Common Stock beneficially owned by Leisurecorp LLC.





(3)
      Consists of the following securities registered in the name of, or otherwise
      owned by Leisurecorp LLC: (i) 2,000,000 Series B Shares (convertible into
      327,868,852 shares of Common Stock), and (ii) warrants to purchase up to
      81,967,213 shares of Common Stock. In addition, as a result of the voting
      agreement under the Shareholder Agreement, Leisurecorp LLC is deemed to have
      shared voting power with respect to the 135,096,557 shares of Common Stock
      issuable to GWSE upon the conversion of the 824,089 Preferred Shares owned
      by
      GWSE and warrants that are convertible/ for an additional 29,147,481 shares
      of
      Common Stock. Leisurecorp is a direct wholly owned subsidiary of Istithmar
      PJSC.
      By virtue of its relationship with Leisurecorp, Istithmar has the power to
      cause
      Leisurecorp to vote, or to dispose of, certain securities which Leisurecorp
      beneficially owns. Accordingly, Istithmar may be deemed, under Rule 13d-3 under
      the Exchange Act, to beneficially own 574,080,104 shares of Common Stock beneficially
      owned by Leisurecorp LLC.





(4)
      Consists of (i) 142,083,334 shares of Common Stock (ii) 120,000 Series B Shares
      (convertible into 19,672,131 shares of Common Stock), and (iii) warrants to
      purchase up to 4,918,033 shares of Common Stock.





(5)
      Consists of 18,666,388 shares of Common Stock, warrants to purchase 3,073,770
      shares and 15,000,000 shares subject to Common Stock purchase
      options.





(6)
      Consists of 1,086,000 shares of Common Stock and 2,250,000 shares subject to
      Common Stock purchase options.





(7)
      Consists of 10,898,470 shares of Common Stock, warrants to purchase up to
      12,961,749 shares of Common Stock and 300,000 Series B Shares (convertible
      into
      49,180,328 shares of Common Stock).





(8)
      Consists of options to purchase 500,000 shares.





(9)
      Consists of 100,000 shares of Common Stock and warrants to purchase up to 66,667
      shares of Common Stock. This excludes the shares owned by GWSE, of which Mr.
      Collins is the President.





Supplementary
      Table on 5% Beneficial Owners





The
      table
      below shows holdings excluding the impact of the provisions of the Shareholder
      Agreement. For the purposes of this table, "Shares Beneficially Owned" therefore
      only include (i) shares of common stock currently owned, (ii) shares of common
      stock that can be acquired upon the conversion of the Series B Shares, (iii)
      shares of common stock that can be acquired upon the exercise of currently
      owned, exercisable stock purchase warrants, (iv) shares of common stock that
      can
      be acquired upon exercise of exercisable stock purchase options.





Name
                and Address of Beneficial Owner (1)
            
            Shares
                Beneficially
              Owned
            
            
            Percentage
                of Total
              Common
                Stock5%
                Beneficial OwnersGregory
                John Norman
            
            
            180,154,351
            
            
            (1)
            
            25.35
            %501
                North A1A, JupiterFlorida,
                33477Great
                White Shark Enterprises, Inc
            
            
            164,244,038
            
            
            
            
            23.18
            %501
                North A1A, JupiterFlorida,
                33477Istithmar
                PJSC
            
            
            409,836,066
            
            
            
            
            42.95
            %P.O.
                Box 17000,Dubai,
                UAEUpLink
                Corporation
            
            
            166,673,498
            
            
            
            
            29.29
            %6500
                River Place Blvd IV, Suiite 201Austin,
                TX 78730Robert
                C. Silzer, Sr.
            
            
            36,740,158
            
            
            
            
            6.53
            %




(1)
      These
      shares include shares owned by Mr. Norman and all of the 164,244,038 shares
      owned by Great White Shark Enterprises, Inc.




31





**ITEM
              12.**
            **CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS**





This
      section describes the transactions we have engaged in with persons who were
      directors, officers or affiliates at the time of the transaction, and persons
      known by us to be the beneficial owners of 5% or more of our common stock since
      January 1, 2007.





In
      May
      2007, the Company sold additional shares of Series B Convertible Preferred
      Stock. In connection
      with the December 2006 purchase of Series B Shares by GWSE and Leisurecorp,
      the
      Company agreed to grant GWSE and Leisurecorp each the right, exercisable until
      the end of April 2007, to increase their investment, or make an additional
      investment in the Series B Shares and warrants on the same terms as the
      securities sold to them on December 29, 2006. GWSE and Leisurecorp timely
      exercised the foregoing option in April 2007 to purchase 1,250,000 Series B
      Shares and warrants to purchase up to 51,229,508 shares of common stock for
      a
      total purchase price of $12,500,000. The closing of the purchase of the
      $12,500,000 additional Series B Shares and warrants was consummated on May
      8,
      2007. Leisurecorp purchased its Series B Shares and warrants by delivering
      a
      $10,000,000 interest-free promissory note (the "Note") that is secured by the
      securities sold to Leisurecorp, and GWSE purchased its Series B Shares and
      warrants in exchange for cash ($1,500,000) and the cancellation of $1,000,000
      of
      outstanding indebtedness the Company owed to GWSE. Leisurecorp was required
      to
      repay the Note as follows: $2,000,000 on or before June 30, 2007; $4,000,000
      on
      or before October 31, 2007; and the remaining $4,000,000 on or before December
      31, 2007. The first payment under the Note of $2,000,000 was received by the
      Company on July 9, 2007, the second payment of $4,000,000 was received by the
      Company on October 9, 2007 and the third payment of $4,000,000 was received
      by
      the Company on December 17, 2007.





On
      November 5, 2007, the Company entered into a contract with Leisurecorp LLC,
      a major
      stockholder of the Company that has the ability to exercise significant
      influence over the Company, to design, supply, deliver and install a Wi-Fi
      network and GPS Management System for a Golf Estates project in Dubai. The
      contract calls for payments from Leisurecorp LLC in excess of $2,000,000 upon
      achievement of specific milestones as defined in the contract. This transaction
      is in the normal course of operations and will be measured at the exchange
      amount, which is the amount of consideration established and agreed to by the
      related parties. For the period ending December 31, 2007, the Company has
      recognized $383,681 in revenue for completion and delivery of the first
      milestone in the contract.





During
      the period ended December 31, 2007, the Company completed a project for
      Leisurecorp LLC. This transaction has been measured at its exchange amount.
      As a
      result of the transaction, $301,000 has been recognized as revenue for the
      period ended December 31, 2007.





For
      the
      year ended December 31, 2007, the Company recorded $193,826 in interest expense
      due to Great White Shark Enterprises for purchase order financing provided
      by
      Great White Shark Enterprises, and for interest on balances owing to Great
      White
      Shark Enterprises. Additionally the Company has recorded $500,000 in sales
      commissions due to Great White Shark Enterprises, which have been charged to
      Sales and Marketing expense, pursuant to an endorsement agreement between the
      two parties dated April 2003. Great White Shark Enterprises is a stockholder
      of
      the Company and has appointed a member of the Company's Board of Directors.
      Included in accounts payable and accrued liabilities at December 31, 2007 is
      $1,109,003 due to Great White Shark Enterprises.





On
      November 13, 2006, we obtained a $1,500,000 unsecured, short-term loan (the
      "$1,500,000 Loan") from GWSE. During 2006, GWSE was, and currently still is,
      a
      lender to GPSI under an existing purchase order credit facility. Bart Collins,
      one of our directors, is the President of GWSE. The $1,500,000 Loan bore
      interest on the outstanding unpaid principal balance at a rate 4.83% per annum
      (11% per annum in the event of
      default), and was due and payable on the earliest to occur of (i) March 31,
      2007, and (ii) the closing of the purchase by GWSE and Leisurecorp LLC of Series
      B Shares and warrants pursuant to that certain Securities Purchase Agreement
      we
      entered into on November 13, 2006 with GWSE and Leisurecorp. As permitted by
      the
      $1,500,000 promissory note that evidenced the $1,500,000 Loan, the entire
      outstanding balance of the $1,500,000 Loan was applied to the purchase price
      of
      the Series B Shares and warrants that GWSE purchased at the closing of the
      sale
      of the Series B Shares and warrants on December 29, 2006.




32





On
      December 29, 2006, we sold a total of 1,574,089 shares of newly authorized
      Series B Shares and warrants to purchase up to 59,885,186 shares of common
      stock
      to GWSE and Leisurecorp LLC. The purchase price of the foregoing shares and
      warrants was $15,740,890. GWSE purchased 574,089 shares in consideration for
      $3,000,000 in cash and the cancellation of the $1,500,000 Loan.
      Leisurecorp paid $10,000,000 for its 1,000,000 Series B Shares and warrants
      by
      paying $5,000,000 in cash and canceling a $5,000,000 loan it had extended to
      us
      on November 13, 2006.





In
      connection with the sale of the 1,574,089 shares of newly authorized Series
      B
      Shares and warrants to purchase up to 59,885,186 shares of common stock to
      GWSE
      and Leisurecorp LLC, and as a condition to the closing of that sale on December
      26, 2006 (the "Closing"), Robert C. Silzer and Douglas Wood converted
      obligations owed to them by GPSI into our securities as follows:





·
            At
                the Closing, Mr. Silzer, our Chief Executive Officer and our Chairman
                of
                the Board, exchanged $750,000 of obligations owed to him by the company
                for 12,295,082 shares of Common Stock and warrants to purchase 3,073,770
                shares of Common Stock. The shares of common stock were sold at the
                same
                price as the conversion price of Series B Shares ($0.061 per share).
                The
                warrants that he received with his shares of common stock were identical
                to the warrants issued to GWSE and Leisurecorp at the Closing. The
                $750,000 obligation owed to Mr. Silzer consisted of the forgiveness
                of a
                $471,560 promissory note, a $12,869 short term loan Mr. Silzer had
                extended to us, accrued and unpaid vacation pay of $106,643 we owed
                him,
                and accrued interest of $158,928 on the foregoing promissory note
                and
                short term loan.





·
            At
                the Closing, Douglas Wood, one of our directors, exchanged $3,000,000
                of
                cash loans made by him during 2006 to us for (i) 300,000 Series B
                Shares
                and (ii) warrants to purchase 12,295,082 shares of Common Stock.
                The
                Series B Shares and warrants were sold for the same price as the
                Series B
                Shares and warrants sold to GWSE and Leisurecorp LLC at the
                Closing.





On
      December 3, 2004, we 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 us to GWSE to 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 (a) 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 us pursuant to
      an
      Agreement dated July 2, 2004 between GPSI and Pinranger (Australia) Pty. Ltd.
      and PagiSat, LLC.





On
      December 29, 2006, at the closing of our sale of the Series B Shares, GWSE
      purchased $3,000,000 of our Series B Shares and warrants and also simultaneously
      converted the remaining outstanding principal amount of the Term Loan, and
      another outstanding short term loan, into 274,089 Series B Shares in full
      settlement of the principal balance due. For a period of two years from the
      conversion date GWSE will continue to receive 20% of the license payments
      wereceive as a result of the licenses we have granted under the Optimal patents, which
      interest in the license payment that we receive will increase thereafter to
      40%
      of the license payments for the remaining life of the patents.





In
      March
      2004 we entered into an agreement with Douglas J. Wood, one of our directors,
      and two other persons pursuant to which they provided the security we needed
      to
      obtain a $1,000,000 line of credit from HSBC Bank Canada to be used for
      manufacturing purposes. On June 22, 2006 this line of credit was increased
      to
      $1,400,000. As of December 31, 2006, we had drawn down $1,433,864 under this
      line of credit. As consideration for the security provided, we agreed to pay
      Mr.
      Wood and the others 15% per annum of the maximum amount outstanding during
      any
      month, payable 50% in cash and 50% in shares of common stock, which shares
      were
      issued at a 10% discount to market based on the seven day average price prior
      to
      each quarter end. In addition, we agreed to issue to Mr. Wood and the two other
      persons warrants to purchase 666,667 shares of common stock at $0.15 per share.
      We also granted Mr. Wood and the two others a security interest in all of our
      inventory. This letter of credit and our agreement with Mr. Wood expired
      February 28, 2007, at which point the line of credit was removed. As of December
      31, 2007, we owed approximately $2,263,382 to Doug Wood and the Wood Family
      Trust. This amount includes $125,773 recorded as interest expense during the
      year. Interest is payable at 8% per annum. This interest was earned on loans
      provided to the Company by Mr. Wood and also on a Line of Credit (which expired
      on February 28, 2007) that was partially funded by Mr. Wood. Mr. Wood was
      appointed as the Company’s CEO and Chairman of the Board on November 29,
      2007.





**ITEM
      13. EXHIBITS**


Exhibit
              Number
            Description  3.1
            Articles
                of Incorporation as filed with the Nevada Secretary of State on December
                12,1995
                (1)




33





3.2
            Certificate
                of Amendment to the Articles of Incorporation as filed with the NevadaSecretary
                of State on January 3, 2000 (2)





3.3
            Certificate
                of Amendment to the Articles of Incorporation as filed with the NevadaSecretary
                of State on January 20, 2000 (2)





3.4
            Certificate
                of Amendment to Articles of Incorporation
                (8)





3.5
            Bylaws
                (1)





3.6
            Amendments
                to Bylaws (5)





3.7
            Amendment
                to Bylaws (7)





4.1
            Stock
                Purchase Warrant, dated January 18, 2008
                (5)





4.2
            Registration
                Rights Agreement, dated January 18, 2008
                (5)





10.1
            Loan
                & Security Agreement Silicon Valley, dated as of , 2008
                (3)





10.2
            Guaranty
                Agreement, dated as of February 26, 2008
                (3)





10.3
            Employment
                Agreement Golf Academies & Ben Porter, dated as of June 1, 2007
                (3)





10.4
            Employment
                Agreement Golf Academies & Phil Lewin, dated as of June 1, 2005
                (3)





10.5
            Intellectual
                Property Security Agreement dated September 20, 2005 by and between
                theCompany
                and Secured Party named therein (3)





10.6
            Form
                of Callable Secured Convertible Note
                (3)





10.7
            Form
                of Warrant issued in connection with the Callable Secured Convertible
                Notes (3)





10.8
            First
                Amendment to Stock Purchase Agreement, dated as of May 28, 2005 by
                and
                amongOptimal
                Golf Solutions, Inc., Darryl Cornish, Charles Houston, and the Company
                (9)





10.9
            Securities
                Purchase Agreement, dated November 13, 2006, by and among GPS Industries,Inc.
                and the purchasers named therein
                (5)





10.10
            Form
                of Registration Rights Agreement, dated December 29, 2006, between
                the
                Company,Great
                White Shark Enterprises, Inc., Leisurecorp LLC, Robert C. Silzer,
                Sr. and
                DouglasWood
                (5)





10.11
            Form
                of Promissory Notes to be issued to Great White Shark Enterprises,
                Inc.
                andLeisurecorp
                LLC (5)





10.12
            Agreement,
                dated November 8, 2006, by and among GPS Industries, Inc. and the
                notepurchasers
                set forth on the signature page thereof regarding the repayment of
                theCallable
                Secured Convertible Notes (5)





10.13
            Settlement
                Agreement dated October 26, 2006 among GPS Industries, ProLink Solutions
                LLC,Elumina
                Iberica S.A. and Elumina Iberica Limited
                (6)





10.14
            Shareholder
                Agreement, dated December 29, 2006, between the Company, with Great
                WhiteShark
                Enterprises, Inc., Leisurecorp LLC, Robert C. Silzer, Sr. and Douglas
                Wood
                (7)





10.15
            Second
                Amendment to Stock Purchase Agreement dated as of December 8, 2006
                by and
                amongthe
                Company, the Sellers an Optimal Golf Solutions, Inc.
                (4)





10.16
            Employment
                Agreement, dated December 19, 2006, between GPS Industries, Inc.
                and
                RobertC.
                Silzer, Sr.**





21.1
            Subsidiaries
                of GPS Industries, Inc. (9)





23.1
            Consent
                of Sherb & Co.**




31.1
            Certification
                of the Registrant's Principal ExecutiveOfficer
                under Exchange Act Rule 15d-14(a), as adoptedpursuant
                to Section 302 of the Sarbanes-Oxley Act of2002.**





31.2
            Certification
                of the Registrant's Principal FinancialOfficer
                under Exchange Act Rule 15d-14(a), as adoptedpursuant
                to Section 302 of the Sarbanes-Oxley Act of2002.**




32.1
            Certification
                of the Registrant's Principal ExecutiveOfficer
                under 18 U.S.C. Section 1350, as adoptedpursuant
                to Section 906 of the Sarbanes-Oxley Act of2002.**





32.2
            Certification
                of the Registrant's Principal FinancialOfficer
                under 18 U.S.C. Section 1350, as adoptedpursuant
                to Section 906 of the Sarbanes-Oxley Act of2002.**




34




99.1
            Financial
                Statements - Uplink Corporation year endedJun
                30, 2006 & 2005 Report of Independent
                Auditors




EX-1
            Joint
                Filing Agreement - Rule 13d-1 under the SecuritiesExchange
                Act of 1934 - Alan Rogers & David Spencer
                (10)





EX-7
            Promissory
                Note - Leisure Corp, dated November 13,
                2006




EX-1
            Joint
                Filing Agreement - Security Exchange Act of 1934Statement
                on Schedule 13d - GWSE





99.6
            Promissory
                Note - GWSE, date November 13, 2006




*
      Indicates a management contract or compensatory plan or
      arrangement.





**
      Filed
      with this Annual Report on Form 10-KSB.




(1)
            Previously
                filed by us on June 4, 1999 as an exhibit to our RegistrationStatement
                on Form 10SB12G and incorporated herein by
                reference.





(2)
            Previously
                filed by us on April 14, 2000 as an exhibit to our Annual Reporton
                Form 10-KSB and incorporated herein by
                reference.





(3)
            Previously
                filed by us on March 6, 2008 as an exhibit to our CurrentReport
                on Form 8-K and incorporated herein by
                reference.





(4)
            Previously
                filed by us on December 15, 2006 as an exhibit to our CurrentReport
                on Form 8-K and incorporated herein by
                reference.





(5)
            Previously
                filed by us on January 18,2008 as an exhibit to our CurrentReport
                on Form 8-K and incorporated herein by
                reference.





(6)
            Previously
                filed by us on November 1, 2006 as an exhibit to our CurrentReport
                on Form 8-K and incorporated herein by
                reference.





(7)
            Previously
                filed by us on January 8, 2007 as an exhibit to our CurrentReport
                on Form 8-K and incorporated herein by
                reference.





(8)
            Previously
                filed by us on December 12, 2006 as an appendix to our proxystatement.





(9)
            Previously
                filed by us on October 21, 2005 as an exhibit to ourRegistration
                Statement on Form SB-2 and incorporated herein by
                reference.





(10)
            Previously
                filed by us on January 8, 2007 Promissory Note Leisure
                Corp.





(11)
            Previously
                filed by us on January 17, 2007 Promissory Note
                GWSE




**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





The
      Audit
      Committee has appointed Sherb & Co. as our independent registered
      public accounting firm for the fiscal year ending December 31, 2007. The
      following table shows the fees that were paid or accrued by us for audit and other
      services provided by Sherb & Co. for the 2006 and 2007 fiscal
      years.





2006
            
            2007Audit
                Fees (1)
            
            $
            73,500
            
            $
            110,000Tax
                Fees (2)
            
            
            10,000
            
            
            10,000All
                Other Fees (3)
            
            
            11,250
            
            
            15,000Total
            
            $
            94,750
            
            $
            135,000




(1)
            Audit
                fees represent fees for professional services provided in
                connectionwith
                the audit of our annual financial statements and the review of
                ourfinancial
                statements included in our Form 10-QSB quarterly reports andservices
                that are normally provided in connection with statutory orregulatory
                filings for the 2006 and 2007 fiscal
                years.




(2)
            Tax
                fees represent fees for professional services related to taxcompliance,
                tax advice and tax planning.




(3)
              All
                  other fees include services rendered in connection with the review
                  ofour
                  Registration Statements and Edgarization services for our SEC
                  Edgarfilings.


All
        audit
        related services, tax services and other services rendered by  Sherb
        & Co. were pre-approved by our Board of Directors or Audit Committee.
        The  Audit
        Committee has adopted a pre-approval policy that provides for the  pre-approval
        of all services performed for us by Sherb & Co. The policy  authorizes
        the Audit Committee to delegate to one or more of its members  pre-approval
        authority with respect to permitted services. Pursuant to this  policy,
        the Board delegated such authority to the Chairman of the Audit  Committee.
        Pre-approval is generally provided for up to one year and any  pre-approval
        is detailed as to the particular service or category of services.  The
        independent auditor and management are required to periodically report
        to  the
        Audit
        Committee regarding the extent of services provided by the
        independent  auditor
        in accordance with this pre-approval. The Audit Committee has
        concluded  that
        the
        provision of the non-audit services listed above is compatible with  maintaining
        the independence of Sherb & Co.


35





SIGNATURES





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of
      1934,
      the registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.


GPS
              INDUSTRIES,
              INC.Date:
              April 15, 2008
            By:
            /s/
              Marc
              PotterName:
              Marc PotterTitle:
                Executive Vice President
              (Principal
                Executive Officer)




In
      accordance with the Securities Exchange Act of 1934, this report has been
      signed below by the following persons on behalf of the registrant in the capacities
      and on the dates indicated.


Signature
              
              Title
              
              Date/s/
                  Marc Potter
              
              Executive
                  Vice President
              
              April
                  15, 2008Marc
                  Potter
              
              (Principal
                  Executive Officer)/s/
                  Joe Miller
              
              Chief
                  Financial Officer
              
              April
                  15, 2008Joe
                  Miller
              
              (Principal
                  Accounting Officer)/s/
                  Bart Collins
              
              Director
              
              April
                  15, 2008Bart
                  Collins/s/
                  Robert Linn
              
              Director
              
              April
                  15, 2008Robert
                  Linn/s/
                  Geoff Hunter
              
              Director
              
              April
                  15, 2008Geoff
                  Hunter




36