GPS Industries, Inc. (GPSI), the only provider of Wi-Fi powered, advertising enhanced GPS systems for golf facilities, resorts and residential communities, has announced financial results for its first fiscal quarter of 2007.
For the quarter ended 31st March 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.”
GPS Industries, Inc. is a global media and technology solutions provider whose GPS and Wi-Fi applications are best-of-breed in the vertical markets of golf course management and residential community development.
In the golf industry, the Company’s Inforemer® GPS Management System features an integrated Wi-Fi communications network, a comprehensive suite of management tools, and award-winning cart-mounted display units that provide an enriched playing experience for golfers and a lucrative advertising opportunity for the Company and its client facilities.
In the community development vertical, the Company’s WiStream™ division implements WiFi coverage throughout an entire development, creating a community-wide wireless ‘hot-spot‘ which supports the Company’s unique array of WiFi amenities: wireless internet connectivity, location tracking devices, wireless security protection, VOIP phones, mobile point-of-sale systems, and an interactive real estate sales tool. GPSI owns key patents for many important 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