Hemisphere GPS Reports 68% Increase in Q4 Revenues

    Toronto Stock Exchange Symbol: HEM

    84% $US growth in business driven by increased adoption and cash flow in

    CALGARY, March 11 /CNW/ - (TSX: HEM) Hemisphere GPS, a designer and
manufacturer of advanced GPS products, today reported revenue growth of 68%
for the fourth quarter of 2007.
    For the fourth quarter ended December 31, 2007, Hemisphere GPS reported
revenues of $13.2 million, an increase of 68% as compared to $7.9 million in
the fourth quarter of 2006. Strong global demand for Hemisphere GPS' guidance
and steering products for Precision Agriculture is being driven by increased
cash flow in the overall agricultural market space.
    Reported revenues were tempered by the foreign exchange impact of a
falling US dollar as substantially all revenues are earned in US dollars.
Revenue growth on a US dollar basis was 84% for the quarter, illustrating the
growth of the business in the quarter year-over-year.
    "We had a very strong Q4 across all business unit product portfolios,"
stated Steven Koles, President & CEO of Hemisphere GPS. "In particular, we
experienced very strong demand for our Agriculture products given the robust
harvest, strong commodity prices, and 2007 year end tax purchasing."
    North American sales delivered healthy growth of 40% (53% in US dollars)
compared to the fourth quarter of 2006 as a result of the cash flow impact of
stronger grain prices. International sales delivered higher growth of 165%
(179% in US dollars) in the fourth quarter compared to 2006.
    Hemisphere GPS' fourth quarter gross margins strengthened to 45%,
year-over-year from 37%. Gross margins improvements are being realized from
new products as well as cost reductions from outsourcing, design and
manufacturing initiatives. However, gross margins were negatively impacted by
the weakening US dollar, reducing the gross margin for the quarter by
approximately 2 percentage points when compared to the foreign exchange rate
in the fourth quarter of 2006. Total expenses increased by $454 thousand, or
7%, to $6.6 million, compared to the fourth quarter of 2006. This is a modest
increase relative to the fourth quarter revenue growth of 68%.
    Hemisphere GPS reported a reduced net loss of $630 thousand, or
($0.01) per share, as compared to a loss $2.8 million, or ($0.06) per share
for the fourth quarter of 2006.
    For the full year ended December 31, 2007, Hemisphere GPS reported record
revenues of $58.1 million, 27% higher than $45.9 million in 2006. When
measured in US dollars, revenue growth was 32%. Gross margin for the year
improved to 47%, from 40% for 2006.
    While 2007 revenues increased by 27%, expenses increased by only 5% to
$24.2 million from $23.0 million, demonstrating the scalability and
profitability potential of Hemisphere GPS' business model under increased
    Hemisphere GPS reported a net loss for the year of $601 thousand,
($0.01) per share, an improvement from a net loss of $19.9 million, or ($0.43)
per share, in 2006. The loss in 2006 included a $14.7 million loss from
discontinued operations divested during 2006.
    At December 31, 2007, Hemisphere GPS held cash of $13.3 million, working
capital of $26.4 million and had nominal debt. In December of 2007 the Company
completed a private placement of 5,555,600 special warrants, issued at a price
of $3.15 per special warrant, for total gross proceeds of $17,500,140.
    As of December 31, 2007, 1,500,028 common shares became issuable to RHS,
Inc. ("RHS") under performance warrants issued to RHS as part of the
acquisition of the Outback business assets in April 2005. Additional common
shares are payable under the performance warrants based on revenue and
profitability for the years 2005 to 2007. The common shares are to be issued
following completion of the audit of the consolidated financial statements for
2007, were valued at $3.54 per share and have been accounted for as additional
consideration for the acquisition resulting in additional goodwill in the
consolidated financial statements.
    Increases in agricultural commodity prices are being driven by high
global demand for food and bio-fuels, in a world with low grain inventories.
Increased cash receipts for farming operations are enabling increased
investment in farm equipment and technologies, such as GPS which improve
farming efficiencies and crop yields. Hemisphere GPS derived more than 85% of
its revenues from the agricultural sector in 2007. "GPS guidance has now moved
to the forefront of farming operations," stated Mr. Koles. "We have seen
increased adoption of GPS guidance and auto-steering by farmers wanting to
improve yields and lower input costs."

    Operational Highlights

    -   In 2007 Hemisphere GPS was awarded 4 new patents (includes BEELINE
        patents) and released a total of 12 new products. Today the Company's
        Outback Guidance product line addresses the market spectrum from the
        low-cost entry level guidance products for smaller farms, to high-
        level centimeter accuracy.

    -   In 2007 Hemisphere GPS introduced a new financing program for its
        Outback Guidance brand in North America. The program assists
        customers spread their investment in Outback Guidance products over
        time, and enables buyers to increase their investments to attain
        increased guidance accuracy upgraded with the latest auto-steering

    -   In early 2008 Hemisphere GPS released the Outback S3, the next
        generation in Outback Guidance. The S3 is loaded with features and
        the latest technology and is extremely user friendly, employing a
        colour touch screen. It is expandable to work with other Outback
        Guidance products and accessories such as the Outback eDriveTC(TM)
        GPS assisted steering system which automatically steers the tractor.
        Combined with BaselineHD(TM), Outback S3 and eDriveTC provide
        centimeter-level accuracy. Outback S3 is also expandable to work with
        the new Outback AutoMate(TM), an automatic boom control system that
        monitors and controls individual sprayer sections to minimize
        overlaps and skips.

    -   To complement guidance and visual awareness, auto-steering adoption
        in Agriculture increased significantly during 2007. The Outback
        eDriveTC is now the highest revenue producing product for Hemisphere

    -   Hemisphere GPS continued to see significant growth outside of North
        America, accounting for 30% of total sales in 2007. Growth is being
        generated in Europe, Australia and South America.

    -   In December of 2007, Hemisphere GPS acquired Australian-based BEELINE
        Technologies Pty Ltd. ("BEELINE") for US$21 million. BEELINE is a
        software developer, providing intelligent high-end GPS guidance and
        auto-steering software for Agriculture equipment as well as
        autonomous control solutions for other machine control applications
        including the mining, construction and military market verticals.

    "BEELINE's advanced software platform leverages highly accurate
"steer-by-wire" technology, which addresses the high-end Precision Agriculture
markets, and complements our existing product offerings" stated Steven Koles.
"Much of the integration work for BEELINE has now been completed and we are
very excited about the synergistic opportunities we can now pursue as a
unified team."
    The Agricultural sector continues to seek to increase efficient and
effective delivery of crop planting, spraying, and harvesting to maximize
yield. GPS guidance, visual awareness, and auto-steering assist farmers to
precisely map and navigate their fields - enabling straighter rows, no skipped
areas and minimal overlap. These products significantly reduce driver fatigue
and stress, while saving valuable time, fuel, fertilizer, insecticides and
other operating costs - ultimately enabling farmers to recoup their GPS
investment very quickly.

    Conference Call - Tuesday March 11 at 11:00AM ET (9:00am MT)

    A conference call and Web cast for shareholders, analysts and other
members of the investment community has been scheduled for Tuesday March 11,
2008 at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time).
    Note: The Company regrets that the question and answer portion of the
call will be limited as the Company is in the midst of filing a preliminary
prospectus related to the December 2007 financing. As such, the Company is
legally restrained from providing any guidance or forward looking financial
information at this time. Management will, however, discuss the 2007 financial
results and provide non-forward looking operational commentary on the call.
    To listen, please dial 1-800-732-9307 approximately 10 minutes before the
conference call. A recording of the call will be available through March 18.
Please dial 1-877-289-8525 and enter the reservation number 21265300 followed
by the number sign to listen to the rebroadcast.
    A live Web cast of the call will be available on the Hemisphere GPS Web
site at http://www.hemispheregps.com. The Web cast will be archived there for
later review.

    About Hemisphere GPS

    Hemisphere GPS designs and manufactures innovative, cost-effective GPS
products for positioning, guidance, and machine control applications in
Agriculture, marine and other markets. The Company holds numerous patents and
other intellectual property and owns leading brand names, including Outback
Guidance(R) and BEELINE(R), two of the leading brands in precision GPS for
Ground Agriculture. The Company is headquartered in Calgary, Alberta, with
major product development, sales, and marketing facilities in Arizona, Kansas,
Texas, and Australia. For more information about Hemisphere GPS, please go to

    The above disclosure contains certain forward-looking statements that
involve substantial known and unknown risks and uncertainties. These
forward-looking statements are subject to numerous risks and uncertainties,
certain of which are beyond Hemisphere GPS' control, including: the impact of
general economic conditions, industry conditions, increased competition, the
lack of availability of qualified personnel or management, fluctuations in
foreign exchange or interest rates, stock market volatility and market
valuations of companies with respect to the announced transactions and the
final valuations thereof, and obtaining required approvals of regulatory
authorities. Hemisphere GPS' actual results, performance or achievement could
differ materially from those expressed in, or implied by these forward-looking
statements and, accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or occur, or if
any of them do so, what benefits, including the amount of proceed, that
Hemisphere GPS will derive there from.

    Consolidated Balance Sheets

    December 31, 2007 and 2006

                                                        2007            2006


    Current assets:
      Cash                                     $  13,295,655   $  11,160,405
      Accounts receivable                          7,043,919       4,995,204
      Deferred commissions                           259,816         111,619
      Inventories                                 15,142,719      11,479,139
      Prepaid expenses and deposits                  629,429         550,530
      Current assets of discontinued operations      393,661       1,360,735
                                                  36,765,199      29,657,632

    Deferred commissions                             254,481         246,414
    Property and equipment                         8,102,650       8,507,990
    Intangible assets                             10,775,475       4,332,591
    Goodwill                                      42,733,247      22,961,432
    Assets of discontinued operations                      -         116,380
                                               $  98,631,052   $  65,822,439

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities $   8,337,366   $   5,785,501
      Deferred revenue                             1,587,939         773,527
      Current portion of long-term debt                    -         300,517
      Current portion of capital leases              101,714         291,057
      Notes payable                                  324,060               -
      Current liabilities of discontinued
       operations                                     57,781         974,505
                                                  10,408,860       8,125,107

    Deferred revenue                               1,696,541       1,672,116
    Capital lease obligations                              -         101,714

    Shareholders' equity:
      Share capital                              113,150,805     104,013,743
      Common shares issuable                       5,313,101               -
      Contributed surplus                          3,242,308       2,776,468
      Warrants                                    16,287,380               -
      Deficit                                    (51,467,943)    (50,866,709)
                                                  86,525,651      55,923,502

                                               $  98,631,052   $  65,822,439

    Consolidated Statements of Operations and Deficit

                            Three months ended         Twelve months ended
                                December 31,                December 31,
                      --------------------------- ---------------------------
                              2007          2006          2007          2006

    Sales             $ 13,225,779  $  7,870,073  $ 58,097,654  $ 45,908,060

    Cost of sales        7,257,348     4,988,766    30,666,385    27,390,609
                         5,968,431     2,881,307    27,431,269    18,517,451

      Research and
       development       1,422,511     1,209,408     5,280,270     4,741,323
      Sales and
       marketing         2,691,687     2,371,877     9,924,163     9,305,319
      General and
       administrative    1,694,148     1,684,442     5,955,310     5,663,242
       compensation        130,200       212,857       666,260       757,142
      Amortization         660,610       665,576     2,408,944     2,509,013
                         6,599,156     6,144,160    24,234,947    22,976,039

    Income (loss)
     before undernoted
     items                (630,725)   (3,262,853)    3,196,322    (4,458,588)

    Loss (gain) on
     sale of marketable
     securities                  -    (1,049,976)       38,809    (1,049,976)
    Foreign exchange
     (gain) loss            26,040       (52,520)      674,276       642,856
    Interest income        (92,084)      (27,203)     (416,783)     (220,984)
    Restructuring costs          -             -             -     1,043,000
    Legal fees on
     settlement of
     lawsuit                94,442        37,080     3,195,946       266,342
    Loss from
     operations           (659,123)   (2,170,234)     (295,926)   (5,139,826)

    Income (loss) from
     operations             28,656      (582,070)     (305,308)  (14,746,737)
    Net loss              (630,467)   (2,752,304)     (601,234)  (19,886,563)

    Deficit, beginning
     of period         (50,837,476)  (48,114,405)  (50,866,709)  (30,980,146)

    Deficit, end of
     period           $(51,467,943) $(50,866,709) $(51,467,943) $(50,866,709)

    Loss per common
     share from
      Basic and
       diluted        $      (0.01) $      (0.05) $      (0.01) $      (0.11)

    Net loss per
     common share:
      Basic and
       diluted        $      (0.01) $      (0.06) $      (0.01) $      (0.43)

    Weighted average
      Basic             46,675,269    46,115,873    46,338,771    46,023,887
      Diluted           54,318,215    46,115,873    53,740,919    46,023,887


    Consolidated Statements of Cash Flows

                            Three months ended         Twelve months ended
                                December 31,                December 31,
                      --------------------------- ---------------------------
                              2007          2006          2007          2006

    Cash flows from
     (used in)
      Loss from
       operations     $   (659,123) $ (2,170,234) $   (295,926) $ (5,139,826)
      Items not
       involving cash:
        Amortization       660,610       665,576     2,408,944     2,509,013
         compensation      130,200       212,857       666,260       757,142
         exchange loss       4,037        20,367         4,037        25,116
        Loss (gain) on
         sale of
         securities              -    (1,049,976)       38,809    (1,049,976)

                           135,724    (2,321,410)    2,822,124    (2,898,531)
      Change in
       working capital:
         receivable        456,847    (1,106,340)   (2,355,191)   (1,582,795)
        Inventories       (612,207)     (625,555)   (3,663,580)     (321,448)
         expenses and
         deposits         (152,193)       47,881       (78,899)           91
         commissions           642       (56,170)     (156,264)     (333,561)
         payable and
         liabilities       891,468     1,835,392     2,272,710     2,657,714
         revenue            (2,389)      376,554       838,837     2,223,230
                           717,892    (1,849,648)     (320,263)     (255,300)
      Cash from
       (used in)
       operations         (224,115)    2,077,595      (304,073)   (5,263,760)
                           493,777       227,947      (624,336)   (5,519,060)
    Cash flows from
     (used in)
      Long-term debt             -      (126,633)     (300,517)     (508,406)
      Capital leases       (94,143)      (88,441)     (291,057)     (300,562)
      Issue of share
       capital              32,738        16,792       451,092       414,051
      Issue of
       warrants         16,287,380             -    16,287,380             -
      Cash used in
       operations                -       (34,590)            -      (346,812)
                        16,225,975      (232,872)   16,146,898      (741,729)
    Cash flows from
     (used in)
      Purchase of
       property and
       equipment          (113,715)   (2,613,361)   (1,052,823)   (4,059,272)
      Proceeds from
       sale of
       securities                -     7,209,670       600,398     7,209,670
       net             (13,100,382)            -   (13,100,382)     (959,303)
      Cash from
       operations          165,495             -       165,495     2,634,745
                       (13,048,602)    4,596,309   (13,387,312)    4,825,840

     (decrease) in
     cash position       3,671,150     4,591,384     2,135,250    (1,434,949)
    Cash, beginning of
     period              9,624,505     6,569,021    11,160,405    12,595,354
    Cash, end of
     period           $ 13,295,655  $ 11,160,405  $ 13,295,655  $ 11,160,405

For further information:

For further information: Cameron Olson, Chief Financial Officer,
Hemisphere GPS, (403) 259-3311, COlson@HemisphereGPS.com; Cory Pala, Investor
Relations, E.vestor Communications Inc., (416) 657-2400, CPala@evestor.com

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