GINSMS Inc.
TSX VENTURE : GOK

GINSMS Inc.

February 28, 2014 11:39 ET

GINSMS Announces Financial Results for Third Quarter Ended December 31, 2013

CALGARY, ALBERTA--(Marketwired - Feb. 28, 2014) - GINSMS Inc. (TSX VENTURE:GOK) has announced its financial results for the third quarter ended December 31, 2013.

PERFORMANCE HIGHLIGHTS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2013:

  • The acquisition of Inphosoft Group Pte Ltd ("Inphosoft") was completed on September 28, 2012. GINSMS's income statement for the three and nine months ended December 31, 2013 includes the operating results of Inphosoft Group Pte Ltd and its subsidiaries resulting in total revenue of $254,327 and $911,652 respectively, compared to $477,240 and $784,237 for the corresponding three and nine months in the previous year.
  • Activities for the three-month and nine-month period ended December 31, 2013 resulted in a net loss of $772,639 and $2,086,759 respectively, including a non-realized exchange loss of $10,928 and $7,797 respectively and a non-cash charge to earnings of $324,826 and $924,277 respectively representing accretion on obligations related to the convertible debentures and promissory notes issued in connection with the acquisition of Inphosoft. For the three and nine months ended December 31, 2012, the Company recorded a net loss of $343,627 and $816,810 respectively.
  • EBITDA of negative $268,623 and $664,667 respectively for the three and nine months ended December 31, 2013. This is a deterioration of $312,544 and $286,935, compared to EBITDA of positive $43,921 and negative $377,732 respectively during the corresponding three and nine months in the previous year. The lower EBITDA principally reflect much higher losses due to lower revenue generated by IOSMS platform despite higher revenue contributed by the Inphosoft Group Pte Ltd and its subsidiaries. There are also higher costs incurred by the whole group in relations to the salaries & wages, amortization & depreciation and accretion costs of debenture and notes payables.
  • Volume of inter-SMS traffic for the three-month period ended December 31, 2013 was down by 69.5% to 6,138,264 from the same period the previous year. When compared to the previous quarter ended September 30, 2013, traffic was down by 5.7%. This downward trend in SMS traffic is largely caused by cellphone users migrating to mobile instant messaging ("MIM") applications and the removal of bundle fees in the new agreements signed with the mobile network operators that came into effect on the 1st March 2013.

RESULTS OF OPERATIONS

Financial Highlights Three-month period ended
December 31,
(Unaudited)
Nine-month period ended
December 31,
(Unaudited)
2013 2012 2013 2012

Revenues $

254,327
477,240 911,652
784,237
Cost of sales $ (97,328) (108,731) (342,297) (246,671)
Gross profit $
Gross margin %
156,999
61.7%
368,509
77.2%
569,355
62.5%
537,566
68.5%
EBITDA (1) $
EBITDA margin
(268,623)
(105.6)%
43,921
9.2%
(664,667)
(72.9)%
(377,732)
(48.2)%
Net earnings $
Net earnings margin
(777,639)
(303.8)%
(343,627)
(72.0)%
(2,086,759)
(228.9)%
(816,810)
(104.2)%
Net earnings (loss) per share $
Basic (0.01) (0.01) (0.04) (0.02)
Diluted (0.01) (0.01) (0.04) (0.02)
1 EBITDA is a non-GAAP measure related to cash earnings and is defined for these purposes as earnings before income taxes, depreciation, amortization and the accretion on obligations.
Consolidated as at
December 31, 2013
(unaudited)
(1)
Consolidated as at
March 31, 2013
(Audited)
(1)
Total assets $ 5,057,488 6,686,027
Total liabilities $ 7,332,427 7,056,584
Shareholders' equity $ (2,274,939) (370,557)
1 The figures reported above are based on the consolidated financial statements of the Company which have been prepared in accordance with International Financial Reporting Standard.

Revenue for the 3 months and 9 months ended December 31, 2013 was $254,327 and $911,652 respectively, representing a decrease of 46.7% and increase of 16.2% respectively, compared to $477,240 and $784,237 during the corresponding periods the previous year. The increase of 140.3% in revenue from Inphosoft for 9 months to $810,450 is mainly due to the inclusion of full 9 months of revenue for the period ended December 31, 2013 as compared to the inclusion of only 3 months of revenue the revenue from Inphosoft for the period ended December 31, 2012. However, revenue from Inphosoft for 3 months ended December 31, 2013 declined by 32.6% to $227,311 is mainly due to the company has concentrated in the development of two applications i.e. InphoShop GoMall Happy Hours V2 and InphoChat Here Messenger in the current quarter. The development of the two applications have not completed yet. Revenue from the Company's IOSMS activities, taken separately, declined by 80.7% and 77.4% for the 3 months and 9 months the previous year. The decline in the revenue generated from the IOSMS platform is due to the less favourable terms of the contracts signed with mobile network operators that came into effect on 1st March 2013 as well as a 69.5% drop in SMS traffic during the quarter ended December 31, 2013, compared to the corresponding quarter the previous year.

Revenue from Inphosoft for the 9 months aggregated $810,450 is broken down as follow: Professional Services - $457,336 (56.4%), License fees - $38,120 (4.7%), and Support and Maintenance (S&M) -$314,994 (38.9%).

The net loss for the quarter ended December 31, 2013 amounted to $772,639, compared to a loss of $343,627 during the same quarter the previous year. The loss for the third quarter this fiscal year includes a net foreign exchange loss of $10,928 and a non-cash charge to earnings of $324,826 representing accretion on obligations related to the convertible debentures and promissory notes issued in connection with the acquisition of Inphosoft. EBITDA for the third quarter ended December 31, 2013 amounted to deficit of $268,623 while EBITDA for the corresponding period the previous year which showed a surplus of $43,921. These results underline a decline in gross profit with gross income decreasing by 57.4% to $156,999 and with a lower gross profit margins hence translate into a gross margin of 61.7%, compared to 77.2% during the corresponding quarter the previous year.

Other than lower revenue generated by the IOSMS platform and the impact the foreign exchange gain have had on the results of the Company for the 9 months ended December 31, 2013, the loss of $2,086,759 reported during the period reflects higher operating expenses. With Inphosoft, salaries and wages jumped by 211.0% to $817,168, and general and administrative expenses are up 119.0% to $233,214. However, consultancy fees decreased by 55.6% to $36,423 and professional fees decreased by 72.8% to $139,420. The decline in professional fees reflected the lower legal fees in particular following the completion of the acquisition at the end of the second quarter of the previous year. The consolidation of Inphosoft also resulted in higher amortization charges which amounted to $493,490, compared to $93,301 for the corresponding 9 months the previous year

About GINSMS

GINSMS is a mobile technology and services company focusing on 4 areas namely Telecom Platforms and Products, Mobile Advertising, Mobile Messaging and Mobile Applications. GINSMS conducts research and development and also establishes partnerships to develop and distribute innovative products and services globally. Through its wholly owned subsidiaries in Singapore, Hong Kong, Malaysia and Indonesia, GINSMS has successfully deployed more than 100 solutions globally. GINSMS also operates a short message service ("SMS") hub that provides inter-operator messaging services to mobile telecom operators in Hong Kong and messaging services to enterprises in Asia. Through its Right Here Media brand, GINSMS provides a one-stop mobile advertising service to advertisers. These services include the development of creative mobile advertising campaigns for advertisers, the provision of technology to execute these campaigns and the placement of advertisements on mobile advertising networks.

Forward Looking Statements

This news release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with GINSMS' business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", and similar expressions to the extent they relate to GINSMS or its management. The forward-looking statements are not historical facts, but reflect GINSMS' current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations, including the matters discussed under "Risks Factors" in GINSMS' Filing Statement filed on August 29, 2012 with the regulatory authorities. GINSMS assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless required by law.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

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