GINSMS Inc. (TSX VENTURE:GOK) has announced its financial results for the fourth
quarter and year ended March 31, 2014.
PERFORMANCE HIGHLIGHTS FOR THE THREE AND TWELVE MONTHS ENDED MARCH 31, 2014:
-- The acquisition of Inphosoft Group Pte Ltd ("Inphosoft") was completed
on September 28, 2012. GINSMS's income statement for the three and
twelve months ended March 31, 2014 includes the operating results of
Inphosoft Group Pte Ltd and its subsidiaries resulting in total revenue
of $219,135 and $1,130,787 respectively, compared to $518,678 and
$1,302,915 for the corresponding three and twelve months in the previous
year.
-- Activities for the three-month and twelve months ended March 31, 2014
resulted in a net loss of $994,330 and $2,972,208 respectively,
including a non-realized exchange loss of $2,513 and $10,310
respectively and a non-cash charge to earnings of $397,577 and
$1,321,854 respectively representing accretion on obligations related to
the convertible debentures and promissory notes issued in connection
with the acquisition of Inphosoft. The net loss for the twelve months
ended March 31, 2014 could have been higher if not for the decrease to
the contingent consideration of approximately $109,000, resulting from
an event that occurred subsequent to the acquisition date, was initially
recorded in the Company's September 30, 2013 and December 31, 2013
interim financial statements based upon an estimate which was based upon
factors available to the Company at the date of interim financial
statements. In connection with the year financial statements, the
Company obtained a third party appraisal of the debentures. Based on the
third-party appraisal, the Company adjusted (increased) the fair value
adjustment of the debentures by approximately $72,000 with a related
increased in accretion of approximately $64,000 in the quarter ended
March 31, 2014. For the three and twelve months ended March 31, 2013,
the Company recorded a net loss of $717,852 and $1,534,662 respectively.
-- EBITDA of negative $622,071 and $1,286,738 respectively for the three
and twelve months ended March 31, 2014. This is a deterioration of
$438,746 and $725,681, compared to EBITDA of negative $183,325 and
negative $561,057 respectively during the corresponding three and twelve
months in the previous year. The lower EBITDA principally reflect much
higher losses due to lower revenue generated by IOSMS platform and also
lower 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 March 31,
2014 was down by 63.9% to 4,850,223 from the same period the previous
year. When compared to the previous quarter ended December 31, 2013,
traffic was down by 21.0%. 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.
-- Liquidity deteriorated considerably with cash on hand of $115,309, down
88.1% from March 31, 2013. Net current liabilities as at March 31, 2014
were $596,118, compared to net current assets of $797,995 as at March
31, 2013.
-- The net loss for the twelve months ended March 31, 2014 could have been
higher if not for the decrease to the contingent consideration of
approximately $109,000, resulting from an event that occurred subsequent
to the acquisition date, was initially recorded in the Company's
September 30, 2013 and December 31, 2013 interim financial statements
based upon an estimate which was based upon factors available to the
Company at the date of interim financial statements. In connection with
the year financial statements, the Company obtained a third party
appraisal of the debentures. Based on the third-party appraisal, the
Company adjusted (increased) the fair value adjustment of the debentures
by approximately $72,000 with a related increased in accretion of
approximately $64,000 in the quarter ended March 31, 2014.
RESULTS OF OPERATIONS
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Three-month period ended Twelve-month period ended
March 31, March 31,
Financial Highlights (Unaudited) (Audited)
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2014 2013 2014 2013
Revenues $ 219,135 518,678 1,130,787 1,302,915
Cost of sales $ (239,473) (154,237) (581,770) (400,908)
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Gross profit $ (20,338) 364,441 549,017 902,007
Gross margin % (9.3)% 70.3% 48.6% 69.2%
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EBITDA (1) $ (622,071) (183,325) (1,286,738) (561,057)
EBITDA margin (283.9)% (35.3)% (113.8)% (43.1)%
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Net earnings $ (994,330) (717,852) (2,972,208) (1,534,662)
Net earnings margin (453.8)% (138.4)% (262.8)% (117.8)%
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Net earnings (loss)
per share $
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Basic (0.02) (0.02) (0.06) (0.04)
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Diluted (0.02) (0.02) (0.06) (0.04)
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(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.
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Consolidated as at Consolidated as at
March, 2014 March 31, 2013
(Audited)(1) (Audited)(1)
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Total assets $ 4,951,716 6,686,027
Total liabilities $ 8,173,290 7,056,584
Shareholders' equity $ (3,221,574) (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 12 months ended March 31, 2014 was $219,135 and
$1,130,787 respectively, representing a decrease of 57.8% and 13.2%
respectively, compared to $518,678 and $1,302,915 during the corresponding
periods the previous year. The increase of 30.8% in revenue from Inphosoft for
12 months to $1,001,428 is mainly due to the inclusion of full 12 months of
revenue for the period ended March 31, 2014 as compared to the inclusion of only
6 months of revenue from Inphosoft for the period ended March 31, 2013. However,
revenue from Inphosoft for 6 months ended March 31, 2014 declined by 45.4% to
$418,288 compared to $765,894 for the 6 months ended March 31, 2013. Revenue
generated through its global partner, Acision, has declined significantly from a
year ago and is not expected to recover soon. Acision has downsized its global
sales team to focus on Acision's core products and places less emphasis on
reselling partners' products. This resulted in the reduced demand for the
Company's products. Moving forward, the business conditions will remain
challenging and the Company has to focus its efforts on other areas in order to
create new revenue streams. The Company has since invested heavily in the
current quarter in the development of two mobile applications namely the
InphoShop series of mobile applications including GoMall and Happy Hours and
RightHere Messenger, an Over-The-Top ("OTT") messaging application. The
development of the three applications is not completed yet. Revenue from the
Company's IOSMS activities, taken separately, declined by 68.7% and 75.9% for
the 3 months and 12 months compared to 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
March 1st 2013 as well as a 63.9% drop in the Company's SMS traffic during the
quarter ended March 31, 2014, compared to the corresponding quarter the previous
year.
Revenue from Inphosoft for the 12 months aggregated $1,001,428 is broken down as
follows: Professional Services - $544,363 (54.4%), Software License Fees -
$49,494 (4.9%), and Support and Maintenance (S&M) -$407,571 (40.7%).
The net loss for the quarter ended March 31, 2014 amounted to $994,330, compared
to a loss of $717,852 during the same quarter the previous year. The loss for
the fourth quarter this fiscal year includes a net foreign exchange loss of
$2,513 and a non-cash charge to earnings of $397,577 representing accretion on
obligations related to the convertible debentures and promissory notes issued in
connection with the acquisition of Inphosoft. EBITDA for the fourth quarter
ended March 31, 2014 amounted to deficit of $622,071 while EBITDA for the
corresponding period the previous year showed a deficit of $183,325 These
results underline a decline in gross profit with gross income decreasing by
105.6% to negative $20,338 and with a lower gross profit margins hence this
translates into a gross margin of -9.3%, compared to 70.3% 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 12 months
ended March 31, 2014, the loss of $2,972,208 reported during the period reflects
higher operating expenses. With Inphosoft, salaries and wages jumped by 88.5% to
$1,126,503, and general and administrative expenses are up 73.8% to $328,765.
However, consultancy fees decreased by 56.8% to $39,407 and professional fees
decreased by 49.0% to $330,770. 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 and accretion costs on
convertible debenture and notes payables which amounted to $399,730 and
1,321,854 respectively, compared to $327,092 and $654,904 respectively for the
corresponding 12 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
GINSMS Inc.
Joel Chin, CEO
+65-6441-1029
investor.relations@ginsms.com
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