CALGARY, ALBERTA -- (Marketwired) -- 02/11/16 -- GINSMS Inc. (TSX VENTURE: GOK) ("GINSMS" or the "Corporation") has announced its financial results for the third and final quarter and nine months ended December 31, 2015. On January 27, 2016, the Company announced the change of its financial year end to December 31, 2015, instead of March 31, 2016. This is in line with the financial year end of its ultimate holding company, Xinhua Holdings Limited.
The annual audited financial statements of the Corporation for the nine months ended December 31, 2015 are currently under audit and in the process of preparation. As required under Canadian securities law regulations, the Corporation will be disclosing and filing on SEDAR its annual audited financial statements and the related management's discussion and analysis ("MD&A") of the Corporation will be ready within 120 days after the end of its revised year end of December 31, 2015.
The Corporation's financial information for the nine months ended December 31, 2015 is prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
Highlights include:
-- Revenue of $3,888,690 for the nine-month period ended December 31, 2015
as compared to $1,082,920 and $1,906,467 for the nine-month period ended
December 31, 2014 and the twelve-month period ended March 31, 2015,
respectively.
-- Revenue of $1,486,851 for the three-month period ended December 31, 2015
as compared to $436,258 and $823,548 for the three-month period ended
December 31, 2014 and the three-month period ended March 31, 2015,
respectively.
-- Gross Profit of $429,264 for the nine-month period ended December 31,
2015 as compared to gross profit of $93,907 and $44,790 for the nine-
month period ended December 31, 2014 and twelve-month period ended March
31, 2015, respectively.
-- Gross Profit of $189,673 for the three-month period ended December 31,
2015 as compared to gross profit of $26,153 and gross loss of $49,118
for the three-month period ended December 31, 2014 and the three-month
period ended March 31, 2015, respectively.
-- Selling, general and administrative expenses increased slightly from
$1,079,576 for the nine-month period ended December 31, 2014 to
$1,313,916 for the nine-month period ended December 31, 2015. Selling,
general and administrative expenses amounted to $1,559,864 for the
twelve-month period ended March 31, 2015.
-- Selling, general and administrative expenses increased from $362,042 for
the three-month period ended December 31, 2014 to $619,124 for the
three-month period ended December 31, 2015. Selling, general and
administrative expenses amounted to $480,287 for the three-month period
ended March 31, 2015.
-- Net loss of $2,432,182 for nine-month period ended December 31, 2015 as
compared to a net loss of $2,411,364 and $6,775,846 for the nine-month
period ended December 31, 2014 and the twelve-month period ended March
31, 2015, respectively.
-- Net loss of $707,289 for three-month period ended December 31, 2015
respectively as compared to a net loss of $821,138 and $4,364,482 for
the three-month period ended December 31, 2014 and the three-month
period ended March 31, 2015, respectively.
-- The cloud-based application-to-person messaging service (the "A2P
messaging") that was introduced in March 27, 2014 has generated revenue
of $1,195,023 and $3,069,374 for the three-month and nine-month periods
ended December 31, 2015, respectively.
On March 27, 2014, GINSMS announced that it had launched the A2P messaging service. Mobile application developers use A2P messaging service to deliver one-time-passwords ("OTP") for authentication of over-the-top ("OTT") mobile applications such as Whatsapp, WeChat, Line and KakaoTalk, in-app purchase confirmations or promotion of latest game releases. Enterprises and financial institutions use A2P messaging service in the areas of mobile marketing, mobile transactions, security, customer relationship management ("CRM") and enterprise resource planning ("ERP"). Transparency Market Research (www.transparencymarketresearch.com) estimated the market size of the A2P messaging service business to be US$53.07 billion globally in 2013 and growing at a compounded annual growth rate of 4.2% till 2020.
GINSMS's A2P messaging service business started generating revenue in the month of April 2014. Revenue for the A2P messaging service business for the first quarter ended June 30, 2014, second quarter ended September 30, 2014, third quarter ended December 31, 2014 and fourth quarter ended March 31, 2015 were $78,115, $104,836, $307,127 and $627,535, respectively. Revenue for the A2P messaging service business for the first quarter ended June 30, 2015 was $808,109, for the second quarter ended September 30, 2015 was $1,066,242 and the third quarter ended December 31, 2015 was $1,195,023.
Selected Profit and Loss Information
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Financial Highlights Three-month Three-month Nine-month Twelve-month
period ended period ended period ended period ended
December 31 December 31 December 31 March 31
(Unaudited) (Unaudited) (Unaudited) (Audited)
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2015 2014 2015 2015
Revenues $
A2P Messaging Service 1,195,023 307,127 3,069,374 1,117,613
IOSMS Messaging Service - (11,105) - 34,820
Software Product &
Services 291,828 140,235 819,316 754,034
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1,486,851 436,257 3,888,690 1,906,467
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Cost of sales $
A2P Messaging Service 1,047,554 285,500 2,792,424 1,037,629
IOSMS Messaging Service - 1,059 - 87,061
Software Product &
Services 249,624 123,545 667,002 736,987
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1,297,178 410,104 3,459,426 1,861,677
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Gross profit $
A2P Messaging Service 147,469 21,627 276,950 79,984
IOSMS Messaging Service - (12,164) - (52,241)
Software Product &
Services 42,204 16,690 152,314 17,047
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189,673 26,153 429,264 44,790
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Gross margin %
A2P Messaging Service 12.3% 7.0% 9.0% 7.2%
IOSMS Messaging Service - 109.5% - (150.0)%
Software Product &
Services 14.5% 11.9% 18.6% 2.3%
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12.8% 6.0% 11.0% 2.3%
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Adjusted EBITDA(1) (383,247) (300,798) (904,932) (1,246,772)
$Adjusted EBITDA margin (25.8)% (68.9)% (23.3)% (65.4)%
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Net earnings $ (707,289) (821,138) (2,432,182) (6,775,846)
Net earnings margin (47.6)% (188.2)% (62.5)% (355.4)%
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Net earnings (loss) per
share $
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Basic (0.00) (0.02) (0.03) (0.13)
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Diluted (0.00) (0.02) (0.03) (0.13)
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(1) Adjusted EBITDA is a non-GAAP measure related to cash earnings and is
defined for these purposes as earnings before income taxes, depreciation
and amortization (in both cost of sales and general and administration
expenses), interest expenses, the accretion on obligations and also
excludes certain non-recurring or non-cash expenditure.
The table below outlines the changes in the major categories:
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Three-month Three-month Nine-month Twelve-month
period ended period ended period ended period ended
December 31, December 31, December 31, March 31
(Unaudited) (Unaudited) (Unaudited) (Audited)
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2015 2014 2015 2015
Amortization (cost of
sales)
- Development
expenditure 28,695 40,345 86,571 172,104
Depreciation (cost of
sales)
- Property, plant and
equipment 9,289 8,809 27,482 34,837
Suspended projects
impairment (cost of
sales) - - - 144,945
Selling, General &
Administrative expenses 619,124 362,042 1,313,916 1,559,864
Allowance for doubtful
debt 18,056 - 18,056 -
Foreign currency exchange
(gain)/loss (8,220) 14,063 134,333 83,584
Interest expenses 171,639 58,908 471,005 199,661
Finance expense
- Accretion on
convertible debentures - 369,499 818,364 1,433,226
Goodwill impairment - - - 2,830,364
Intangible assets
impairment - - - 393,375
Writeback of deferred tax
liability on intangible
assets - - - (126,259)
Development expenditures
impairment (expense) - - - 164,456
Depreciation (expense)
- Property, plant and
equipment 3,204 3,378 9,791 13,941
Amortization (expense)
- Intangible assets -
contracts - - - 111,181
- Intangible assets -
software - 39,337 - 157,350
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Selected Balance Sheet Information
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December 31, 2015 March 31, 2015
(Unaudited) (Audited)
$ $
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Current Assets
Bank and cash balances 310,805 515,208
Accounts receivable and others, net 1,536,894 781,552
Prepaid expenses 136,588 109,062
-----------------------------------
1,984,287 1,405,822
Non-Current Assets
Property, plant and equipment 53,156 70,809
Development expenditures 576,986 606,044
-----------------------------------
TOTAL ASSETS 2,614,429 2,082,675
-----------------------------------
-----------------------------------
Current Liabilities
Accounts payable and accrued liabilities 1,844,293 1,160,432
Convertible debentures - 8,290,903
Advance from a related party 556,370 -
Promissory note payable 400,000 400,000
Current tax liabilities 89,885 -
-----------------------------------
2,890,548 9,851,335
Non-Current Liabilities
Loans from related parties 2,943,129 2,293,970
Deferred tax liability 3,321 1,145
-----------------------------------
TOTAL LIABILITIES 5,836,998 12,146,450
Equity
Share capital 10,484,429 1,339,386
Reserves - 131,995
Equity component of convertible
debentures - 35,776
Deficit (13,889,187) (11,590,406)
Accumulated other comprehensive income 187,496 23,363
-----------------------------------
Total equity (deficiency) attributable to
equity shareholders (3,217,262) (10,059,886)
Non-controlling interest (5,307) (3,889)
-----------------------------------
TOTAL EQUITY (DEFICIENCY) (3,222,569) (10,063,775)
TOTAL LIABILITIES & EQUITY 2,614,429 2,082,675
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(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.
Total assets of GINSMS including cash, accounts receivable, prepaid expenses, property and equipment and development expenditures as at December 31, 2015 amounted to $2,614,429 compared to $2,082,675 as at March 31, 2015. Bank and cash balances amounted to $310,805, compared to $515,208, a decrease of 39.7%. The decrease was mainly due to getting less loans from the related parties in the current quarter ended December 31, 2015 as the Corporation relied more on the cash flow from the operation. The cash flow from financing activities is $864,627 for the nine months ended December 31, 2015 compared to $1,685,725 for the twelve months ended March 31, 2015, as shown in the selected Liquidity and Capital Resources section below.
Selected Liquidity and Capital Resources Information
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Nine-month Twelve-month
period ended period ended
December 31, 2015March 31, 2015
(Unaudited) (Audited)
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$ $
-----------------------------------
Cash, beginning of period/year 515,208 115,309
-----------------------------------
Operating activities
Net loss for the period/year (2,432,182) (6,775,846)
Current tax expenses 93,411 -
Deferred tax expenses (credit) 2,570 (841)
Foreign currency exchange loss 134,333 83,584
Allowance for doubtful debts 18,056 -
Interest expense 471,005 199,661
Accretion on convertible debentures 818,364 1,433,226
Writeback of deferred tax liability on
intangible assets - (126,259)
Goodwill impairment - 2,830,364
Intangible assets impairment - 393,375
Development costs impairment - 164,456
Suspended projects impairment - 144,945
Amortization & depreciation 123,844 489,413
Changes in non-cash working capital (83,859) (4,153)
Tax paid (4,963) -
-----------------------------------
Net cash used in operating activities (859,421) (1,168,075)
-----------------------------------
Financing activities
Loans from related parties 287,373 2,417,973
Repayment of loans from related parties - (732,248)
Advance from a related party 680,248 -
Repayment of advance from a related
party (102,994) -
-----------------------------------
Net cash generated from financing
activities 864,627 1,685,725
-----------------------------------
Investing activities
Development costs (47,036) (154,130)
Purchase of property, plant and
equipment (19,628) (9,060)
-----------------------------------
Net cash used in investing activities (66,664) (163,190)
-----------------------------------
Effect of exchange rate changes on cash (142,945) 45,439
-----------------------------------
-----------------------------------
(Decrease)/Increase in cash (204,403) 399,899
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Cash, end of period/year 310,805 515,208
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Segmented information
a) Revenue by major customers
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Nine-month period ended
December 31, 2015 Twelve-month period ended
(Unaudited) March 31, 2015 (Audited)
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$ % of total $ % of total
revenue revenue
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Customer A 1,541,256 39.6 571,354 30.0
Customer B 713,375 18.3 2,611 0.1
Customer C 543,441 14.0 119,802 6.3
Customer D 390,340 10.0 - -
Customer E 270,061 6.9 551,458 28.9
Customer F 48,592 1.2 6,055 0.3
All other customers 381,625 10.0 655,187 34.4
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Total 3,888,690 100.0 1,906,467 100.0
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b) Revenue by geographical locations
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Nine-month period ended
December 31, 2015 Twelve-month period ended
(Unaudited) March 31, 2015 (Audited)
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$ % of total $ % of total
revenue revenue
----------------------------------------------------
Asia 3,163,856 81.4 1,150,863 60.4
Europe 123,137 3.2 554,244 29.1
North America 552,740 14.2 120,517 6.3
Other regions 48,957 1.2 80,843 4.2
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Total 3,888,690 100.0 1,906,467 100.0
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c) Financial information by business segments
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Nine-month period ended Software
December 31, 2015 Investment Messaging products and Total
(Unaudited) services
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$ $ $ $
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Revenue - 3,069,374 819,316 3,888,690
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Depreciation and
amortisation 89 375 123,380 123,844
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Income tax expenses - - 95,981 95,981
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Net loss (1,304,128) (45,159) (1,082,895) (2,432,182)
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Segment assets, total 33,697 1,360,033 1,220,699 2,614,429
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Segment liabilities, total (600,616) (3,467,382) (1,769,000) (5,836,998)
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Total expenditures for
property and equipment
and development
expenditures - - 66,664 66,664
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Software
Twelve-month period ended Investment Messaging products and Total
March 31, 2015 (Audited) services
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$ $ $ $
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Revenue - 1,152,433 754,034 1,906,467
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Depreciation and
amortisation 119 1,247 488,047 489,413
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Income tax credit - - (107) (107)
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Net loss (5,036,536) (185,325) (1,553,985) (6,775,846)
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Segment assets, total 5,482 1,322,085 755,108 2,082,675
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Segment liabilities, total (8,843,954) (1,610,523) (1,691,973)(12,146,450)
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Total expenditures for
property and equipment
and development
expenditures - - 163,190 163,190
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About GINSMS
GINSMS is a mobile technology and services company focusing on 2 areas namely its A2P Messaging Service and its Software Products and Services. GINSMS operates a cloud-based A2P messaging service that allows the termination of SMS to mobile subscribers of more than 200 mobile operators globally. GINSMS also develops and distribute innovative software products and services for mobile operators and enterprises and have successfully deployed more than 100 solutions worldwide. GINSMS has offices in China, Singapore, Hong Kong, Malaysia and Indonesia.
Forward Looking Statements
Certain information included in this press release may contain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "could", "will", "expect", "intend", "estimate", "anticipate", "believe", or "continue" or the negative thereof or variations thereon or similar terminology. These statements are not historical facts, but reflect management's current beliefs and are based on information currently available to management regarding future results and events. Particularly, these forward-looking statements are based on management's estimate of future events based on technological advances relating to the Company's services, current market conditions and past experiences of management in relation to how certain contracts will affect revenues. Forward-looking statements, by their very nature, involve significant risks, uncertainties and assumptions.
A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to dependence on major customers, system failures, delays and other problems, increasing competition, security and privacy breaches, dependence on third-party software and equipment, adequacy of network reliance, network diversity and backup systems, loss of significant information, insurance coverage, capacity limits, rapid technology changes, market acceptance, decline in volume of attractions, retention of key members of the management team, success of expansion into Chinese and other Asian markets, credit risk, consolidation of existing customers, dependence on required licenses, economy and politics in countries where the Company operates, conflicts of interest and residency of directors and officers. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, the Company cannot assure the reader that actual results will be consistent with these forward-looking statements.
In particular, forward-looking statements include the following assumptions:
-- Management's belief that the availability of 3G/4G services in China and
the rest of the world will continue to create demand for the Company's
software products and services.
-- Management's belief that the future growth in messaging is in the area
of A2P Messaging Service and the Company's investment in this area will
create a viable and profitable business in the future.
-- Management's belief that the Company is able to generate sufficient
amounts of cash through operations and financing activities to fulfil
the working capital requirements of its present operations.
These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect new events or circumstances except as may be required by law. Accordingly, readers should not place undue reliance on the forward-looking statements. Forward looking statements are presented in this news release for the purpose of assisting investors and others in understanding certain key elements of our expected fiscal 2016 financial results, as well as our objectives, strategic priorities and business outlook for fiscal 2016, and in obtaining a better understanding of the Company's anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. All forward-looking statements contained in this press release are qualified by this cautionary statement.
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.
Contacts:
GINSMS Inc.
Joel Chin
CEO
+65-6441-1029
investor.relations@ginsms.com
