GPS Industries, Inc.
OTC Bulletin Board : GPSN

GPS Industries, Inc.

May 23, 2007 06:30 ET

GPS Industries Reports 173% Revenue Growth in Q1 2007

Accelerated Sales Build Company's Media Potential

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 23, 2007) - GPS Industries, Inc (GPSI) (OTCBB:GPSN), the only provider of Wi-Fi powered, advertising enhanced GPS systems for golf facilities, resorts and residential communities, today announced financial results for its first fiscal quarter of 2007, ended March 31, 2007.

For the first quarter ended March 31, 2007, the Company recorded total revenue of $2,257,000, compared to $826,000 in the year earlier period. This 173% increase in revenue was primarily realized through a 200% increase in sales of the Company's Inforemer® Golf Management System. The increase also reflects expanded marketing and sales efforts, the growing reputation of the Company's technology solutions, and a new two-tier pricing structure with sales incentives that had not yet been implemented in the year earlier period.

Cost of goods sold increased to approximately $1,400,000 for Q1 2007, compared to approximately $433,000 for the first quarter of 2006. The increase in cost of goods sold primarily reflects higher product sales. As a percentage of revenues, cost of goods sold increased from 52% to 64%. GPS Industries anticipates that its cost of manufacturing will improve in the current fiscal year due to continuing increases in sales volume and production efficiencies. In addition, the Company's strengthened financial condition will allow the Company to obtain superior financial terms from component and raw materials suppliers.

Gross profit for the first quarter 2007 increased 86%, to approximately $600,000 versus approximately $322,000 in the first quarter of 2006. Gross margins declined to 27% in Q1-2007, from 39% in Q1-2006. The shrinkage in gross margin is primarily explained by the modified pricing and sales structure that offers lower acquisition costs to customers that participate in the Company's comprehensive advertising program. As a consequence, Management expects greater levels of high-margin advertising revenue should be realized in future fiscal periods.

The Company's loss from operations increased to $2,685,996 in the 2007 first quarter over the loss from operations of $1,976,286 in the 2006 first quarter. The increase in loss from operations in the 2007 fiscal first quarter was due primarily to the lower gross margins resulting from sales incentives under the new pricing structure. In addition, the Company experienced increased sales and marketing expenses due to expanded trade show participation, and increased its investment in research & development.

Interest expense decreased 71% in the 2007 first quarter vs. the year earlier period, reflecting the Company's reduction in interest-bearing debt. The repayment of notes was facilitated by the December 2006 sale of $15.7 million (1.57 million shares) in preferred stock.

Loss per share in the first quarter of 2007 was $0.01, identical to the loss of $0.01 per share in the first quarter of 2006.

"This was a pivotal quarter for us," stated Robert Silzer, Sr., President and CEO of GPS Industries. "We've driven sales volume up substantially and as we continue to expand our margins will increase and our recurring revenue streams will grow handsomely. Moreover, the investments we have made in our cart-mounted Inforemer-HD display units will enable us to realize the full revenue potential of the digital advertising network that our installation base represents."

About GPS Industries (GPSI)

GPS Industries, Inc. (OTCBB:GPSN) is a technology solutions provider whose customizable, patent-protected applications in GPS and Wi-Fi software and hardware offer superior return on investment in the vertical markets of golf course management and residential community development. In the golf industry vertical, the Company's INFOREMER-HD™ GPS System features an integrated Wi-Fi communications network, award-winning display units delivering the most powerful on-course advertising opportunities in the golf industry, and a comprehensive suite of software applications that empower course management to control expenses and maximize revenues throughout all aspects of course operations. In the community development vertical market, the Company's WiStream applications provide developers with uniquely powerful, community-wide turnkey wireless ISP, asset tracking, security, communications and property sales technology solutions. GPSI owns key patents for these and other GPS and Differential GPS (DGPS) applications in fifteen countries worldwide, including the United States, Australia, Great Britain and Japan. For additional information, please visit: www.gpsindustries.com, www.wistream.com and www.gpsifireattheflag.com.

Forward-Looking Statements

Some statements contained in this release may be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Editors and investors are cautioned that such forward-looking statements involve risks and uncertainties that may cause the company's actual results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to, the company's ability to generate revenues and other factors as described in the Company's literature and filings with the Securities and Exchange Commission.

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