Hemisphere GPS Reports Record Q2 Revenues

29 July 2008, 1:00pm

Calgary, AB — July 29, 2008 — (TSX: HEM) Hemisphere GPS, a designer and manufacturer of advanced GPS products, today reported financial results for the second quarter and first six months of 2008. (All amounts in US dollars).

For the second quarter ended June 30, 2008, Hemisphere GPS reported a 59% increase in revenues to a second quarter record of $23.0 million, a substantial increase from revenues of $14.5 million in the second quarter of 2007. Significant revenue growth was realized in all product lines and regions for Ground Agriculture, Air Agriculture and Precision Products - which includes marine GPS Compass applications. Revenue growth continues to be driven by strong fundamentals in the agriculture market where record grain prices are resulting in higher farm incomes. In addition, the Company’s patented Crescent® Vector™ GPS Compass technology has experienced strong growth for marine applications.

“We have seen a significant increase in revenues since the North American harvest began in the third quarter of 2007, and the acceptance of GPS and auto-steering within precision agriculture is at an all time high,” stated Steven Koles, President & CEO of Hemisphere GPS. “Our total revenues for the trailing twelve months have reached $71 million, which represents growth of 66% over the prior year comparable twelve month period”.

The Company commenced shipments of its Outback Guidance® S3™ product at the end of March, which contributed to revenue growth in the quarter. For the second quarter of 2008, Hemisphere GPS saw year-overyear growth of approximately 48% in North American revenues and 91% growth in non-North American revenues, demonstrating the strength of the global agricultural markets.

Revenues from the Company’s Precision Products line – focused on non-agriculture markets - continued to show very strong growth, increasing by 71% in the second quarter and 75% year-to-date. The growth in this product line has been driven by strong demand for the Company’s Vector GPS Compass sensor products, differential GPS receivers and GPS components sold to original equipment manufacturers (“OEM’s”) and system integrators.

Gross margin for the second quarter increased to 52.5% of revenues from 46.7% for the same quarter of 2007. Gross margin has improved as a result of initiatives focused on margin improvement including new products, pricing programs, outsourcing of higher volume components and finished goods to third-party manufacturing overseas and the inclusion of software revenues from the Beeline® integration which generate very high gross margins.

Second quarter research and development expenses were $2.0 million, or 8.8% of revenues, an increase of 72%, including Beeline expenses, compared to the second quarter of 2007 (44% excluding Beeline). During 2007, and in the first half of 2008, the Company has made a number of significant new hires continuing to build the strength of its research and development capabilities. The acquisition of Beeline Technologies in December 2007 added approximately 20 engineering employees, greatly strengthening the Company’s software engineering capability.

The investment in research and development activities is critical for the Company to maintain and build its position in current and targeted markets and the Company is targeting to spend at least 10% on such activities on an annualized basis.

Total operating expenses in the second quarter of 2008, which include operating expenses from the acquired Beeline business, were $8.6 million, an increase of $3.3 million, or 63% compared to the second quarter of 2007. Adjusting for the impact of Beeline operating expenses and the strengthening Canadian dollar, normalized operating expenses increased by approximately 36%, or $1.9 million, when compared to the second quarter of 2007. Revenue growth was over 50% during this period, excluding Beeline revenues, demonstrating the scalability of the Company’s business model as revenues grow.

Hemisphere GPS reported record second quarter net income of $3.2 million, or $0.06 per share (basic and diluted), an increase from $0.2 million, or $0.00 per share (basic and diluted), in the second quarter of 2007.

www.hemispheregps.com

Geo: International