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


                                 FORM 10-KSB/A

                                Amendment No. 2

This  amendment is filed to reflect the changes in the  accounting  treatment of
the  acquisition  of Optimal Golf  Solutions,  Inc.  disclosed in Note 2. to the
Financial  Statements.  This change in accounting  treatment does not change the
financial position of the Company.


                                   (Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934

                   For the fiscal year ended December 31, 2004

                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                          ACT OF 1934 [NO FEE REQUIRED]

    For the transition period from _____________ to _____________ Commission
                               file number 0-25963

                              GPS INDUSTRIES, INC.


             (Exact name of registrant as specified in its charter)



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

         Suite 214, 5500 - 152nd Street
         Surrey, British Columbia                    V3S-5J9
         (Address of principal executive offices)   (Zip Code)

        Registrant's telephone number, including area code: 604-576-7442

        Securities registered pursuant to Section 12(b) of the Act: None

 Securities registered pursuant to Section 12(g) of the Act:

                    Common Stock, par value $.001 per share

Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report(s)), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of 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.

Revenues for the fiscal year ended December 31, 2004 were $2,184,299.

The aggregate market value of the Common Stock held by non-affiliates of the
registrant as of December 31, 2004 was approximately $28.6 million.

Registrant had 207,552,851 shares of Common Stock, $.001 par value per share,
outstanding as of March 14, 2005.

Documents Incorporated by Reference to the extent indicated herein: None



<PAGE>




                                TABLE OF CONTENTS

PART II


Item  6. Management's Discussion and Analysis or Plan of
         Operations                                             4
Item  7. Financial Statements                                   8

PART IV
Item 13. Exhibits and Reports on Form 8-K                       9

Signatures

Certificates




                                       3

<PAGE>

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Results of Operations:

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

This Annual Report on Form 10-KSB for the period ended December 31, 2004
contains "forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, including statements that include the words
"believes", "expects", "anticipates", or similar expressions. These
forward-looking statements include, among others, statements concerning the
Company's expectations regarding its working capital requirements, financing
requirements, its business, growth prospects, competition and results of
operations, and other statements of expectations, beliefs, future plans and
strategies, anticipated events or trends, and similar expressions concerning
matters that are not historical facts. The forward-looking statements in this
Annual Report on Form 10-KSB for the period ended December 31, 2004 involve
known and unknown risks, uncertainties and other factors that could cause the
actual results, performance or achievements of the Company to differ materially
from those expressed in or implied by the forward-looking statements contained
herein.

Overview:

The Company is involved in the development of golf course management technology.
The Company has developed both a hand-held and cart mounted product using Global
Positioning Systems ("GPS") technology. At December 31, 2004 and December 31,
2003, substantially all of the Company's assets and operations were located in
Canada. The Company also maintains sales offices in the UK and in Florida, USA.

The Company applies GPS, radio frequency and a sophisticated integrated network
of wireless technology to information systems for the golf and recreational
industries. The Company's portable product, the "Inforemer", is the first
patented communications network that utilizes advanced internet protocols to
provide a wireless information system to enhance recreational value, increase
golf course profits and improve player safety. The Company generated revenue for
the first time in the year ended December 31, 2004 from the sales of its

                                        4

<PAGE>

products and continued to earn revenue in the first and second quarter of 2005.
The Company's objective is to obtain a leadership position as an international
supplier of GPS golf wireless products and become the leader in hand-held
portable recreational devices ("PRDs") for applications worldwide.

The Company expects to recognize revenue only when delivery has occurred, the
sales price is fixed or determinable, and collectibility is probable. When other
significant obligations remain after products are delivered, revenue will be
recognized only after such obligations are fulfilled.


For the years ended December 31, 2004 and 2003

Revenues

The Company had no revenue in 2003. In 2004, the Company sold their GPS System
to 10 golf courses for total revenue of $1,999,728. These courses included
Tiburon, Brookwater, Mayfair Lakes, Diamond Woods, Dayton Valley, Maryland
National. Stonewall, Heritage Hills, Chestnut Ridge, and Glynns Creek. Granite
Links was another course installed in 2004 but it was removed and is being
reinstalled in 2005 as an expanded system. Thus this system was not recorded as
a sale in 2004. In addition to these installations, the Company rented one
system to Noosa Springs generating $10,095 in rental revenue and installed a
system at the Point Roberts golf club as a pay-for-play system generating $374
in revenue in 2004. Other revenue booked in 2004 included repairs & warranty
revenue of $18,348, territory sales in the amount of $86,000, Distributor Demo
Kits totalling $35,000, service & support fees totalling $9,000, and sale of
parts $954. Patent licence fees collected by Optimal Golf Solutions Inc.
amounted to $24,800. Thus, total revenue in 2004 amounted to $2,184,299.

Administration Expenses

Administration expenses increased by $273,290 from $2,928,656 for the year ended
December 31, 2003 to $3,201,946 for the year ended December 31, 2004.
Administration expenses consist of salaries and employee related costs,
including compensation costs paid by the issuance of stock, as well as legal,
audit, investor relations and consulting fees. Non-cash stock based compensation
expense were $1,814,303 for 2004, $1,711,091 for 2003.

Depreciation and Amortization

Depreciation and amortization increased by 74% from $72,170 to $125,507. This
increase is attributable to an increase in the property and equipment asset
base, particularly the purchase of patents.

Sales and Marketing

Sales and marketing expenses increased by $1,515,466 from $171,671 for the year
ended December 31, 2003 to $1,687,137for the year ended December 31, 2004 to
expand the global distribution network and GPSI's presence in North America.
This increase is attributable to the formation of a direct sales and marketing
department starting in Q3, increased advertising and marketing expenses as the
Inforemer product was brought to market and commission payments paid to sales
staff and under the Endorsement Agreement with Great White Shark Enterprises
which the Company signed in April 2003.

Engineering, Research and Development

Engineering, Research and development costs increased by $235,599 for the year
ended December 31, 2004 to $1,440,681 as opposed to $1,205, 082 for the year
ended December 31, 2003. This increase was attributable to the engineering and
development cost of developing the Inforemer product to the stage of creating
sales of the product. These costs comprised personnel costs, consultants,
computer software development costs, travel and accommodation and service costs.

Finance Costs

The decrease in finance costs of $453,352 from $677,931 for the year ended
December 31, 2003 to $224,579 for the year ended December 31, 2004, is due to a
drop in expenses incurred to obtain additional financing for the Company. In the
previous year most of these expenses related to the non-cash cost of the
conversion features with three loans and the non-cash cost of issuing stock and
warrants in connection with the debt financing. There was only a limited
conversion of one loan in the year ended December 31, 2004

Finance costs include the warrants issued in conjunction with the Company's debt
financings. Prior to 2003, the Company issued warrants in conjunction with the
sale of convertible debentures. The value of these warrants is recorded as a

                                        5

<PAGE>

discount on the convertible debentures and is being amortized over the term of
the respective convertible debenture. The Company issued warrants in 2003
related to its $1,425,000 bank line of credit. The value of these warrants was
recorded as deferred financing costs and was amortized over the one-year term of
the bank line of credit. In 2004 this cost amounted to $26,000

Interest expense

Interest expense increased by 105% from $279,378 for the year ended December 31,
2003 to $572,845 for 2004. This $293,467 increase is related to the increase in
debt financing by the Company during 2004.

Gain (Loss) on Extinguishment of Debt

During 2004 the Company wrote off $332,538 of trade debt related to discontinued
operations. This debt consisted of accrued liabilities and accounts payable
related to prior years. During 2003 the Company wrote off debt from discontinued
operations which resulted in a gain on extinguishment of debt in the amount of
$1,461,367.

During 2004 the Company also settled other liabilities relating to discontinued
operations by issuance of common stock. These stock issuances resulted in a gain
on extinguishment of debt of $547,680.

During 2004 the Company also wrote off a loan liability of $1,185,000 incurred
in 2001 and collateralized by certain securities. The lender cannot be located
and the Company believes the collateral has been realized. This amount has been
recorded as a gain on extinguishment of debt.

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 gain on
extinguishment of debt amounting to $9,076.

Liquidity And Capital Resources

At December 31, 2004 the Company had significant debt liabilities which include:

A draw down on a $1,000,000 manufacturing line of credit from HSBC Bank Canada
in the amount of $975,903. This line of credit is secured by a Letter Of Credit
arranged by Doug Wood, Dan Wood, and James Liken. Interest accrues at 15% per
annum on the balance drawn down for the LOC.

A draw down on a $1,500,000 operating line of credit provided by HSBC Bank
Canada in the amount of $1,333,499. This Line Of Credit is secured by a Letter
Of Credit provided by Citibank and is secured by Hansen, Inc. in the amount of
$1,500,000. GPSI pays the quarterly LOC fees from Citibank which are $7,500 per
quarter.

An outstanding loan owing to the Bank Of Montreal of $25,121.

A loan from Great White Shark Enterprises made on December 3, 2004 in the amount
of $3,000,000 with interest on the balance outstanding of 10% per annum.

Shareholder advances from Doug Wood, a director, in the amount of $1,405,000
with interest owing of 8% per annum

An advance from the Wood Family Trust in the amount of $150,000 with interest
owing of 8% per annum.

A $96,725 loan from Synapse Ventures, owned by Julius Farkas, GPSI's Director of
Manufacturing, with interest owing at 3% per month or 36% per annum.

A shareholders loan from Robert C. Silzer, GPSI's President & CEO, in the amount
of $603,415 with interest owing of 8% per annum.

A convertible debenture owing to the Shaar Fund in New York in the amount of
$671,892 with interest owing of 6% per annum. Interest and principal payments of
$60,000 are made each quarter, i.e. principal is due of $20,000 per month.

Debt related to discontinued operations (Chapter 7 filings) totalling $3,423,522
which is reflected on the GPSI balance sheet as current liabilities, is not
expected to be settled with cash. These amounts are being written off in
accordance with the statute of limitations rules in each state in which they
were incurred and are reflected as a gain on extinguishment of debt at the time
of write-off.

                                        6

<PAGE>

Accounts payable and accrued liabilities totalling $2,303,063.

Deferred revenue relating to cash received in advance from golf courses, but not
yet earned because the installation is not complete, in the amount of $118,848.

Thus, total liabilities were $16,186,709 or $10,786,666 excluding debt from
discontinued operations.

At December 31, 2004 the working capital deficit was $14,210,188 compared to
$10,082,967 at December 31, 2003.


Operating activities used cash of $5,468,163 and $2,134,831 for the years ended
December 31, 2004 and December 31, 2003 respectively. The increase in cash usage
was principally attributable to, the increase in net loss from operations to
$8,959,685, before adjusting for non cash expenses of the charge for impairment
of patent assets of $3,750,000, payment of expenses with stock in the amount of
$1,383,530 and expenses paid by stock issuances of $2,074,293.


At December 31, 2004 and December 31, 2003, a substantial portion of the
Company's current liabilities consisted of loans in default and liabilities with
respect to discontinued operations.

Financing for the year ended December 31, 2004 provided cash of $6,883,280 as
opposed to $2,179,200 in 2003

In 2004 the Company raised $205,888 from the issuance of common stock, $375,000
from the issuance of convertible preferred stock and obtained $812,546 in loans
from bank indebtedness and $5,469,380 from other loans. In 2003 the Company
raised $141,000 from the issuance of common stock, $625,000 from the issuance of
convertible debt and obtained $1,470,862 in loans from bank indebtedness and
$30,443 from other loans.

The Company has historically relied upon sales of its common stock, debt
instruments and loans from its directors to finance research and development,
marketing and operations. As of December 31, the Company had incurred
significant losses totalling $44,693,115 as of December 31, 2004 and had a
working capital deficit of $14,210,188. In view of the Company's limited amount
of cash and cash equivalents and its utilization of cash for its operations, the
Company will only be able continue operations for a limited period of time. The
cash requirement needed to meet operating expenses averaged $471,359 per month
in 2004. This monthly cash out flow is reduced to $455,680 per month with the
annual Gross Margin of $188,153. Accordingly, additional financing will be
required to market the Company's product and working capital to gear up
production of its product and complete installation commitments on sales
contracts executed. The Company continues to pursue opportunities for a private
equity offering and/or debt financing. There can be no assurances that any
additional financing will take place or, if so the terms thereof. To the extent
of any shortfall in financing, the Company's product development and sales and
commercialization of new programs will be delayed, curtailed or prevented, and
the Company may be required to suspend or substantially modify its operations
and/or seek protection under applicable bankruptcy laws.

The Company's independent certified public accountants, in their independent
auditors' report on the consolidated financial statements as of and for the year
ended December 31, 2004, have expressed substantial doubt about the Company's
ability to continue as a going concern. To the extent that the Company is unable
to successfully restructure its debt obligations and/or obtain the capital
necessary to fund its future cash requirements on a timely basis and under
acceptable terms and conditions, the Company will not have sufficient cash
resources to maintain operations, and may consider a formal or informal
restructuring or reorganization.

Critical Accounting Policies.
All accounting policies are included in the Notes to the Financial Statements.

Off Balance Sheet Arrangements
All such arrangements are included in the Notes to the Financial Statements.

Contractual Obligations, Contingent Liabilities and Commitments All such
liabilities are included in the Notes to the Financial Statements.


                                       7
<PAGE>

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Filed herewith are the following financial statements:

                              GPS INDUSTRIES, INC.
                              FINANCIAL STATEMENTS

                                      INDEX


                                                                 Page Number
                                                             -------------------
INDEPENDENT AUDITORS' REPORT                                         F - 1

CONSOLIDATED FINANCIAL STATEMENTS:

       Balance Sheet                                                 F - 2

       Statements of Operations                                      F - 3

       Statements of Stockholders' Deficit                           F - 4

       Statements of Cash Flows                                      F - 5-6

       Notes to Financial Statements                            F - 7 to F - 20




                                       8
<PAGE>



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 sheet of GPS Industries
Inc. as of December 31, 2004, and the related consolidated statements of
operations, stockholders' deficit and cash flows for the years ended December
31, 2004 and 2003. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
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 financial
statements are free of material misstatement. 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, 2004 and the results of its operations and its cash flows for
the years ended December 31, 2004 and 2003 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,
2005. 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.

This  report has been re-issued to reflect the changes in the  accounting
treatment of the  acquisition  of Optimal Golf  Solutions,  Inc.  disclosed in
Note 2. to the Financial  Statements.  This change in accounting  treatment does
not change the financial position of the Company.





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



March 26, 2005
Except for Note 2, dated November 30, 2005
New York, New York


                                       F-1



<PAGE>

                      GPS INDUSTRIES INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET


                                December 31, 2004


Assets

Current

     Cash                                                          $    173,092
     Accounts receivable                                                239,698
     Inventory                                                        1,393,198
     Prepaid expenses and other current assets                          170,533
                                                                   -------------
     Total Current Assets                                             1,976,521

Property and equipment, net                                             114,625

Patents                                                               1,759,067

Deferred implementation costs                                             5,297
                                                                   -------------
                                                                   $  3,855,510
                                                                   =============

Liabilities and Stockholders' Deficit

Current liabilities

     Bank indebtedness                                             $  2,309,408
     Bank loan                                                           25,121
     Deferred Revenue                                                   118,848
     Short term loans                                                 1,663,332
     Accounts payable and accrued liabilities                         2,303,063
     Liability associated with Optimal Golf acquisition               2,980,000
     Convertible loans                                                  240,000
     Promissory notes - related parties                                 603,415
                                                                   -------------
                                                                     10,243,187

     Liabilities related to discontinued operations
     (Chapter 7 proceedings filed in 2002)
     Promissory note payable                                          1,274,757
     Accounts payable and accrued liabilities                         1,861,298
     Loans payable to related parties                                   258,000
     Capital lease obligations ( in default)                             29,467
                                                                   -------------
                                                                      3,423,522

                                                                   -------------
     Total current liabilities                                       13,666,709
                                                                   -------------

Convertible debt                                                        431,892

Long-term loan investor                                               2,520,000

Stockholders' deficit

     Class A common stock, $.001 par value, 250,000,000
     authorized 205,021,853 issued and outstanding                      205,122
     5% Convertible Preferred Shares, $.001 par value,
     25,000,000 authorized 375,000 issued and outstanding;
     liquidation                                                        375,000
     Accumulated other comprehensive income                             722,295
     Deferred compensation expense                                    ( 675,789)
     Deferred Financing Costs                                         ( 350,000)
     Additional paid-in capital                                      31,653,396
     Accumulated deficit                                           ( 44,693,115)
                                                                   -------------

     Total Stockholder's Deficit                                   ( 12,763,091)
                                                                   -------------

                                                                   -------------
                                                                   $  3,855,510
                                                                   =============

          See accompanying notes to consolidated financial statements

                                      F-2

<PAGE>

                      GPS INDUSTRIES INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS


                                                For the Twelve Months Ended
                                                        December 31,
                                                    2004               2003
                                               ------------     ----------------
Revenue                                        $ 2,184,299      $             -

Cost of Goods Sold                               1,643,136                    -

Installation Costs                                 353,010                    -
                                               ------------     ----------------
Gross Profit                                       188,153                    -
                                               ------------     ----------------


Operating Expenses


      General and Administrative Expenses        3,201,946            2,928,656
      Depreciation and amortization                125,507               72,170
      Sales and marketing                        1,687,137              171,671
      Engineering and Research and
      Development                                1,440,681            1,205,082
      Impairment of Patent Asset                 3,750,000                    -
                                               ------------     ----------------
                                                10,205,271            4,377,579


Loss Before Other Income (Expense)             (10,017,118)         ( 4,377,579)
                                               ------------     ----------------

Other Income (Expense)

      Finance costs                              ( 224,579)           ( 677,931)
      Interest expense                           ( 572,845)           ( 279,378)
      Loss on foreign exchange                   ( 219,436)            ( 37,454)
      Gain on extinguishment of debt             2,074,293            1,461,367
                                               ------------     ----------------
                                                 1,057,433              466,604

Net Loss Before Deemed Preferred Stock
Dividend                                        (8,959,685)          (3,910,975)

      Deemed Preferred Stock Dividend            ( 189,208)                   -
                                               ------------     ----------------

Net Loss Applicable to Common Stockholders     $(9,148,893)     $   ( 3,910,975)
                                               ============     ================

Loss per common share - basic and diluted      $    ( 0.05)     $        ( 0.04)
                                               ============     ================

Weighted average number of common
 shares outstanding - basic and diluted        167,950,231           96,982,573
                                               ============     ================

          See accompanying notes to consolidated financial statements

                                      F-3

<PAGE>
                                            GPS INDUSTRIES INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>

                                          Class A Common Stock  Class B Common Stock    Additional  Preferred    Other
                                            Number                Number                  Paid-In     Shares   Comprehensive
                                          of Shares     Amount   of Shares    Amount      Capital               Income
-----------------------------------------------------------------------------------------------------------------------------
<S>             <C>                       <C>         <C>        <C>        <C>        <C>                      <C>
Balance January 1, 2003                   77,372,468  $ 77,372   100,000    $ 100      $ 19,220,976           - $   722,295

Common stock issued for
 compensation expense                     14,272,030    14,272         -       -          1,734,819           -           -
Common stock issued for
 deferred compensation                     9,010,520     9,011         -       -            892,041           -           -
Common stock issued for
 related party debt                        2,831,631     2,832         -       -            225,137           -           -
Common stock issued for services             500,000       500         -       -            140,047           -           -
Common stock issued on conversion
 of debt                                  38,776,206    38,776         -       -          2,240,439           -           -
Common stock issued for cash               1,410,000     1,410         -       -            139,590           -           -
Common stock issued for accounts payable     513,650       514         -       -             30,597           -           -
Common stock issued for interest           3,105,144     3,105         -       -            149,938           -           -
Common stock issued for finance costs      3,000,000     3,000         -       -            327,000           -           -
Warrants issued for bank letter of
 credit                                            -         -         -       -             39,000           -           -

Cancellation of Class B Stock                      -       100  (100,000)   (100)                 -           -           -

Comprehensive Loss
Net income                                         -         -         -       -                  -           -           -
Deferred compensation expense                      -         -         -       -                  -           -           -
Subscriptions receivable                           -         -         -       -                  -           -           -

Total Comprehensive Loss                           -         -         -       -                  -           -           -
                                         -----------  --------  ---------  --------    -------------   ---------   ---------
Balance December 31, 2003                150,791,649   150,892         -       -          25,139,584          -     722,295

Common stock issued for
 compensation expense                      9,694,903     9,695         -       -           1,147,345          -           -
Common stock issued for settlement
 of debt                                  21,084,981    21,085         -       -           2,042,565          -           -
Common stock issued for purchase
 of patents                                3,500,000     3,500         -       -             276,500          -           -
Common stock issued for services             400,000       400         -       -              31,600          -           -
Common stock issued on conversion
 of debt                                   2,707,275     2,707         -       -             240,948          -           -
Common stock issued for cash               2,857,143     2,857         -       -             197,143          -           -
Common stock issued for investment
in subsidiary                              9,000,000     9,000         -       -           1,161,000          -           -
Common stock issued for interest             307,331       307         -       -              19,406          -           -
Common stock issued for finance costs      4,678,571     4,679         -       -             609,607          -           -
Warrants issued for debt financing                 -         -         -       -             598,490          -           -

Preferred Shares issued for cash                   -         -         -       -                   -    375,000           -

Comprehensive Loss                                 -         -         -       -                   -          -           -

Net loss                                           -         -         -       -                   -          -           -
Deferred compensation expense                      -         -         -       -                   -          -           -
Subscriptions receivable                           -         -         -       -                   -          -           -
Deferred financing costs                           -         -         -       -                   -          -           -
Deemed dividend on preferred shares                -         -         -       -             189,208          -           -

Total Comprehensive Loss                           -         -         -       -                   -          -           -
                                         -----------  --------  ---------  --------    -------------   ---------   ---------
Balance December 31, 2004                205,021,853  $205,122         -    $  -       $  31,653,396   $375,000    $722,295
                                         ===========  ========  =========  ========    =============   =========   =========
<PAGE>


                                          Deferred          Deferred                               Total
                                          Compensation      Financing  Subscription  Accumulated   Stockholders'
                                          Expense           Costs      Receivable    Deficit       Deficit
----------------------------------------------------------------------------------------------------------------
Balance January 1, 2003                         -                 -            -   $ (31,633,248) $ (11,612,504)

Common stock issued for
 compensation expense                           -                 -            -               -      1,749,091
Common stock issued for
 deferred compensation                          -                 -            -               -        901,052
Common stock issued for
 related party debt                             -                 -            -               -        227,969
Common stock issued for services                -                 -            -               -        140,547
Common stock issued on conversion
 of debt                                        -                 -            -               -      2,279,215
Common stock issued for cash                    -                 -            -               -        141,000
Common stock issued for accounts
 payable                                        -                 -            -               -         31,111
Common stock issued for interest                -                 -            -               -        153,043
Common stock issued for finance costs           -                 -            -               -        330,000
Warrants issued for bank letter of credit       -                 -            -               -         39,000

Cancellation of Class B Stock                   -                 -            -               -              -

Comprehensive Loss
Net income                                      -                                     (3,910,975)    (3,910,975)
Deferred compensation expense            (901,050)                -            -               -       (901,050)
Subscriptions receivable                        -                 -       (5,888)              -         (5,888)
                                                                                                    ------------
Total Comprehensive Loss                        -                 -            -               -     (4,817,913)
                                         ---------       -----------     --------  --------------   ------------
Balance December 31, 2003                (901,050)                -       (5,888)    (35,544,223)   (10,438,389)


Common stock issued for compensation
 expense                                        -                 -            -               -      1,157,040
Common stock issued for settlement of
 debt                                           -                 -            -               -      2,063,650
Common stock issued for purchase of
 patents                                        -                 -            -               -        280,000
Common stock issued for services                -                 -            -               -         32,000
Common stock issued on conversion
 of debt                                        -                 -            -               -        243,655
Common stock issued for cash                    -                 -            -               -        200,000
Common stock issued for investment
in subsidiary                                   -                 -            -               -      1,170,000
Common stock issued for interest                -                 -            -               -         19,713
Common stock issued for finance costs           -                 -            -               -        614,286
Warrants issued for debt financing              -                 -            -               -        598,490

Preferred Shares issued for cash                -                 -            -               -        375,000

Comprehensive Loss

Net loss                                                                              (9,148,893)    (9,148,893)
Deferred compensation expense             225,261                                                       225,261
Subscriptions receivable                        -                          5,888               -          5,888
Deferred financing costs                        -          (350,000)           -               -       (350,000)
Deemed dividend on preferred shares             -                                              -        189,208
                                                                                               -   -------------
Total Comprehensive Loss                        -                 -            -               -     (9,078,536)
                                         ---------       -----------     --------  --------------  -------------
Balance December 31, 2004                (675,789)         (350,000)           -   $ (44,693,116)  $(12,763,091)
                                         =========       ===========     ========  ==============  =============

</TABLE>

<PAGE>

                      GPS INDUSTRIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                    For the Years Ended December 31,
                                                                              ----------------------------------------------
                                                                                      2004                     2003
                                                                              ----------------------------------------------
Cash Flow From Operating Activities
<S>                                                                            <C> <C>                    <C> <C>
     Net loss from operations                                                  $ ( 8,959,685)             $ ( 3,910,975)


     Adjustments to reconcile net loss to net
      cash used in operating activities:
        Depreciation and amortization                                                125,507                     72,170
        Amortization of deferred compensation                                        225,261                    168,948
        Impairment of Patent Asset                                                 3,750,000                          -
        Inventory impairment                                                            -                       190,000
        Gain on extinguishment of debt                                            (2,074,293)               ( 1,199,350)
        Expenses paid by issuance of stock                                         1,383,530                  2,156,607
        Interest converted to stock                                                   73,713                    153,043
        Finance charges converted to stock                                           134,286                    330,000
        Amortization of finance costs                                                 26,000                          -
     Changes in operating assets and liabilities:
        Inventories                                                                 (856,575)                 ( 406,567)
        Accounts Receivable                                                         (239,698)                         -
        Prepaid expenses and deposits                                                (97,719)                  ( 11,032)
        Deferred implementation costs                                                100,688                  ( 105,985)
        Accounts payable and accrued liabilities                                    (317,612)                   428,310
        Discontinued Accounts payable and accrued liabilities                      1,139,586                          -
        Other liabilities                                                            118,848                          -
                                                                                   --------                         -
Net Cash Used In Operating Activities                                            ( 5,468,163)               ( 2,134,831)
                                                                                 ------------               ------------
Cash Flow From Investing Activities
        Purchase of property and equipment                                         ( 121,892)                  ( 70,400)
        Purchase of patents                                                         ( 23,500)                         -
        Investment in Optimal Golf                                                ( 1,100,000)                        -
                                                                                  ------------                        -
Net Cash Flow Used In Investing Activities                                        ( 1,245,392)                  ( 70,400)
                                                                                  ------------                  ---------
Cash Flow From Financing Activities
        Common stock issued for cash                                                  205,888                    141,000
        Convertible preferred stock issued for cash                                   375,000                          -
        Proceeds from loans and bank indebtedness                                   5,469,380                     30,443
        Repayments of bank loan                                                       (16,591)                  ( 27,382)
        Borrowings under bank indebtedness                                            812,546                  1,470,862
        Repayments of loans from related parties                                      (19,621)                  ( 60,723)
        Borrowing on convertible loans                                                 56,678                    625,000
                                                                                     -------                   -------
Net Cash Flow From Financing Activities                                             6,883,280                  2,179,200
                                                                                    ----------                 ---------


Effect Of Exchange Rate On Cash                                                          -                     ( 37,454)
                                                                                   ---------                   ---------
Net Increase (Decrease) In Cash                                                     169,725                   ( 63,485)
Cash, Beginning Of Period                                                             3,367                     66,852
                                                                                    ------                    ------

Cash, End Of Period                                                               $ 173,092                    $ 3,367
                                                                                  ============              =============
Supplemental disclosure of cash flow information:
     Cash paid for interest                                                         $ -                        $ -
                                                                                  ============              =============
     Cash paid for taxes                                                           $ -                        $ -
                                                                                  ============              =============

Non-Cash Investing And Financing Activities
     Common stock issued on conversion of convertible notes                          243,655                  2,279,215
     Common stock issued to settle debt                                            2,063,650                    227,969
     Common stock issued for deferred compensation expenses                              -                      901,052
     Common stock issued for interest                                                 19,713                          -
     Common stock issued for financing expenses                                      614,286                          -
     Warrants issued with debt                                                       280,000                          -
     Common stock issued for investment in subsidiary                              1,170,000                          -
     Common stock issued for expenses                                                 32,000                          -
     Warrants issued in consideration of debt financing                              404,000                          -
     Warrants issued for interest                                                    54,000                           -
     Common stock issued in settlement of accounts payable                              -                        31,111

</TABLE>


          See notes to accompanying financial consolidated statements

                                      F-5

<PAGE>

                      GPS industries Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements

                 For the years ended December 31, 2004 and 2003

1. NATURE OF OPERATIONS

GPS Industries Inc., (the "Company" or "GPSI") a Nevada corporation, is involved
in the development of golf course management technology. The Company has
developed hand-held and cart mounted Global Positioning System ("GPS") units. At
December 31, 2004, the Company had substantially all of its assets and
operations in Canada.

Infotech 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 and its assets and liabilities at
that time and have not been adjusted to reflect the bankruptcy filing.

All remaining unresolved liabilities of IGT are reflected as liabilities related
to discontinued operations. All resolution of liabilities related to IGT are
reflected as either a gain (loss) on extinguishment of debt - discontinued
operations.

ProShot Golf, Inc.

The Company acquired ProShot Golf Inc., ("ProShot") on January 12, 2001. ProShot
is a California based Company that manufactures, markets, leases and installs an
integrated GPS system that provides golfers with yardage readings and potential
shot options from any location on a golf course. The ProShot GPS system is
installed directly on golf carts.

On September 21, 2001, the Company received notices of defaults from a group of
Inforetech shareholders (the "Guarantors") in regard to a finance agreement
dated April 24, 2001. The Company, being unable to cure those defaults, along
with one of its directors signed an agreement with the Guarantors stating that
the Company would use its best efforts to assist in the foreclosure of ProShot's
assets by its bank, so that the Bank debt and ultimately the obligation of the
Guarantors, to the Bank, in respect of their guarantee of ProShot's Bank debt,
might be reduced.

During the fourth quarter of 2001, the Company discontinued all operations of
ProShot, accordingly all revenues, expenses and liabilities associated with
ProShot in 2001 has been classified as discontinued operations.

On May 31, 2002 ProShot filed a petition for relief under Chapter 7 of the
federal bankruptcy laws of the United States Bankruptcy Court.

All remaining unresolved liabilities of ProShot are reflected as liabilities
related to discontinued operations. All resolution of liabilities related to IGT
are reflected as either a gain (loss) on extinguishment of debt - discontinued
operations.

2.  ACQUISITIONS


On November 19, 2004 the Company entered into a Stock Purchase Agreement with
the shareholders of Optimal Golf Solutions, Inc. ("Optimal") to acquire 100% of
the common shares of Optimal (the "Share Acquisition") for $5,250,000. Optimal's
assets at the date of acquisition were concentrated in a single indentifiable
intangible patent asset, therefore the acquisition was treated as an asset
purchase for accounting purposes. The Company gave $2,270,000 of cash and stock
pursuant to the terms of the agreement as shown below. The remaining amount due
from the Company in the amount of $2,980,000 was recorded as a liability on the
Company's balance sheet.


                                      F-6

<PAGE>

         (i)      Upon signing the purchase agreement the Company was required
                  to pay $100,000 and an additional $1,000,000 at closing.

         (ii)     The balance of $4,150,000 is to be paid in two tranches of
                  shares of common stock of the Company. Shares issued under
                  these tranches, can be liquidated by the shareholders of
                  Optimal over 360 trading days (after the effectiveness of a
                  registration statement referred to below) in accordance with
                  the terms of a Leakage Agreement; and an additional cash
                  payment, if required, depending on what amount Optimal
                  receives from the shares it sells into the market.

                  The first stock tranche (payment) is for 9,000,000 shares.
                  These shares were trading at $.13 on the date the agreement
                  was signed and valued at $1,170,000, accordingly. Under the
                  terms of the agreement the shares can be sold in accordance
                  with the Leakage Agreement over 180 trading days. Any funds
                  received from the sale of those shares in excess of $3,250,000
                  (i.e. $1,000,000 over the $2,250,000 target price for the
                  first share payment) will be deducted from the amount to be
                  paid with the second stock payment, targeted for the remaining
                  amount due of $1,900,000 (plus interest). The stock price has
                  not reached the target price of $.25 at any point from the
                  date of the acquisition and is trading at $.10 on at April 8,
                  2005, therefore the Company will have to issue additional
                  shares to cover the difference between the market price and
                  $.25 target price or cash. The second stock tranche (payment)
                  will be issued at a 15% discount to market price at the time
                  of issuance and can be sold into the market by Optimal over a
                  further 180 trading days. The Company has the right to pay out
                  any remaining balance plus interest owing at any time.

                  The Company will use its best efforts to file a Registration
                  Statement as required under the Stock Purchase Agreement to
                  make the stock payments required to the shareholders under
                  this Agreement. If the Registration Statement has not become
                  effective by June 30, 2005, GPSI must pay cash of $2,250,000
                  plus interest over eight monthly instalments of $250,000 each
                  starting June 1, 2005. In that case, the first stock payment
                  of shares would be returned to the Company. If the
                  Registration Statement has not become effective by September
                  30, 2005, then the Company must also pay cash to the
                  shareholders (in lieu of a second stock payment) of $1,900,000
                  plus interest in eight monthly payments of $237,500 commencing
                  on October 1, 2005.

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

         The following table summarizes the estimated fair values of the assets
         acquired and liabilities assumed at the date of acquisition.


                           Aggregated purchase price          $   5,250,000
                                                                ===========
                           Day One Impairment                 $   2,250,000
                                                                -----------
                           Fair value of assets acquired      $   3,000,000
                           SFAS 144 Impairment                $  (1,500,000)
                                                                -----------
                           Net  assets acquired               $   1,500,000
                                                                 ==========


         These patents acquired have a remaining useful life of seven years and
         expire on November 11, 2011. The value attributed to these patents is

                                      F-7

<PAGE>


          based on  discounted  future  earnings  that the  Company  expects  to
          receive from ownership of the patents and license agreement  royalties
          with various customers over the life of the patents.

          A day one  measurement  of the  impairment  loss was calculated on the
          present  value of the third  party cash flows being  generated  by the
          patent on the date of valuation plus the amount added for a "relief of
          royalty"  full term license.  A "relief from royalty"  amount of $1.68
          million,  comparable  to an  existing  third  party full term  license
          payment, was added to the third party royalty license revenues already
          being generated by the 093 patent to calculate the  undiscounted  cash
          flow service  potential of the asset at the date of  acquisition.  The
          carrying  amount of the asset at the date of acquisition  exceeded and
          was not recoverable  from the total of the  undiscounted  cash flow of
          both the third  party  revenue  and  "relief  from  royalty"  revenue.
          Therefore the  recognition  and  measurement of an impairment loss was
          required.  This calculation resulted in a fair value impairment at the
          date of acquisition of $2.25 million.

          The  Company  determined  that a cash flow  recoverability  test as of
          December 31, 2004 was  necessary  under the guidance of SFAS 144 since
          the Company  had a  significant  current  period loss and a history of
          operating  and cash flow  losses.  SFAS 144 does not  provide  for the
          inclusion  of the cash flow of a "relief from  royalty"  method as was
          the case for the day one  measurement and resulting day one impairment
          loss,  therefore the "relief of royalty"  amount was excluded from the
          test at December 31,  2004.  Pursuant to SFAS 144 the Company used the
          lowest  level of  identifiable  cash flows for the  patent  which were
          considered  to be the cash flows for the  underlying  business  of the
          Company,  as the underlying business requires either ownership of or a
          license under the patent to operate. The cash flow recoverability test
          was performed based on the  undiscounted  cash flows of the underlying
          business  over the future life of the patent  compared to the carrying
          value of the patent. This test included the effects of the current and
          projected cash flows of the business beginning with historical numbers
          and projecting  future cash flows using various  assumptions  over the
          life of the patent.  The sum total of these future  undiscounted  cash
          flows did not exceed the  carrying  value of the  asset.  Therefore  a
          second  impairment  test was calculated  based on the present value of
          the  future  cash  flows of the  business.  As a result  of this  test
          pursuant to SFAS 144, the Company  determined  that there was a second
          impairment  of $1.5  million  to reduce  the value of the asset to the
          $1.5 million on December 31, 2004.




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, 2004. 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, 2004, have expressed substantial doubt about
the Company's ability to continue as a going concern.

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

                                      F-8

<PAGE>


4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


These 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.

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

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

Revenue recognition

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

Impairment of Long-Lived Assets


The Company's long-lived assets consist of patents, property and equipment. In
assessing the impairment of 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 did not record
any impairment charges for property and equipment at December 31, 2004. However,
if these estimates or the related assumptions change in the future, the Company
may be required to record impairment charges for these assets at such time. The
Company did record impairment charges for certain of its patent assets at
December 31, 2004. These impairment charges are more fully discussed in Note 2
to the Financial Statements.


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. which  it
acquired on November 19, 2004.  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 18,829,806 potential shares were
excluded from the fully diluted calculation as they are anti-dilutive.

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

                                      F-9

<PAGE>

that would occur if dilutive stock options and warrants were exercised. These
potentially dilutive securities were not included in the calculation of loss per
share for the periods presented because the Company incurred a loss during such
periods and thus their effect would have been anti-dilutive. Accordingly, basic
and diluted loss per common share is the same for all periods presented.

Use of Estimates

The preparation of financial statements in conformity with accounting principals
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.

Reclassification

Certain amounts have been reclassified in 2003 to conform to the presentation in
2004.

Financial Instruments

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

Foreign Currency Translation

Assets and liabilities of subsidiaries operating in foreign countries are
translated into U.S. dollars using both the exchange rate in effect at the
balance sheet date of historical rate, as applicable. Results of operations are
translated using the average exchange rates prevailing throughout the year. The
effects of exchange rate fluctuations on translating foreign currency assets and
liabilities into U.S. dollars are included in stockholders equity (Accumulated
other comprehensive loss), while 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
collectibility 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, 2004 the allowance for doubtful accounts was $0.

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
Patents                                   Patent life

The Company leases certain of its office equipment under capital lease
agreements. The assets and liabilities under capital leases are recorded at the
lesser of the present value of aggregate future minimum lease payments or the
fair value of the assets under the lease. Assets under capital lease are
depreciated over the shorter of their estimated useful lives or the lease term.

                                      F-10

<PAGE>

Depreciation expense for the years ended December 31, 2004 and 2003 was $81,074
and $72,170 respectively.

Cash and Cash Equivalents

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

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.

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at fair
value. The Company has chosen to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and related Interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the estimated fair value of the Company's stock at the date of the grant
over the amount an employee must pay to acquire the stock. The Company has
adopted the "disclosure only" alternative described in SFAS 123 and SFAS 148,
which require pro forma disclosures of net income and earnings per share as if
the fair value method of accounting had been applied.

Pro forma information regarding net income (loss) and net loss per share is
required by SFAS No. 123 and has been determined as if the Company had accounted
for its stock options granted using the fair value method of SFAS No. 123. No
stock options were issued in the year ended December 31, 2004. The fair value
for options issued in the year ended December 31, 2003 was estimated at the date
of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions: risk-free interest rate of 6%; no dividend yield;
volatility factor of the expected market price of the Company's common stock of
150%, and the expected lives of the options were estimated at approximately 4
years. The weighted average fair value of stock options granted for the years
ended December 31, 2004 and 2003 was $Nil and $122,976, respectively.

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 employee 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 do not provide a reliable single measure of the
fair value of its employee stock options.

                                      F-11

<PAGE>

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information is as follows:



                                         2004                 2003
                                        ------               ------
Net loss as reported               $(9,148,893)         $ ( 3,910,975)
Pro forma compensation expense               -               (122,976)
                                   ------------         --------------
Pro forma net loss                 $(9,148,893)         $ ( 4,033,951)
                                   ============         ==============

Net loss per share:
Basic and diluted, as reported         $ (0.05)             $ (0.04)
Basic and diluted, pro forma           $ (0.05)             $ (0.04)

Income Taxes

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. This history is limited with regard to the
Company as the current year end of December 2004, is the year the Company
commenced sale and distribution of their GPS product. The Company does not
believe that it is exposed to any significant risk in its cash investment.

Recent Accounting Pronouncements

-        In November 2004, the Financial Accounting Standards Board issued (`the
         FASB") issued Statement of Financial Accounting Standards No. 151
         ("SFAS No. 151"), "Inventory Costs, an amendment of ARB No. 43, Chapter
         4." SFAS No. 151 clarifies that abnormal inventory costs such as costs
         of idle facilities, excess freight and handling costs, and wasted
         materials (spoilage) are required to be recognized as current period
         costs. The provisions of SFAS No.151 are effective for inventory costs
         incurred during fiscal years beginning after June 15, 2005. Management
         is currently evaluating the provisions of SFAS No. 151 and does not
         expect the adoption will have a material impact on the Company's
         financial position, results of operations or cash flows.

                                      F-12

<PAGE>

         In December 2004, the FASB finalized SFAS No. 123R "Share-Based
         Payment" ("SFAS 123R"), amending SFAS No. 123, effective beginning the
         Company's first quarter of fiscal 2006. SFAS 123R will require the
         Company to expense stock options based on grant date fair value in its
         financial statements. Further, adoption of SFAS No. 123R will require
         additional accounting related to income tax effects and additional
         disclosure regarding cash flow effects resulting from share-based
         payments arrangements. The adoption of SFAS 123R will not effect the
         Company's cash flows or financial position, but may have an adverse
         impact on results of operations if options are granted in the future.

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

5. PROPERTY AND EQUIPMENT

At December 31, 2004 property and equipment consisted of the following:


Office equipment                                $            302,536
Computer software                                             77,708
Leasehold improvements                                       105,628
Tooling                                                       28,297
                                                              ------
                                                             514,169
Less:  accumulated depreciation                             (399,544)
                                                           ---------
                                                $            114,625
                                                           =========

6. PATENTS

         In June 2004, in addition to patents acquired with the Optimal
         purchase, 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. The purchase price for these
         patents was $20,000 in cash and the issuance of 3,500,000 shares of
         common stock valued at $0.08 per share or $280,000, for a total cost of
         $300,000. 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 capitalized related legal and
         acquisition fees of $3,500.

         In addition to the above Pinranger patents, the Company has possession
         of all of Optimal's patents, since the acquisition of Optimal in
         November 2004

The following is a reconciliation of all patents owned as of December 31, 2004:

               Patents                               $  1,803,500
               Less: accumulated depreciation             (44,433)
                                                       -----------
                                                     $  1,759,067
                                                       ===========

                                      F-13

<PAGE>


Future amortization of patents is expected to be as follows:

               Year Ended December 31,
                       2005                              $  249,992
                       2006                                 249,992
                       2007                                 249,992
                       2008                                 249,992
                       2009                                 249,992
                       Thereafter                           509,107
                                                         -----------
                                                         $1,759,067
                                                         ===========


7. CAPITAL LEASES


The Company's subsidiary IGT leased certain equipment under capital lease
agreements that expire at various dates through January 2006. During 2002 IGT
defaulted on those leases and surrendered the equipment to the leasing Company.
The leasing Company took action in the Supreme Court of British Columbia for the
balances outstanding on the leases. No liability is expected to accrue to the
Company as a result of these actions, but the balance of the leases have been
shown as a current liability at December 31, 2004.



8. DEBT


The Company and its subsidiaries have significant debt liabilities. The
following table is a summary of debt at December 31, 2004.


Bank Indebtedness  (a)                             $      2,309,408
Bank Loan (h)                                                25,121
Short term loans  (b)                                     1,663,332

Long term loan (f)                                        3,000,000
Discount on debt (f)                                      (480,000)
                                                          ---------
                                              Sub-total:  2,520,000
                                                          ---------

Convertible debt (c)                                        671,892
Note payable - related parties (g)                          603,415
Promissory notes (d)                                      1,274,757
Loan to related party  (e)                                  258,000
                                                        -----------
Total Debt                                                9,325,925
Less Current Portion                                     (6,374,033)
                                                        -----------
Total Long-Term Debt                               $      2,951,892
                                                        ===========

                                      F-14
<PAGE>


      (a)  (i)    Effective June 27, 2003, the Company obtained a one year bank
                  line of credit for $1,425,000 to fund its operations.  As of
                  December 31, 2004, the Company has drawn $1,333,499 under this
                  line of credit. The line of credit bears interest at prime
                  plus 0.5%, which was 4.75% at December 31, 2004. This line
                  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.  As consideration for providing
                  the standby bank letter of credit, the Company issued to
                  Hansen Inc. a common stock purchase warrant to purchase
                  1,000,000 shares of the Company's common stock, exercisable
                  $0.10 per share (a 15% discount to the market price) for a
                  period of three years.  The fair value of this common stock
                  purchase warrant, calculated pursuant to the Black-Scholes
                  option pricing model, was determined to be $52,000, which was
                  charged to operations over the twelve month period beginning
                  July 2003 and ending June 2004. Accordingly, $26,000 was
                  charged to operations as finance costs for the twelve months
                  ended December 30, 2004. This letter of credit was renewed in
                  June 2004, December 2004, and in March 2005 until December
                  2005. For the extension granted in December 2004, the Company
                  issued warrants to purchase 500,000 shares, with an exercise
                  price of $0.10 per share. These warrants have been valued at
                  $52,000, and have been accounted for as a deferred finance
                  cost, in the accompanying shareholders' deficit. The cost will
                  be amortized over three months, the approximate length of the
                  extension of the line of credit. None of the deferred costs
                  have been amortized as of December 31, 2004. The value of the
                  warrants was determined with use of the Black-Scholes pricing
                  model with the following factors: 3 year life, risk free rate
                  of return of approximately 3.25% and a volatility factor of
                  approximately 125%. In March 2005 a further extension of the
                  credit line an additional 1,000,000 warrants were provided to
                  Hansen Inc. for three years at an exercise price of $0.12 per
                  share.  Management is currently determining the valuation of
                  these warrants for the extension of the line of credit.

           (ii)   Effective March 23, 2004, the Company entered into a
                  Reimbursement Agreement with Douglas J. Wood, Daniel S. Wood
                  and James Liken (the Secured Party) to have them secure a new
                  $1,000,000 line of credit to be used for manufacturing
                  purposes. The security provided was a Letter of Credit from
                  Citicorp North America Inc. The Company's bankers HSBC Bank
                  Canada provided the Company this new line of credit on April
                  29, 2004 based on the security provided. As of December 31,
                  2004 The Company has drawn $975,909 from this credit line. The
                  credit line has been renewed until October 31, 2005. This line
                  bears interest at prime plus 0.5%, which was 4.75% at December
                  31, 2004.

                  As consideration, for the security for this credit line, the
                  Secured Party is to receive 1.25% of the maximum amount
                  outstanding per month of this credit line. This consideration
                  is payable 50% in US$ and 50% in common shares of the Company,
                  issued at a 10% discount to market based on the seven day
                  average price prior to each quarter end. Additionally, the
                  Company agreed to issue warrants to purchase 666,667 shares of
                  the Company's common stock at US$0.15 per share. The Company
                  also granted the Secured Party a security interest in all the
                  Company's inventory. This letter of credit, along with its
                  related Reimbursement Agreement, has been renewed until
                  October 31, 2005. These warrants have been valued at $72,000,
                  and have been accounted for as a deferred financial cost, in
                  the accompanying shareholders' deficit. The cost is being
                  amortized over one year, the approximate length of the line of
                  credit. A total of $54,000 of the deferred costs has been
                  amortized in the year ended December 31, 2004. The value of
                  the warrants was determined with use of the Black-Scholes
                  pricing model with the following factors: 3 year life, risk
                  free rate of return of approximately 1.9% and a volatility
                  factor of 200%.

                                      F-15

<PAGE>

(b)      As at December 31, 2004 the Company has $1,663,332 owing on short term
         notes from various employees and investors. These notes are payable on
         demand, and bear interest at varying rates of 0% to 36% per annum.
         These notes are unsecured.

(c)      One convertible loan was outstanding as at December 31, 2004.  Amount
         due to The Shaar  fund of $671,892.

         The Shaar Fund:

         Effective August 4, 2000, amended by agreement dated October 29, 2002
         the Company entered into a securities purchase agreement with The Shaar
         Fund Ltd., relating to the sale of $1,000,000 in principal amount of 8%
         Convertible Debenture due November 2, 2007 and warrants to purchase up
         to 100,000 shares of Common Stock. Interest of 6% accrues on this
         debenture from September 12, 2000 and is payable quarterly commencing
         September 30, 2000. The exercise price of the warrants is $6.25 and
         they expire on September 12, 2005. The amending agreement also added
         interest accrued as at the amendment date of $166,000 to principal.

         As at December 31, 2004 the principal amount outstanding is $726,000
         which is offset by unamortized debt discount of $42,624 and unamortized
         finance costs of $11,484, giving a net balance of $671,892. The
         principal is being repaid at $20,000 plus accrued interest per month.

         At the time of issuance the proceeds raised of $1,000,000 have been
         allocated to the debt ($634,649) and the warrants ($365,351) based on
         their relative fair values at the date the loan was received. The fair
         value of the warrant is considered to be a discount on the convertible
         debenture, with a corresponding credit to additional paid in capital.
         The debt discount is being amortized, on an effective basis, over the
         five-year term of the debenture. During 2004 and 2003, $54,142 and
         $73,068, respectively, of the discount was amortized and included in
         financing costs, leaving an unamortized debt discount of $42,624. In
         addition to the debt discount, the Company allocated a deferred
         financing cost asset. During 2004 and 2003, $2,536 and $2,535,
         respectively were amortized pertaining to this deferred finance cost,
         leaving an unamortized balance of $11,484 as of December 31, 2004.

         The debenture is convertible (plus related interest expense) into
         Common Stock at the lesser of (i) $.32 or (ii) 75% of the average of
         the three lowest closing bid prices of the Company's common shares for
         the ten days immediately preceding the conversion date. These terms
         give the holder an in the money conversion rate, the benefit of which
         is limited to the proceeds allocated to the debt. Accordingly, a
         beneficial conversion feature of $634,649 has been recognized as a
         further discount on the convertible debenture liability with a
         corresponding credit to additional paid in capital.

 (d)     This is a promissory note for $1,274,757, which was entered into by the
         Company's discontinued, ProShot subsidiary in January 2001. The note
         matured in January 2004, with accrued interest at 6% per annum,
         accruing form October 1998. The Company has not accrued any interest on
         this note since December 2001.

(e)      The Company has a promissory note dated December 11, 1998 in the amount
         of $258,000 due to a party related to ProShot. As these are part of
         discontinued operations, the Company has not accrued ant interest
         related to these notes in the years ended December 31, 2004 and 2003,
         respectively.

(f)      On December 3, 2004 GPS Industries, Inc. ("GPSI") entered into a Credit
         Agreement with Great White Shark Enterprises, Inc. ("GWSE") for GWSE to
         provide 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. Collateral for the loan was a first

                                      F-16

<PAGE>

         recorded priority security interest in (i) all of the shares of the
         capital stock of Optimal Golf Solutions, Inc. ("Optimal") acquired by
         GPSI pursuant to a Stock Purchase Agreement dated November 19, 2004
         between GPSI and the former shareholders of Optimal, (ii) a second
         security interest in the Optimal Patents behind the former Optimal
         shareholders, in the event that GPSI does not fulfill their purchase
         agreement of the Optimal and (iii) all rights of GPSI to the Pinranger
         Patents acquired by GPSI pursuant to an Agreement dated July 2, 2004
         between GPSI and Pinranger (Australia) Pty. Ltd. and  PagiSat, LLC. The
         Pinranger Patents are registered in 13 countries in Europe, Japan, and
         Australia.

         The Term Loan may be repaid at any time prior to maturity without
         premium or penalty, except that the total minimum interest to be paid
         must be $300,000 irrespective of when the loan is repaid. During the
         term of the loan, GPSI must pay interest of 10% per annum on a monthly
         basis in cash or shares. If GWSE chooses to receive shares, the
         interest rate will be adjusted to 15% for the period selected and the
         shares will be priced at a 15% discount to market, using the average
         daily close for the three trading days prior to the end of the monthly
         period for which interest is due. The maturity date on this loan is
         November 15, 2011, and accordingly the entire loan is classified as
         long-term.

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

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

         In addition to the above-mentioned interest and security provided for
         the Term Loan, GWSE will also receive an equity bonus of 3,000,000
         restricted Common Shares of GPSI and a three year Warrant to purchase
         2,000,000 Common Shares of GPSI at an exercise price of $.15. These
         warrants are exercisable immediately.

         The Company has recorded a debt discount of $480,000 with regards to
         the issuance of 3,000,000 shares of common stock. This discount will be
         amortized over the life of the loan, or until such time as the
         principal is paid off. As of December 31, 2004, none of the discount
         has been amortized.

         With regards to the warrants attached to the note, the Company has
         recorded a deferred financial cost of $280,000, in the accompanying
         shareholders' deficit. The cost is being amortized over the life of the
         loan, or until such time as the principal is paid off. As of December
         31, 2004, none of the costs associated with this deferred cost has been
         amortized. These warrants were valued base upon a Black-Scholes
         calculation, assuming a three year life, a risk free rate of return of
         approximately 2.25% and a volatility of approximately 125%.

(g)      Promissory notes payable to the president of the Company are unsecured,
         repayable on demand and bear interest at 8% per annum. As of December
         31, 2004 the balance of the note is $603,415. Interest of $79,685 has
         been accrued on this note through December 31, 2004.

                                      F-17

<PAGE>

(h)      The Company has a loan from a commercial bank for $27,668. As part of a
         settlement agreement the bank agreed that no further interest will
         accrue on this loan.

All of the above notes are classified as short term, payable within one year,
except for the convertible loan outstanding due to the Shaar Fund. (Debt (c))
and the loan from Great White Shark Enterprises, Inc. (Debt (f))

Principal repayable on Long term debt is:

         2005              $    240,000
         2006              $    240,000
         2007              $    191,892
         Thereafter        $  2,520,000
                           ---------------
         Total             $  3,191,892
                           ===============


9. GAIN ON EXTINGUISHMENT OF DEBT


-        In February 2001, the Company received a $1,185,000 loan bearing
         interest at LIBOR plus 1% which was collateralized by certain
         securities. The lender cannot be located at the date of this report,
         and the Company believes this collateral has been realized. As a
         result, the Company has written off this loan liability in the year
         ended December 31, 2004. This write off amounted to $1,185,000, and has
         been recorded in the Consolidated Statement of Operations as a gain on
         extinguishment of debt.

-        On May 10, 2004 the Company agreed to issue 6,336,883 shares of common
         stock to Proshot Investors LLC and various other parties valued at
         market value of $570,320 in settlement of debt guarantee liabilities of
         $1,118,000, for a gain on extinguishment of debt of $547,680. Of the
         shares issued in settlement, 1,873,651 are held in escrow and may be
         used to satisfy a further recorded liability of the Company no later
         than January, 2010. These shares were all issued in July, 2004. The
         remaining liability represents a promissory note for $1,274,757 for
         fees owed to Proshot's attorneys.

-        During the year ended December 31, 2004 the Company wrote off trade
         debts arising from discontinued operations amounting to $332,537. This
         was based upon management's belief that these debt holders rights have
         expired under the statutes of limitations in the various States in
         which the debt holders reside.

-        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
         gain on extinguishment of debt amounting to $9,076.



10. STOCKHOLDERS' DEFICIT


Effective September 30, 2003, pursuant to a written consent of a majority of the
Company's stockholders, the Company amended its Articles of Incorporation to
change its name to GPS Industries Inc., to increase the authorized shares of
common stock from 100,000,000 shares to 250,000,000 shares, to authorize
25,000,000 shares of preferred stock, and to eliminate the dual classes of
common stock. The elimination of the dual classes of common stock has been
reflected in the Company's consolidated financial statements at December 31,
2003, and did not have any effect on the Company's consolidated results of
operations, financial position or cash flows.

                                      F-18

<PAGE>

A definitive proxy statement was filed with the SEC on March 21, 2005 to
increase the total number of authorized shares to 550,000,000 of which
500,000,000 will be common shares and 50,000,000 will be preferred shares. The
Company will hold a special meeting of shareholders on April 27, 2005 at 8:00 am
at their corporate offices in Surrey, B.C. to vote on the proposed increase of
authorized shares which will be used to raise additional equity capital for the
Company.


Details Of Shares Issued:

         On January 7, 2003, the Company issued 250,000 shares of common stock
         to a former employee of the Company, valued at market value of $10,000
         as part of a severance package, which was charged to operations. This
         employee is the son of the Company's Chief Executive Officer.

         On January 29, 2003 the Company issued 1,903,363 shares to Augustine
         Funds LP for principal and accrued interest of $45,000 and $8,770
         respectively with respect to a $1,000,000 8% convertible debenture due
         August, 2005

         On February 1, 2003 and March 14, 2003, the Company issued 500,000
         shares of common stock valued at $35,000 to a consultant for services
         rendered.

         On February 1, 2003, the Company issued 617,528 shares of common stock
         to The Sharr Fund Ltd. for principal and accrued interest of $20,000
         and $316, respectively, with respect to a $1,000,000 8% convertible
         debenture due November 2, 2007. On March 1, 2003, the Company issued an
         additional 600,294 shares of common stock to The Sharr Fund Ltd., for
         principal and accrued interest of $20,000 and $1,315, respectively,
         with respect to this convertible debenture. The debenture is
         convertible (plus related accrued interest) into common stock at the
         lesser of (i) $5.25 per share or (ii) 75% of the average of the three
         lowest closing bid prices of the Company's common stock for the ten
         days immediately preceding the conversion date.

         On March 31, 2003, the Company issued 5,520,468 shares of common stock
         to Augustine Funds, L.P. for principal and accrued interest of $127,000
         and $26,193, respectively, with respect to a $1,000,000 8% convertible
         debenture due August 4, 2005. The debenture is convertible (plus
         related accrued interest) into common stock  at the lesser of (i) $5.25
         or (ii) 75% of the average closing bid price of the Company's common
         stock for the five days immediately preceding the conversion date.

         On April 15, 2003, the Company issued 3,100,000 shares of common stock
         to various consultants for services rendered.

         On April 22, 2003, the Company issued 446,914 shares of common stock to
         The Sharr Fund Ltd. for principal and accrued interest of $20,000 and
         $513, respectively, with respect to a $1,000,000 8% convertible
         debenture due November 2, 2007.

         On May 9, 2003, the Company issued 200,000 shares of common stock
         valued at $38,000 for principal and accrued interest of $25,329 and
         $12,671, respectively, for a partial payment on an $85,000 promissory
         note obligation to La Jolla Investments.

         On May 9, 2003, the Company issued 2,165,000 shares of common stock
         valued at $411,350 to related parties for services rendered.

         On June 24, 2003, the Company issued 422,459 shares of common stock to
         the Shaar Fund Ltd. for principal and accrued interest of $40,000 and
         $1,330, respectively, with respect to a $1,000,000 8% convertible
         debenture due November 2, 2007.

                                      F-19

<PAGE>

         During July 2003, the Company issued 6,000,000 shares of common stock
         to Augustine Funds, L.P. for principal and accrued interest of $600,000
         and $10,500, respectively, with respect to a $1,000,000 8% convertible
         debenture due August 4, 2005.

         On October 16, 2003 the Company issued 10,000,000 shares of common
         stock in connection with a 57 month endorsement agreement. The shares
         were valued at the market on date of issuance for $1,070,000.
         Accordingly, this amount was recorded as deferred compensation and is
         being amortized over the life of the agreement. The Company recognized
         $168,950 in amortization expense for the year ended December 31, 2003.

         On October 16, 2003 the Company issued 313,650 shares of common stock
         valued at $ 12,546 to a former employee in settlement of a claim.

         On December 1, 2003 the Company issued 200,000 shares of common stock
         valued at $31,111 in partial settlement of accounts payable of $65,000.

         On December 2, 2003 the Company issued 250,000 shares of common stock
         valued at $25,000 to La Jolla for principal of $25,000 for a partial
         payment on an $85,000 promissory note obligation to La Jolla
         Investments.

         On December 2, 2003 the Company issued 5,703,071 shares of common stock
         valued at $399,215 in full payment of a convertible loan.

         On December 2, 2003 the Company issued 100,000 shares of common stock
         valued at $10,000 for services rendered.

         On December 2, 2003 the Company issued 1,000,000 shares of common stock
         valued at $100,000 to for advisory services.

         On December 2, 2003 the Company issued 1,000,000 shares of common stock
         valued at $100,000 for consulting services.

         On December 2, 2003 the Company issued 17,000 shares of common stock
         valued at $1,700 in full payment of a debt.

         On December 2, 2003 the Company issued 155,500 shares of common stock
         valued at $15,555 as a payment of interest on a short term loan.

         On December 2, 2003 the Company issued 300,000 shares of common stock
         valued at $30,000 as a signing bonus.

         On December 2, 2003 the Company issued 2,068,000 shares of common stock
         valued at $206,800 to related parties in lieu of the balance of a
         severance settlement.

         On December 2, 2003 the Company issued 500,000 shares of common stock
         valued at $50,000 for services rendered.

         On December 2, 2003 the Company issued 122,000 shares of common stock
         valued at $18,300 to three former employees for salaries owed.

         On December 2, 2003 the Company issued 3,445,131 shares of common stock
         valued at $172,257 to a related party -in repayment of a long term debt
         outstanding since 1999. The payment included interest accrued at the
         rate of 5%, totalling $30,675

                                      F-20

<PAGE>

         On December 2, 2003 the Company issued 2,802,567 shares of common stock
         valued at $168,154 to Augustine Funds, L.P. for principal and accrued
         interest of $148,000 and $20,154 respectively, with respect to a
         $1,000,000 8% convertible debenture due August 4, 2005.

         On December 2, 2003 the Company issued 500,000 shares of common stock
         valued at $50,000 to five members of the Company's Board of Advisors.

         On December 2, 2003 the Company issued 7,161,285 shares of common stock
         for conversion of $500,000 of debt owed to Whag.

         On December 2, 2003 the Company issued 500,000 shares of common stock
         valued at $50,000 for legal fees provided.

         On December 2, 2003 the Company issued 1,500,000 shares of common stock
         valued at $150,000 to the Company's Board of Directors.

         On December 2, 2003 the Company issued 1,107,000 shares of common stock
         valued at $106,433 to the Sharr fund. Fund Ltd. for principal and
         accrued interest of $100,000 and $6,433 respectively, with respect to a
         $1,000,000 8% convertible debenture due November 2, 2007.

         On December 2, 2003 the Company issued 2,066,100 shares of common stock
         valued at $103,305 for conversion of debt

         On December 31, 2003 the Company issued 6,316,802 shares of common
         stock valued at $538,261 to Whag, $500,000 principal and accrued
         interest of $38,261.

         On December 31, 2003 the Company issued 3,000,000 shares of common
         stock valued at $300,000 to Vindemiolla. $200,000 of this amount
         related to the cancellation of a royalty program and the remaining
         $100,000 related to the release of patent rights held as security.

         On December 31, 2003 the Company issued 1,410,000 shares of common
         stock valued at $141,000 for cash.

         On December 31, 2003 the Company issued 150,000 shares of common stock
         valued at $15,000 for principal of $15,000 for a partial payment on an
         $85,000 promissory note obligation to La Jolla Investments.

         On January 9, 2004, the Company issued 53,000 shares of common stock
         valued at market value of $7,685 for services rendered.

         On January 22, 2004, the Company issued 100,000 shares of common stock
         valued at market value of $16,000 for services rendered.

         On January 22, 2004, the Company issued 1,000,000 shares of common
         stock valued at market value of $160,000 to Blue & Gold Capital in
         settlement of debt.

         On March 2, 2004 the Company issued 100,000 shares of common stock
         valued at market value of $13,000 as a signing bonus to an employee.

         On March 2, 2004 the Company issued 518,333 shares of common stock
         valued at market value of $67,383 to various consultants for services
         rendered.

         On March 2, 2004 the Company issued 250,000 shares of common stock to
         Atechs corporation valued at market value of $31,250 in settlement of
         debt, related to a discontinued operation.

         On March 2, 2004, the Company issued 23,518 shares of common stock
         valued at $2,940 as payment of interest on a short term loan.

                                      F-21

<PAGE>

         On April 15, 2004, the Company issued 20,000 shares of common stock
         valued at market value of $2,400 for services rendered

         On May 10, 2004 the Company issued 6,336,883 shares of common stock to
         Proshot Investors LLC and various other parties valued at market value
         of $570,320 in settlement of debt guarantee liabilities of $1,118,000.
         1,873,651 of these shares are held in escrow and may be used to satisfy
         a further recorded liability of the Company no later than January 2010.

         On May 15, 2004, the Company issued 1,957,143 shares of common stock
         valued at market value of $156,571 for services rendered.

         On May 15, 2004, the Company issued 714,286 shares of common stock
         valued at market value of $57,143 to Blue & Gold Capital in settlement
         of debt and as payment for services rendered.

         On June 7, 2004 the Company issued 60,590 shares of common stock to La
         Jolla Cove Investors valued at market value of $4,847 in full
         settlement of the debt outstanding.

         On June 29, 2004, the Company issued 3,500,000 shares of common stock
         to several parties valued at market value of $280,000 as payment for
         the acquisition of the Pinranger patents.

         On July 6, 2004 the Company issued 1,750,000 shares of common stock to
         Mr. Ross McKenzie valued at market value of $157,500 in full settlement
         of a promissory note outstanding.

         On July 12, 2004, the Company issued 350,000 shares of common stock
         valued at market value of $28,000 for services rendered

         On July 26, 2004 the Company issued 2,991,088 shares of common stock
         valued at $269,198 to the Shaar fund. Fund Ltd. for principal and
         accrued interest of $160,000 and $25,543 respectively, with respect to
         a portion of the $1,000,000 8% convertible debenture due November 2,
         2007. The difference of $83,655 was charged to a loss on extinguishment
         of debt.

         On July 22, 2004 the Company issued 473,222 shares of common stock to
         the MWW Group valued at market value of $42,590 in partial settlement
         of a debt outstanding for $73,261, the difference of $30,671 has been
         recorded as a corresponding gain on extinguishment of debt.

         On August 30, 2004 the Company issued 500,000 shares of common stock
         valued at $40,000 to Augustine Funds, L.P. for debt with respect to a
         $1,000,000 8% convertible debenture due August 4, 2005, that was
         previously settled in 2003. This settlement in 2004 was an additional
         amount of settlement claimed by the debenture holders.

         On August 30, 2004, the Company issued 400,000 shares of common stock
         valued at market value of $32,000 for services rendered.

         On August 30, 2004 the Company issued 1,450,000 shares of common stock
         valued at market value of $116,000 as signing bonuses.

         On August 30, 2004 the Company issued 2,857,143 shares of common stock
         for cash purchase of $200,000. In connection with this investment, a
         total of 714,285 warrants at an exercise price of $0.10 per share were
         attached. These warrants have a three year life from the date of
         issuance.

         On August 30, 2004, the Company issued 1,428,571 shares of common stock
         valued at market value of $112,857 for financing services rendered.

         On November 3, 2004 the Company issued 500,000 shares of common stock
         valued at $50,000 for services rendered.

         On November 3, 2004 the Company issued 8,000,000 shares of common stock
         valued at market value of $800,000 as part payment for the acquisition
         of Optimal.

                                      F-22

<PAGE>

         On November 24, 2004, the Company issued 10,000,000 shares of common
         stock valued at market value of $1,000,000 in full settlement of an
         outstanding debt.

         On December 2, 2004, the Company issued 1,500,000 shares of common
         stock valued at market value of $240,000 to various consultants for
         services rendered.

         On December 2, 2004 the Company issued 500,000 shares of common stock
         valued at market value of $80,000 as part payment for the acquisition
         of Optimal.

         On December 2, 2004 the Company issued 450,000 shares of common stock
         valued at market value of $67,500 to various consultants for services
         rendered.

         On December 27, 2004 the Company issued 2,446,428 shares of common
         stock valued at $342,500 for services rendered.

         On December 30, 2004 the Company issued 500,000 shares of common stock
         valued at $70,000 for services rendered

         On August 3, 2004, the Company issued 250,000 shares of Series A 5%
         Convertible Preferred Stock for $250,000. This stock is convertible
         into 3,521,126 common shares, at a conversion rate of $0.071 per share.
         In addition, attached to the issuance are 880,282 common stock purchase
         warrants at an exercise price of $0.167 per share. In connection with
         this offering the Company recognized a deemed dividend of $120,423, of
         which $76,057 is attributed to the beneficial conversion feature, and
         $44,366 is attributed to the value of the warrants which are
         exercisable upon issuance. The value of the warrants was determined
         with use of the Black-Scholes pricing model with the following factors:
         3 year life, risk free rate of return of 4% and a volatility factor of
         125%.

         On October 27, 2004, the Company issued 125,000 shares of Series A 5%
         Convertible Preferred Stock for $125,000. This stock is convertible
         into 2,371,912 common shares, at a conversion rate of $0.0527 per
         share. In addition, attached to the issuance are 592,978 common stock
         purchase warrants at an exercise price of $0.124 per share. In
         connection with this offering the Company recognized a deemed dividend
         of $68,785, of which $45,422 is attributed to the beneficial conversion
         feature, and $23,363 is attributed to the value of the warrants which
         are exercisable upon issuance. The value of the warrants was determined
         with use of the Black-Scholes pricing model with the following factors:
         3 year life, risk free rate of return of 4% and a volatility factor of
         125%.

         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.


11. STOCK PURCHASE WARRANTS


During the year ended December 31, 2004, the Company issued the following
warrants:

         During the year ended December 31, 2004, the Company issued 3,166,667
         warrants associated with various debt issuances. (see Note 7)

         During the year ended December 31, 2004, the Company issued warrants to
         purchase 714,285 shares at $0.10 in connections with the sale of common
         stock (see Note 9)

         During the year ended December 31, 2004, the Company issued for
         services warrants to purchase 3,950,000 shares of common stock at
         prices ranging from $0.055 to $0.19 per. The Company has valued
         1,750,000 of these warrants at $183,000, and has accounted for this as

                                      F-23

<PAGE>

         an operating expense. The valuation was based upon a Black-Scholes
         calculation, assuming a three year life, a risk free rate of return of
         ranging from approximately 2 to 4% and a volatility ranging from
         approximately 100% to 250%. The remaining 2,200,000 warrants, issued
         for services, were issued at exercise prices ranging from $0.10 to
         $0.19 per share, with a 120 day life. These remaining 2,200,000
         warrants were valued at $11,490, and has accounted for this as an
         operating expense. Theses warrants were valued based upon a
         Black-Scholes calculation, assuming a 120 day life, a risk free rate of
         return of approximately 4% and a volatility of approximately 100% to
         250%. These 2,200,000 warrants have expired as of December 31, 2003.

During the year ended December 31, 2003, the Company issued the following
warrants:

         During the year ended December 31, 2003, the Company issued a warrant
         for the purchase of 1,000,000 shares at $0.10 per share. These warrants
         are associated with debt issuances. (see Note 7)

     A reconciliation of warrant activity is as follows:

<TABLE>
<CAPTION>
                                                                   Number of          Weighted
                                                                    shares            average
                                                                   issuable        exercise Price
                                                                 --------------    ---------------
<S>                                   <C>                            <C>                 <C>
                   Balance at January 1, 2003                        5,735,714           $  0.055

                         Granted                                     1,000,000               0.10

                         Exercised                                           -                  -

                         Expired                                   (1,885,714)             (1.07)
                                                                 --------------    ---------------
                   Balance at December 31, 2003                      4,850,000
                                                                                            0.053

                         Granted                                     9,504,211              0.143

                         Exercised                                           -                  -

                         Expired                                   (2,200,000)            (0.152)
                                                                 --------------    ---------------
                   Balance at December 31, 2004                     12,154,211           $  2.059
                                                                 ==============    ===============

         The following table summarized warrants outstanding and exercisable as of December 31, 2004:

                                               Number of       Weighted-average
                                                 shares           remaining         Number of
                                               underlying        contractual         shares
                         Exercise Price         warrants            life           exercisable
                      --------------------    --------------    --------------    --------------
                                                                 (in Years)
                         $6.20 - $6.28            3,850,000     1.29                  3,850,000

                         $0.32 - $0.15            4,996,948     2.66                  4,996,948

                        $0.124 - $0.055           3,307,263     2.23                  3,307,263
                                              --------------    --------------    --------------
                                                 12,154,211     1.34                 12,154,211

</TABLE>



12. STOCK OPTIONS


On July 15, 2002, the Company's Board of Directors passed a resolution (i)
amending the 2001 Stock Option Plan, as permitted under section 8 thereof, to
increase the maximum number of Shares that may be issued or transferred pursuant
to Options to 14,000,000 and (ii) adopting the 2002 Stock Compensation Plan,
which provides for the issue of up to 1,250,000 shares at $0.02 per share and
1,250,000 at $0.03.

                                      F-24

<PAGE>

On July 31, 2002, the Company's Board of Directors passed a resolution providing
for the issue of cashless options to 2 former executives of the Company to
acquire a total of 8,003,875 shares of the Company at a deemed price of $0.0075
in settlement of outstanding salaries. Options covered by this resolution were
issued on September 9, 2002 resulting in an administrative cost of $60,029. As
of December 31, 2002, 3,448,280 of these options had been exercised leaving a
balance outstanding of 4,555,595.

On November 6, 2003, the Company's Board of Directors passed a resolution
amending the 2001 Stock Option Plan, as permitted under section 8 thereof, to
increase the maximum number of Shares that may be issued or transferred pursuant
to the Plan to 30,000,000. In the year ended December 31, 2003, the Company
granted to employees under this Plan 1,260,000 common share options. Of these
option granted in 2003, a total of 240,000 were cancelled in the year ended
December 31, 2004 upon termination of various employees.

In April 2003, the Company adopted the 2003 Stock Option Plan. A total of
4,000,000 shares may be issued under this Plan. As of December 31, 2004 no
options have been granted under this plan.

No options were issued to GPSI staff in the year ended December 31, 2004.

There were no options granted in the year ended December 31, 2004

Stock option activity under the stock option plan is as follows:


                                                            Weighted-
                               Number of  Shares            average
                                    Issuable                exercise
                                       #                     price $
---------------------------  --------------------------- --------------
Balance December 31, 2002             5,655,595              $0.045
Granted                               1,260,000              0.10
Exercised
---------------------------  ----------------------------  -----------
Balance December 31, 2003            6,915,595               0.055
Granted                                  0                     0
Exercised                                0                     0
Expired                               (240,000)              0.10
--------------------------  -----------------------------  -----------
Balance December 31, 2004            6,675,595               $0.053
                            =============================  ===========


The following table summarizes the outstanding and exercisable options as at
December 31, 2004

   Exercise            Number          Weighted-average      Number
    prices           outstanding          remaining        exercisable
       $                  #            contractual life         #
---------------  ------------------  -------------------- -------------
    0.20              1,100,000             1.00            1,100,000
    0.075             4,555,595             2.69            4,555,595
    0.10              1,020,000             2.75            1,020,000
---------------  ------------------  --------------------  -----------
                      6,675,595                             6,675,595

                                      F-25

<PAGE>


13. COMMITMENTS AND CONTINGENCIES


Lease Commitments

The Company leases office premises and certain of its office equipment under
operating leases with various expiration dates to 2006. Rent expense for the
years ended December 31, 2004 and December 31, 2003 was $111,983 and $58,299
respectively. This table shows future minimum lease commitments under the leases
at December 31, 2004


        2005                     $      79,234
        2006                             6,610
                                       -------
                                 $      85,844
                                       =======

Legal Proceedings

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

The Company's wholly owned subsidiary, IGT is a defendant in a number of
lawsuits principally arising from vendor debt, which in the aggregate are not
material or accounted for on the books. Both IGT and ProShot have filed Chapter
7 petitions under the federal bankruptcy laws. The financial statements have not
been adjusted to reflect the bankruptcy filings.


14. INCOME TAXES


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:




                                                    2004         2003
                                                 ----------  -----------
                                                  $ 000's       $ 000's
                                                 ----------  -----------
Expected (benefit) at U.S. statutory rates          (3,147)      (1,291)
Change in valuation allowance                        1,834          668
Non-deductible expenses                              1,313          623
                                                  ----------   ----------
Income 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 are as follows:

                                      F-26

<PAGE>

1                                                    2004
                                                 ----------
                                                   $ 000's
                                                 ----------
Net operating loss carryforwards                    9,030
Research expenditures for Canadian tax purposes     1,170
                                                 ----------
Total deferred tax assets                          10,200
                                                   10,200
                                                 ----------
Net deferred tax assets                                -
                                                 ==========

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 $25,800,000, which will expire in the year 2024.
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.




                                      F-27
<PAGE>

ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND  REPORTS ON FORM 8K.




(a ) Exhibits

Exhibit Number           Title

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

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

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

        3.4              Bylaws (1)

       10.1              Share Exchange and Finance Agreement dated as of
                         December 16, 1999 (2)

       10.2              Security Purchase Agreement The Shaar Fund Ltd. (3)

       10.3              Stock Purchase Agreement to Acquire Optimal Golf
                         Solutions, Inc. (4)

       10.4              Credit Agreement With Great White Shark Enterprises,
                         Inc. (5)

       10.5              Amendment to Endorsement Agreement Dated April 1, 2003
                         Relating To Greg Norman Resigning From The Board Of
                         Directors And Going On To The Advisory Board. (6)

       21.1              Subsidiaries of Registrant. *

       23.1              Consent of Independent Certified Public Accountants*

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

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

       32                Certification of Chief Executive Officer and Chief
                         Financial Officer pursuant to Section 906 of the
                         Sarbanes Oxley Act of 2002 *


(1) Incorporated by reference to the Exhibits to the Registration Statement on
    Form 10-SB

(2) Incorporated by reference to the Exhibits to the Form 8-K filed on Jan 29,
    2002

                                        9

<PAGE>

(3) Incorporated by reference to Registration Statement Form SB-2 filed on
October 4, 2000

(4) Incorporated by reference to the Form 8-K filed November 26, 2004

(5) Incorporated by reference to the Form 8-K filed December 8, 2004

(6) Incorporated by reference to the Form 8-K filed January 26, 2005

(7) Incorporated by reference to the Definitive Proxy Statement filed March 21,
2005

* Filed herewith.

                                       10

<PAGE>

SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.


                                                     GPS INDUSTRIES, INC.


                                        By:      /s/ Robert C. Silzer, Sr.
                                                 -------------------------------
                                                     Robert C. Silzer, Sr.
                                                     President, Chief Executive
                                                     Officer


Dated: December 1, 2005