GINSMS Inc. — Annual Report 2020

Mar 26, 2021

GINSMS INC.

Consolidated Financial Statements
For the years ended December 31, 2020
and December 31, 2019

To the Shareholders of GINSMS Inc.:

Management is responsible for the preparation and presentation of the accompanying consolidated financial statements, including responsibility for significant accounting judgments and estimates in accordance with International Financial Reporting Standards. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.

In discharging its responsibilities for the integrity and fairness of the consolidated financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded and financial records are properly maintained to provide reliable information for the preparation of consolidated financial statements.

The majority of the Audit Committee is composed of Directors who are neither management nor employees of the Corporation. The Committee is responsible for overseeing management in the performance of its financial reporting responsibilities. The Audit Committee has the responsibility of meeting with management and external auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reporting issues. The Audit Committee is also responsible for recommending the appointment of the Corporation's external independent auditors.

RSM Hong Kong is appointed by the Directors to audit the consolidated financial statements and report directly to them; their report follows. The external independent auditors have full and free access to, and meet periodically and separately with, the Board, the Audit Committee and management to discuss their audit findings.

March 26, 2021

Chief Executive Officer

Director

羅申美會計師事務所

利園二期二十九字樓

電話 +852 2598 5123

傳真 +852 2598 7230

香港銅鑼灣恩平道二十八號

RSM Hong Kong

29th Floor, Lee Garden Two, 28 Yun Ping Road, Causeway Bay, Hong Kong T+852 2598 5123 F+852 2598 7230

www.rsmhk.com

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www.rsmhk.com

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF GINSMS Inc. (Incorporated in Alberta under the Canada Business Corporations Act)

Opinion

We have audited the consolidated financial statements of GINSMS Inc. (the "Corporation") and its subsidiaries, which comprise the consolidated statements of financial position as at December 31, 2020 and December 31, 2019, and the consolidated statements of comprehensive loss, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended December 31, 2020 and December 31, 2019, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Corporation and its subsidiaries as at December 31, 2020 and December 31, 2019, and of its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2020 and December 31, 2019 in accordance with International Financial Reporting Standards ("IFRSs").

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Corporation in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to note 2 in the consolidated financial statements which indicates that the Corporation incurred a net loss of \$3,508 during the year ended December 31, 2020 and, as of that date, the Corporation had net current liabilities of \$6,471,862 and net liabilities of \$6,393,161. As stated in note 2, these events or conditions indicate that a material uncertainty exists that may cast significant doubt on the Corporation's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

This section of our auditor's report is intended to describe the matters selected from those communicated with the Audit Committee that, in our professional judgment, were of most significance in our audit of the consolidated financial statements. Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our report.

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

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INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF GINSMS Inc. (Incorporated in Alberta under the Canada Business Corporations Act)

Other information

Management is responsible for the Other Information. The Other Information comprises all of the information included in the management's discussion and analysis other than the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the Other Information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the Other Information and, in doing so, consider whether the Other Information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this Other Information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and those charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Corporation's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Corporation or to cease operations, or have no realistic alternative but to do so.

The Audit Committee assists the directors in discharging their responsibilities for overseeing the Corporation's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation's internal control.

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Auditor's Responsibilities for the Audit of the Consolidated Financial Statements (cont'd)

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Corporation to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Mr. Wong Wo Cheung.

RSM Hong Kong Certified Public Accountants Hong Kong

March 26, 2021

GINSMS INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2020 AND DECEMBER 31, 2019

(In Canadian Dollars)

	Note	2020	2019
		S	\$
Revenue Cost of sales	$\overline{7}$	2,823,335 (1,791,770)	2,638,717 (1,912,323)
Gross profit		1,031,565	726,394
Expenses
Salaries and wages		(496, 128)	(485, 726)
Professional fees		(272, 101)	(273, 470)
Directors' fees		(40,000)	(40,000)
General and administrative		(137, 577)	(202, 911)
(Allowance for)/reversal of allowance for doubtful debts Depreciation of property, plant and equipment		(2,083)	6,828
Depreciation of right-of-use assets		(6, 217) (44, 340)	(2, 732) (15,017)
Foreign currency exchange (loss)/gain		(20,192)	68,688
Profit/(loss) from operations		12,927	(217, 946)
Finance costs
Interest expenses		(15, 486)	(97, 612)
Loss before tax		(2, 559)	(315, 558)
Income tax (expenses)/credit	9	(949)	247
Net loss for the year		(3,508)	(315, 311)
Other comprehensive income, net of tax:
Items that may be reclassified to profit or loss:
Foreign exchange differences on translating foreign
operations		50,492	(75, 139)
Total comprehensive income/(loss) for the year		46,984	(390, 450)
Net loss for the year attributable to:
Shareholders		(2, 122)	(314, 819)
Non-controlling interest		(1, 386)	(492)
		(3,508)	(315, 311)
Total comprehensive income/(loss) for the year
attributable to:
Shareholders		48,074	(389, 818)
Non-controlling interest		(1,090)	(632)
		46,984	(390, 450)
Loss per share	11
Basic (in Canadian cents) Diluted		(0.001) N/A	(0.21) N/A

The accompanying notes are an integral part of these consolidated financial statements.

GINSMS INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31, 2020 AND 2019

(In Canadian Dollars)
	Note	2020	2019
		\$	\$
Non-current assets	12
Property, plant and equipment Right-of-use assets	13	39,999	50,859
Goodwill	14	73,331	120,385
		113,330	171,244
Current assets
Accounts receivable	15	557,834	360,885
Other receivables, prepayments and deposits		76,576	82,133
Bank and cash balances		296,312	194,411
		930,722	637,429
Current liabilities
Accounts payable and accrued liabilities	16	749,061	670,400
Advances from related parties	18	1,100,130	887,512
Loan from related parties	20	4,933,186	4,168,840
Promissory note payable	19	580,000	580,000
Lease Liabilities	21	38,717	40,071
Current tax liabilities		1,490	590
		7,402,584	6,347,413
Net current liabilities		(6,471,862)	(5,709,984)
Total assets less current liabilities		(6,358,532)	(5,538,740)
Non-current liabilities
Loans from related parties	20		824,628
Lease Liabilities	21	34,629	76,777
		34,629	901,405
NET LIABILITIES		(6, 393, 161)	(6, 440, 145)
EQUITY
Share capital	22	11,415,709	11,415,709
Deficit		(18,034,210)	(18,032,088)
Accumulated other comprehensive income		239,449	189,253
Total deficiency attributable to equity shareholders of the
Corporation		(6,379,052)	(6,427,126)
Non-controlling interests		(14, 109)	(13,019)
TOTAL DEFICIENCY		(6, 393, 161)	(6, 440, 145)
Going concern (Note 2)

Approved on behalf of the board on March 26, 2021

Director

Director

The accompanying notes are an integral part of these consolidated financial statements.

GINSMS INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND DECEMBER 31, 2019

(In Canadian Dollars)

			Attributable to equity shareholders of the Corporation
	Share capital	Deficit	Accumulated other comprehensive income	Total	Non- controlling interests	Total deficiency
						æ.
Balance as at January 1, 2019	11,415,709	(17, 717, 269)	264,252	(6,037,308)	(12, 387)	(6,049,695)
Loss for the year		(314, 819)	×	(314, 819)	(492)	(315, 311)
Other comprehensive income			(74, 999)	(74,999)	(140)	(75, 139)
Balance as at December 31, 2019 and January 1, 2020	11,415,709	(18,032,088)	189,253	(6,427,126)	(13,019)	(6,440,145)
Loss for the year	۰	(2, 122)	$\overline{\phantom{a}}$	(2, 122)	(1,386)	(3,508)
Other comprehensive income			50.196	50,196	296	50,492
Balance as at December 31, 2020	11,415,709	(18.034.210)	239,449	(6, 379, 052)	(14, 109)	(6,393,161)

The accompanying notes are an integral part of these consolidated financial statements.

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GINSMS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND DECEMBER 31, 2019

(In Canadian Dollars)

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	2020	2019
	\$	S
OPERATING ACTIVITIES
Net loss for the year	(3,508)	(315, 311)
Current tax expense	949	787
Deferred tax credit		(1,034)
Interest expenses	15,486	97,612
Foreign currency exchange loss/(gain)	20,192	(68, 688)
Depreciation of property, plant and equipment	28,686	22,551
Depreciation of right-of-use assets	44,340	15,017
Allowance for /(reversal of allowance for) doubtful debts	2,083	(6, 828)
Loss on written off of suspended project costs		9,466
Changes in non-cash working capital items:
Accounts receivable	(184, 669)	299,146
Other receivables, prepayments and deposits	4,706	17,311
Accounts payable and accrued liabilities	79,434	(540, 344)
Interest on lease liabilities	(15, 486)	(6,531)
Income tax paid	٠	(787)
Net cash used in operating activities	(7, 787)	(477, 633)
FINANCING ACTIVITIES
Advances from related parties	212,377	570,806
Repayment of advance from a related party	(2,690)	(82, 758)
Principal elements of lease payments	(43, 504)	(18, 545)
Net cash generated from financing activities	166,183	469,503
INVESTING ACTIVITIES
Purchase of property, plant and equipment	(18, 732)	(37, 579)
Net cash used in investing activities	(18, 732)	(37, 579)
Effect of exchange rate changes on cash held in foreign
currencies	(37, 763)	(27, 831)
Increase/(decrease) in cash	101,901	(73, 540)
Cash, beginning of year	194,411	267,951
Cash, end of year	296,312	194,411

(In Canadian Dollars)

$\mathbf{1}$ . GENERAL INFORMATION

GINSMS Inc. (the "Corporation") was incorporated in Alberta under the Canada Business Corporations Act on March 20, 2009. The address of its registered office is Suite 3000, 700 -9th Avenue S.W., Calgary, Alberta, T2P 3V4. The Corporation's shares are listed on the TSX Venture Exchange ("TSXV").

The Corporation is an investment holding company. The principal activities of its subsidiaries are set out in note 25 to the consolidated financial statements.

In the opinion of the directors of the Corporation, Xinhua Mobile Limited ("Xinhua Mobile"), a company incorporated in the Cayman Islands, is the immediate parent; Beat Holdings Limited ("Beat Holdings"), a company incorporated in the Cayman Islands, is the ultimate parent.

Beat Holdings' securities are listed on Tokyo Stock Exchange's Second Section (9399).

The principal activities of the Corporation are as follows:

$(a)$ Provision of messaging service ("Messaging Service")

The Corporation, through its subsidiary, GIN International Limited in Hong Kong, was originally involved in the provision of inter-operator short message services. On March 27, 2014, the Corporation launched its cloud-based application-to-peer ("A2P") messaging service ("A2P Service"). Through the provision of A2P Service, the Corporation enables the mobile application developers, short message service ("SMS") gateway, enterprises and financial institution to deliver SMS worldwide without any upfront capital investment through the use of the Corporation's rich application programming interface.

$(b)$ Provision of software products and services ("Software Products and Services")

The Corporation operates its Software Products and Services business through Inphosoft Group Pte. Ltd. ("Inphosoft"), its wholly-owned subsidiary. Inphosoft is headquartered in Singapore with subsidiaries in Malaysia and Indonesia. The activities of Inphosoft consist of providing software products and services with a focus in the following areas:

• T. Provision of support and maintenance services to customers that have purchased its products and solutions.
• Maintain the A2P Cloud platform and develop new features as and when -ii. necessary, to support the Corporation's A2P business.
• iii. Outsource technical resources to customers for the purpose of software development based on a time and material basis.

Software Products and Services revenues are primarily derived from customers in Singapore, Malaysia and Indonesia.

2. BASIS OF PREPARATION

These consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board (the "IASB"). IFRSs comprise International Financial Reporting Standards ("IFRS"); International Accounting Standards ("IAS"); and Interpretations.

The consolidated financial statements were authorised for issue by the Board of Directors on March 26, 2021.

The IASB has issued certain new and revised IFRSs that are first effective or available for early adoption for the current accounting period of the Corporation. Note 3 provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Corporation for the current and prior accounting periods reflected in these consolidated financial statements.

Amounts are reported in Canadian dollars ("CDN" or "\$") unless otherwise indicated.

The Corporation has faced considerable competition in its existing principal activities, and the profitability of the businesses has been affected. The Corporation incurred a loss of \$3,508 for the year ended December 31, 2020. Additionally, as at December 31, 2020, the Corporation had net current liabilities and net liabilities of \$6,471,862 and \$6,393,161 respectively. These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Corporation's ability to continue as a going concern. Therefore, the Corporation may be unable to realize its assets and discharge its liabilities in the normal course of business.

The spread of COVID-19 in all relevant jurisdictions has impacted the Corporation's operation and customer base and uncertainty regarding the extent, duration and are having a material impact on all aspects of the Corporation's operations. The Corporation confirms to adopt the going concern basis in preparing its consolidated financial statements. Management has instituted plans to address these matters:

• $(a)$ The liquidity risk is mitigated as related parties have confirmed with the Corporation that they will not demand settlement of the interest-free loans of \$4,566,411 and cash advances of \$1,100,130 until the Corporation is in sound financial position to repay to them. Furthermore, the immediate parent and the promissory note holder have agreed to extend the due dates of the loan of \$366,775 and promissory note of \$580,000 to March 31, 2022 and have confirmed with the Corporation that they will not demand settlement of the loan and promissory note until the Corporation is in sound financial position to repay to them.
• $(b)$ The ultimate parent has agreed to provide adequate funds for the Corporation to meet all third party obligations for at least the ensuing twelve month period.
• The directors will continuously and closely monitor the Corporation's liquidity position $(c)$ and financial performance and implement measures to improve the Corporation cash flows.

As a result, considering after all relevant information. includina its actions completed to date and its future plans, the management has concluded that the Corporation is able to continue as a going concern for a period of 12 months from December 31, 2020.

$2.$ BASIS OF PREPARATION (CONT'D)

The estimates used by management in reaching this conclusion are based on information available as of the date these financial statements were authorized for issuance and include internally generated cash flow forecasts. Accordingly, actual results could differ from these estimates and resulting variances may be material to management's assessment.

Should the Corporation be unable to continue as a going concern, adjustments would have to be made to the consolidated financial statements to adjust the value of the Corporation's assets to their recoverable amounts, to provide for any further liabilities which might arise and to reclassify non-current assets and liabilities as current assets and liabilities, respectively.

ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING $3.$ STANDARDS

$(a)$ Application of new and revised IFRSs

The Corporation has applied the Amendments to Reference to the Conceptual Framework in IFRS Standards and the following amendments to IFRSs issued by the IASB for the first time, which are mandatorily effective for the annual period beginning on or after January 1, 2020 for the preparation of the consolidated financial statements:

Amendments to IAS 1 and IAS 8 Definition of Material Amendments to IFRS 3 Definition of a Business Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform

Except as described below, the application of the Amendments to References to the Conceptual Framework in IFRS Standards and the amendments to IFRSs in the current year had no material impact on the Corporation's consolidated financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

Amendments to IAS 1 and IAS 8 Definition of Material

The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.

The application of the amendments had no impact on the consolidated financial statements.

Amendments to IFRS 3 Definition of a Business

The amendments clarify the definition of a business and provide further guidance on how to determine whether a transaction represents a business combination. In addition, the amendments introduce an optional "concentration test" that permits a simplified assessment of whether an acquired set of activities and assets is an asset rather than business acquisition, when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or Corporation of similar identifiable assets.

$3_ii$ ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (CONT'D)

$(a)$ Application of new and revised IFRSs (cont'd)

Amendments to IFRS 3 Definition of a Business (cont'd)

The Corporation has applied the amendments prospectively to transactions for which the acquisition date is on or after January 1, 2020. The application of the amendments had no impact on the consolidated financial statements as the Corporation had no acquisitions.

Amendments to IFRS 9, IAS 39 and IFRS 7, Interest Rate Benchmark Reform

The amendments modify specific hedge accounting requirements to allow hedge accounting to continue for affected hedges during the period of uncertainty before the hedged items or hedging instruments affected by the current interest rate benchmarks are amended as a result of the on-going interest rate benchmark reform.

The amendments had no impact on the consolidated financial statements of the Corporation as the Corporation had no hedged items.

New and revised IFRSs in issue but not yet effective $(b)$

The Corporation has not applied any new and revised IFRSs that have been issued but are not yet effective for the financial year beginning January 1, 2020. These new and revised IFRSs include the following which may be relevant to the Corporation.

	Effective for accounting periods beginning on or after
IFRS 16, COVID-19-Related Rent Concessions	June 1, 2020
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2	January 1, 2021
Amendments to IFRS 3 Reference to the Conceptual Framework	January 1, 2022
Amendments to IAS 16 Property, plant and equipment: proceeds before intended use	January 1, 2022
Amendments to IAS 37 Onerous contracts - cost of fulfilling a contract	January 1, 2022
Annual Improvements to IFRSs 2018 - 2020 Cycle	January 1, 2022
Amendments to IAS 1 Classification of liabilities as current or non-current	January 1, 2023

The Corporation is in the process of making an assessment of what the impact of these amendments and new standards is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES $4.$

These consolidated financial statements have been prepared under the historical cost convention, unless mentioned otherwise in the accounting position below.

The preparation of consolidated financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Corporation's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 5.

The significant accounting policies applied in the preparation of these consolidated financial statements are set out below.

Consolidation $(a)$

The consolidated financial statements include the financial statements of the Corporation and its subsidiaries made up to December 31. Subsidiaries are entities over which the Corporation has control. The Corporation controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The Corporation has power over an entity when the Corporation has existing rights that give it the current ability to direct the relevant activities, i.e. activities that significantly affect the entity's returns.

When assessing control, the Corporation considers its potential voting rights as well as potential voting rights held by other parties. A potential voting right is considered only if the holder has the practical ability to exercise that right.

Subsidiaries are consolidated from the date on which control is transferred to the Corporation. They are de-consolidated from the date the control ceases.

The gain or loss on the disposal of a subsidiary that results in a loss of control represents the difference between (i) the fair value of the consideration of the sale plus the fair value of any investment retained in that subsidiary and (ii) the Corporation's share of the net assets of that subsidiary plus any remaining goodwill and any accumulated foreign currency translation reserve relating to that subsidiary.

Intragroup transactions, balances and unrealized profits are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Corporation.

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to the Corporation. Non-controlling interests are presented in the consolidated statement of financial position and consolidated statement of changes in equity within equity. Non-controlling interests are presented in the consolidated statement of comprehensive income (loss) as an allocation of profit or loss and total comprehensive income (loss) between the non-controlling shareholders and owners of the Corporation.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Corporation and to the non-controlling shareholders even if this results in the non-controlling interests having a deficit balance.

$(a)$ Consolidation (cont'd)

Changes in the Corporation's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (i.e. transactions with owners in their capacity as owners). The carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Corporation.

$(b)$ Business combination and goodwill

The acquisition method is used to account for the acquisition of a subsidiary in a business combination. The consideration transferred in a business combination is measured at the acquisition-date fair value of the assets given, equity instruments issued, liabilities incurred and any contingent consideration. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. Identifiable assets and liabilities of the subsidiary in the acquisition are measured at their acquisition-date fair values.

The excess of the sum of the consideration transferred over the Corporation's share of the net fair value of the subsidiary's identifiable assets and liabilities is recorded as goodwill. Any excess of the Corporation's share of the net fair value of the identifiable assets and liabilities over the sum of the consideration transferred is recognised in consolidated profit or loss as a gain on bargain purchase which is attributed to the Corporation.

The non-controlling interests in the subsidiary are initially measured at the non-controlling shareholders' proportionate share of the net fair value of the subsidiary's identifiable assets and liabilities at the acquisition date.

After initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units ("CGUs") or groups of CGUs that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the Corporation at which the goodwill is monitored for internal management purposes. Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to its recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

$(c)$ Foreign currency translation

$(i)$ Functional and presentation currency

Items included in the financial statements of each of the Corporation's entities are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The consolidated financial statements are presented in CDN, which is the Corporation's functional and presentation currency.

The primary functional currencies of its subsidiaries are Hong Kong Dollars ("HKD") and Singapore Dollars ("SGD"). These currencies are freely convertible into foreign currencies.

$(c)$ Foreign currency translation (cont'd)

$(ii)$ Transactions and balances in each entity's financial statements

Transactions in foreign currencies are translated into the functional currency on initial recognition using the exchange rates prevailing on the transaction dates. Monetary assets and liabilities in foreign currencies are translated at the exchange rates at the end of each reporting period. Gains and losses resulting from this translation policy are recognised in profit or loss.

$(iii)$ Translation on consolidation

The results and financial position of all the Corporation entities that have a functional currency different from the Corporation's presentation currency are translated into the Corporation's presentation currency as follows:

• Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
• Income and expenses are translated at average exchange rates for the period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates. in which case income and expenses are translated at the exchange rates on the transaction dates); and
• All resulting exchange differences are recognised in other comprehensive income/(loss) and accumulated in the foreign currency translation reserve.

On consolidation, exchange differences arising from the translation of monetary items that form part of the net investment in foreign entities are recognised in other comprehensive income and accumulated in the foreign currency translation reserve. When a foreign operation is sold, such exchange differences are reclassified to consolidated profit or loss as part of the gain or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

$(d)$ Property, plant and equipment

Property, plant and equipment held for use in the production or supply of goods or services, or for administrative purposes, are stated in the consolidated statement of financial position at cost, less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Corporation and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in profit or loss during the period in which they are incurred.

$(d)$ Property, plant and equipment (cont'd)

Depreciation of property, plant and equipment is calculated at rates sufficient to write off their cost over the estimated useful lives on a straight-line basis. The useful lives $3 - 5$ years.

The useful lives and depreciation method are reviewed and adjusted, if appropriate, at the end of each reporting period.

The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in profit or loss.

$(e)$ Leases

At inception of a contract, the Corporation assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to direct the use of the identified asset and to obtain substantially all of the economic benefits from that use.

$(i)$ The Corporation as a lessee

Where the contract contains lease component(s) and non-lease component(s), the Corporation has elected not to separate non-lease components and accounts for each lease component and any associated non-lease components as a single lease component for all leases.

At the lease commencement date, the Corporation recognises a right-of-use asset and a lease liability, except for short-term leases that have a lease term of 12 months or less and leases of low-value assets which, for the Corporation are primarily laptops and office furniture. When the Corporation enters into a lease in respect of a low-value asset, the Corporation decides whether to capitalise the lease on a lease-by-lease basis. The lease payments associated with those leases which are not capitalised are recognised as an expense on a systematic basis over the lease term.

Where the lease is capitalised, the lease liability is initially recognised at the present value of the lease payments payable over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate. After initial recognition, the lease liability is measured at amortised cost and interest expense is calculated using the effective interest method. Variable lease payments that do not depend on an index or rate are not included in the measurement of the lease liability and hence are charged to profit or loss in the accounting period in which they are incurred.

$4₁$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

$(e)$ Leases (cont'd)

$(i)$ The Corporation as a lessee (cont'd)

The right-of-use asset recognised when a lease is capitalised is initially measured at cost, which comprises the initial amount of the lease liability plus any lease payments made at or before the commencement date, and any initial direct costs incurred. Where applicable, the cost of the right-of-use assets also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, discounted to their present value, less any lease incentives received. The right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment losses.

Right-of-use assets in which the Corporation is reasonably certain to obtain ownership of the underlying leased assets at the end of the lease term are depreciated from commencement date to the end of the useful life. Otherwise, right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

Refundable rental deposits paid are accounted under IFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost of right-of-use assets.

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, or there is a change in the Corporation's estimate of the amount expected to be payable under a residual value guarantee, or there is a change arising from the reassessment of whether the Corporation will be reasonably certain to exercise a purchase. extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The lease liability is also remeasured when there is a change in the scope of a lease or the consideration for a lease that is not originally provided for in the lease contract ("lease modification") that is not accounted for as a separate lease. In this case the lease liability is remeasured based on the revised lease payments and lease term using a revised discount rate at the effective date of the modification.

$(f)$ Contract assets and contract liabilities

Contract asset is recognised when the Corporation recognises revenue before being unconditionally entitled to the consideration under the payment terms set out in the contract. Contract assets are assessed for expected credit losses ("ECL") in accordance with the policy set out in note $4(u)$ and are reclassified to receivables when the right to the consideration has become unconditional.

$(f)$ Contract assets and contract liabilities (cont'd)

A contract liability is recognised when the customer pays consideration before the Corporation recognises the related revenue. A contract liability would also be recognised if the Corporation has an unconditional right to receive consideration before the Corporation recognizes the related revenue. In such cases, a corresponding receivable would also be recognised.

For a single contract with the customer, either a net contract asset or a net contract liability is presented. For multiple contracts, contract assets and contract liabilities of unrelated contracts are not presented on a net basis.

When the contract includes a significant financing component, the contract balance includes interest accrued under the effective interest method.

$(g)$ Recognition and derecognition of financial instruments

Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Corporation entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

The Corporation derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Corporation neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Corporation recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Corporation retains substantially all the risks and rewards of ownership of a transferred financial asset, the Corporation continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

The Corporation derecognises financial liabilities when, and only when, the Corporation's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

$(h)$ Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

$(h)$ Financial assets (cont'd)

Debt investments

Debt investments held by the Corporation are classified into amortised cost, if the investment is held for the collection of contractual cash flows which represent solely payments of principal and interest. Interest income from the investment is calculated using the effective interest method.

Trade and other receivables $(i)$

A receivable is recognised when the Corporation has an unconditional right to receive consideration. A right to receive consideration is unconditional if only the passage of time is required before payment of that consideration is due. If revenue has been recognised before the Corporation has an unconditional right to receive consideration, the amount is presented as a contract asset.

Receivables are stated at amortised cost using the effective interest method less allowance for credit losses.

$(i)$ Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Corporation's cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flow. Cash and cash equivalents are assessed for ECL.

$(k)$ Financial liabilities and equity instruments

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument under IFRSs. An equity instrument is any contract that evidences a residual interest in the assets of the Corporation after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

$(1)$ Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method.

Borrowings are classified as current liabilities unless the Corporation has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

$(m)$ Trade and other payables

Trade and other payables are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost.

$(n)$ Equity instruments

An equity instrument is any contract that evidence a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Corporation are recorded at the proceeds received, net of direct issue costs.

$(0)$ Revenue and other income

Revenue is recognised when control over a service is transferred to the customer, at the amount of promised consideration to which the Corporation is expected to be entitled, excluding those amounts collected on behalf of third parties. Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts.

Revenue from provision of messaging services is recognised over time as services are provided to customers.

Revenue from provision of support and maintenance services is recognised over time when the services are rendered, by reference to time lapsed.

Revenue from outsourcing technical resources is recognised over time as services provided.

Interest income is recognised as it accrues using the effective interest method.

$(p)$ Employee benefits

$(i)$ Employee leave entitlements

Employee entitlements to annual leave and long service leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave and long service leave as a result of services rendered by employees up to the end of the reporting period.

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

$(ii)$ Pension obligations

The Corporation contributes to defined contribution retirement schemes which are available to all employees. Contributions to the schemes by the Corporation and employees are calculated as a percentage of employees' basic salaries. The retirement benefit scheme cost charged to profit or loss represents contributions payable by the Corporation to the funds.

$(iii)$ Termination benefits

Termination benefits are recognised at the earlier of the dates when the Corporation can no longer withdraw the offer of those benefits, and when the Corporation recognises restructuring costs and involves the payment of termination benefits.

$4₁$ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)

$(q)$ Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalized as part of the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by applying a capitalization rate to the expenditures on that asset. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings of the Corporation that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

$(r)$ Government grant

A government grant is recognised when there is reasonable assurance that the Corporation will comply with the conditions attaching to it and that the grant will be received.

Government grants relating to income are deferred and recognised in profit or loss over the period to match them with the costs they are intended to compensate.

Government grants that become receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Corporation with no future related costs are recognised in profit or loss in the period in which they become receivable.

$(s)$ Taxation

Income tax represents the sum of the current tax and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit recognised in profit or loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Corporation's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences, unused tax losses or unused tax credits can be utilized. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Corporation is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realized, based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income (loss) or directly in equity, in which case the deferred tax is also recognised in other comprehensive income (loss) or directly in equity.

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Corporation expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

For the purposes of measuring deferred tax for leasing transactions in which the Corporation recognises the right-of-use assets and the related lease liabilities, the Corporation first determines whether the tax deductions are attributable to the right-of-use assets or the lease liabilities.

For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Corporation applies IAS 12 requirements to right-of-use assets and lease liabilities separately. Temporary differences relating to right-of-use assets and lease liabilities are not recognised at initial recognition and over the lease terms due to application of the initial recognition exemption.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Corporation intends to settle its current tax assets and liabilities on a net basis.

$(t)$ Impairment of non-financial assets

The carrying amounts of non-financial assets are reviewed at each reporting date for indications of impairment and where an asset is impaired, it is written down as an expense through the consolidated statement of comprehensive income (loss) to its estimated recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, recoverable amount is determined for the cash-generating unit to which the asset belongs. Recoverable amount is the higher of value in use and the fair value less costs of disposal of the individual asset or the cash-generating unit.

Value in use is the present value of the estimated future cash flows of the asset / cash-generating unit. Present values are computed using pre-tax discount rates that reflect the time value of money and the risks specific to the asset / cash-generating unit whose impairment is being measured.

Impairment losses for cash-generating units are allocated first against the goodwill of the unit and then pro rata amongst the other assets of the cash-generating unit. Subsequent increases in the recoverable amount caused by changes in estimates are credited to profit or loss to the extent that they reverse the impairment.

$(u)$ Impairment of financial assets and contract assets

The Corporation recognises a loss allowance for ECL on trade receivables and contract assets. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

The Corporation always recognises lifetime ECL for trade receivables and contract assets. The ECL on these financial assets are estimated using a provision matrix based on the Corporation's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Corporation recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Corporation measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

$(u)$ Impairment of financial assets and contract assets (cont'd)

Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Corporation compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this assessment, the Corporation considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Corporation's debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Corporation's core operations.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

• an actual or expected significant deterioration in the financial instrument's external (if available) or internal credit rating;
• significant deterioration in external market indicators of credit risk for a particular financial instrument;
• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor's ability to meet its debt obligations;
• an actual or expected significant deterioration in the operating results of the debtor;
• significant increases in credit risk on other financial instruments of the same debtor:
• an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor's ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Corporation presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Corporation has reasonable and supportable information that demonstrates otherwise.

Despite the foregoing, the Corporation assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if:

• The financial instrument has a low risk of default, $(i)$
• The debtor has a strong capacity to meet its contractual cash flow obligations $(ii)$ in the near term, and
• $(iii)$ Adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

(u) Impairment of financial assets and contract assets (cont'd)

Significant increase in credit risk (cont'd)

The Corporation considers a financial asset to have low credit risk when the asset has external credit rating of "investment grade" in accordance with the globally understood definition or if an external rating is not available, the asset has an internal rating of "performing". Performing means that the counterparty has a strong financial position and there is no past due amounts.

The Corporation regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

Definition of default

The Corporation considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable.

• when there is a breach of financial covenants by the counterparty; or
• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Corporation, in full (without taking into account any collaterals held by the Corporation).

Irrespective of the above analysis, the Corporation considers that default has occurred when a financial asset is more than 90 days past due unless the Corporation has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

• significant financial difficulty of the issuer or the counterparty;
• a breach of contract, such as a default or past due event;
• the lender(s) of the counterparty, for economic or contractual reasons relating to the counterparty's financial difficulty, having granted to the counterparty a concession(s) that the lender(s) would not otherwise consider; or
• it is becoming probable that the counterparty will enter bankruptcy or other financial reorganization: or
• the disappearance of an active market for that financial asset because of financial difficulties.

$(u)$ Impairment of financial assets and contract assets (cont'd)

Write-off policy

The Corporation writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, including when the debtor has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Corporation's recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information as described above. As for the exposure at default, for financial assets, this is represented by the assets' gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Corporation's understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the ECL is estimated as the difference between all contractual cash flows that are due to the Corporation in accordance with the contract and all the cash flows that the Corporation expects to receive, discounted at the original effective interest rate.

If the Corporation has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Corporation measures the loss allowance at an amount equal to 12-month ECL at the current reporting date, except for assets for which simplified approach was used.

The Corporation recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

Provisions and contingent liabilities $(v)$

Provisions are recognised for liabilities of uncertain timing or amount when the Corporation has a present legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

$(v)$ Provisions and contingent liabilities (cont'd)

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow is remote.

$(w)$ Events after the reporting period

Events after the reporting period that provide additional information about the Corporation's position at the end of the reporting period or those that indicate the going concern assumption is not appropriate are adjusting events and are reflected in the consolidated financial statements. Events after the reporting period that are not adjusting events are disclosed in the notes to the consolidated financial statements when material.

5. CRITICAL JUDGEMENTS AND KEY ESTIMATES

Critical judgement in applying accounting policies

In the process of applying the accounting policies, the directors have made the following judgment that has the most significant effect on the amounts recognised in the consolidated financial statements (apart from those involving estimations, which are dealt with below).

$(a)$ Going concern basis

These consolidated financial statements have been prepared on a going concern basis, the validity of which depends upon the financial support of the ultimate parent at a level sufficient to finance the working capital requirements of the Corporation. Details are explained in note 2 to the consolidated financial statements.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

$(a)$ Impairment of trade receivables and contract assets

The management of the Corporation estimates the amount of impairment loss for ECL on trade receivables and contract assets based on the credit risk of trade receivables and contract assets. The amount of the impairment loss based on ECL model is measured as the difference between all contractual cash flows that are due to the Corporation in accordance with the contract and all the cash flows that the Corporation expects to receive, discounted at the effective interest rate determined at initial recognition. Where the future cash flows are less than expected, or being revised downward due to changes in facts and circumstances, a material impairment loss may arise.

As at December 31, 2020, the carrying amount of trade receivables and contract assets is \$557,834 (net of allowance for doubtful debts of \$25,876) (2019: \$360,885 (net of allowance for doubtful debts of \$25,872)).

$6.$ FINANCIAL RISK MANAGEMENT

The Corporation's activities expose it to a variety of financial risks: foreign currency risk, credit risk, liquidity risk and interest rate risk. The Corporation's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Corporation's financial performance.

$(a)$ Foreign currency risk

The Corporation is exposed to foreign currency rate variability primarily in relation to certain assets and liabilities denominated in foreign currencies such as United States Dollars ("USD"). However, the Corporation has no material exposure to foreign currency risk as most of its foreign operations are self-sustaining and these foreign operations' functional currencies are in HKD and SGD. The Corporation is mainly exposed to the effects of fluctuation in SGD and USD.

The Corporation also mitigates foreign currency risks, within each segment, by transacting in their functional currency for material procurement, sales contracts and financing activities.

The Corporation currently does not have a foreign currency hedging policy in respect of foreign currency transactions, assets and liabilities. The Corporation monitors its foreign currency exposure closely and will consider hedging significant foreign currency exposure should the need arise.

The following presents the carrying amounts of the financial instruments that are denominated in the currencies:

	At December 31, 2020
	CDN \$	SGD S	HKD \$	USD \$	Euro S	Others S	Total \$
Bank and cash balances	2.423	46,886	3,065	105,287	67.517	71.134	296,312
Trade receivables Other receivables and		485,670	۰	701	40,309	31.154	557,834
Deposits		3.575	108		25.924	23.066	52,673
Accounts payable and accrued liabilities Advances from related	(88,014)	(23, 905)	(144, 119)	(37,009)	(53, 175)	(305,797)	(652, 019)
parties		(167, 778)	(289, 228)		m.	(643, 124)	(1, 100, 130)
Promissory note payable	(580,000)						(580,000)
Loans from related parties		(1, 445, 456)	(2,608,304)	(879, 426)			(4,933,186)

	At December 31, 2019
	CDN	SGD \$	HKD \$	USD \$	Euro \$	Others \$	Total \$
Bank and cash balances	6.414	24.435	3.431	76.498	14.871	68.762	194,411
Trade receivables Other receivables and		241.853	۰	7.119	101.171	10,742	360,885
Deposits Accounts payable and		7.077	110		26.312	23,512	57,011
accrued liabilities Advances from related	(83, 398)	(64, 276)	(205, 212)	(6, 575)	(64, 177)	(178, 106)	(601, 744)
parties		(47.386)	(293, 552)		ä	(546, 574)	(887, 512)
Promissory note payable	(580,000)				÷	C.M.	(580,000)
Loans from related parties		(1, 457, 758)	(2,647,299)	(888, 411)			(4,993,468)

$6.$ FINANCIAL RISK MANAGEMENT (CONT'D)

$(a)$ Foreign currency risk (cont'd)

At December 31, 2020, if the SGD had weakened or strengthened 5 per cent against USD with all other variables held constant, consolidated loss after tax and the deficiency for the year would have been \$20,000 (2019: \$18,000) higher or lower, arising mainly as a result of the foreign exchange gain or loss denominated on net payables denominated in USD.

$(b)$ Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Corporation is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Corporation's exposure to credit risk arising from cash and cash equivalents is limited because the counterparties are banks and financial institutions with high credit-rating assigned by international credit-rating agencies, for which the Corporation considers to have low credit risk.

Trade receivables and contract assets

Customer credit risk is managed by each business unit subject to the Corporation's established policy, procedures and control relating to customer credit risk management. Individual credit evaluations are performed on all customers requiring credit over a certain amount. These evaluations focus on the customer's past history of making payments when due and current ability to pay, and take into account information specific to the customer as well as pertaining to the economic environment in which the customer operates. Trade receivables are due within 30 days from the date of billing. Debtors with balances that are more than 180 days past due are requested to settle all outstanding balances before any further credit is granted. Normally, the Corporation does not obtain collateral from customers.

The Corporation measures loss allowances for trade receivables and contract assets at an amount equal to lifetime ECLs, which is calculated using a provision matrix. As the Corporation's historical credit loss experience does not indicate significantly different loss patterns for different customer segments, the loss allowance based on past due status is not further distinguished between the Corporation's different customer bases.

Expected loss rates are based on actual loss experience over the past 4 years. These rates are adjusted to reflect differences between economic conditions during the period over which the historic data has been collected, current conditions and the Corporation's view of economic conditions over the expected lives of the receivables.

$6.$ FINANCIAL RISK MANAGEMENT (CONT'D)

$(b)$ Credit risk (cont'd)

Trade receivables and contract assets

Movement in the loss allowance account in respect of trade receivables and contract assets during the year is as follows:

	2020	2019
		\$
At January 1	25,872	44.067
Amount written off during the year Allowance for/(reversal of allowance for) doubtful		(11,699)
debt for the year	2,083	(6,828)
Exchange differences	(2,079)	332
At December 31	25,876	25,872

$(c)$ Liquidity risk

The Corporation manages its risk of not meeting its financial obligations through management of its capital structure, and annual budgeting of its revenues. expenditures and cash flows.

The maturity analysis based on contractual undiscounted cash flows of the Corporation's non-derivative financial liabilities is as follows:

	Less than 1 year	Between 1 and $2$ years	Between $2$ and $5$ years	Total
	\$	\$	\$	\$
At December 31, 2020
Accounts payable and accrued liabilities	652,019			652,019
Advances from related parties	1,100,130			1,100,130
Promissory note payable	580,000			580,000
Loans from related parties	4,933,186			4,933,186
Lease liabilities	45,756	36,606		82,362
	Less than	Between 1 and $2$	Between $2$ and $5$
	1 year \$	years \$	years \$	Total \$
At December 31, 2019 Accounts payable and
accrued liabilities	601,744		7.	601,744
Advances from related parties	887,512
Promissory note payable	592,000			887,512
Loans from related parties	4,168,840	824,628		592,000 4,993,468

$6.$ FINANCIAL RISK MANAGEMENT (CONT'D)

$(c)$ Liquidity risk (cont'd)

The Corporation has working capital deficiency of \$6,471,862 as at December 31. 2020 (2019: \$5,709,984). The liquidity risk is mitigated as related parties have confirmed with the Corporation that they will not demand settlement of the interest-free loans of \$4,566,411 and cash advances of \$1,100,130 until the Corporation is in sound financial position to repay to them. Furthermore, the immediate parent and the promissory note holder have agreed to extend the due dates of the loan of \$366,775 and promissory note of \$580,000 to March 31, 2022 and have confirmed with the Corporation that they will not demand settlement of the loan and promissory note until the Corporation is in sound financial position to repay to them.

$(d)$ Interest rate risk

As the Corporation has no significant interest-bearing assets, its earnings and operating cash flows are substantially independent of change in market interest rates.

The Corporation's borrowings issued at a fixed rate expose the Corporation to fair value interest rate risk. The Corporation is not exposed to cash flow interest rate risk as at December 31, 2020 and 2019.

$(e)$ Categories of financial instruments

	As at December 31, 2020	As at December 31, 2019
Financial assets: Financial assets measured at amortised cost	906,819	612.307
Financial liabilities:
Financial liabilities at amortized costs	7,265,335	7,062,724

$(f)$ Fair values

The carrying amounts of the Corporation's financial assets and financial liabilities as reflected in the consolidated statement of financial position approximate their respective fair values.

$(g)$ Capital management

Capital is comprised of shareholders equity (deficit) on the consolidated statement of financial position. The Corporation's objective when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide returns to shareholders. The Corporation's sources of additional capital and policies for distribution of excess capital may also be affected by the Corporation's capital management objectives.

The Corporation manages capital by regularly monitoring its current and expected liquidity requirements rather than using debt/equity ratio analysis. The capital is generally used for defraying the administrative expenses in promoting the objectives of the Corporation. The external imposed capital requirement for the Corporation is to have a public float of at least 10% of the shares in order to maintain its listing on the TSX Venture Exchange. As at December 31, 2020, 15.63% of the shares were held in public hands.

There have been no changes in the Corporation's capital management policies for the years ended December 31, 2020 and December 31, 2019.

$7.5$ REVENUE

An analysis of the Corporation's revenue is as follows:

	2020	2019
	S	\$
Revenue from contracts with customers within the scope of IFRS 15
A2P Messaging Service income	1,386,756	1,589,957
Software Products & Services income	1,397,790	1,033,319
	2,784,546	2,623,276
Other income
Government grant (note)	15,550
Miscellaneous income	23,239	15,441
	2,823,335	2,638,717

Note: In response to the negative impact of COVID-19, the government of Malaysia announced the Employment Retention Program "ERP" and Wages Subsidy Program "WSP" which were announced in March and April, 2020 respectively. The ERP and WSP provided a wage subsidy to employers based on certain criteria.

The Corporation has determined that it has qualified these subsidies from April, 2020 through September, 2020 and has, accordingly, applied for the ERP and WSP.

For the year ended 31 December, 2020, the Corporation has recognised \$15,550 from the ERP and WSP programs and has recorded them as other income. As of December 31, 2020, the Corporation has received \$15,550 from the ERP and WSP programs.

8. SEGMENT INFORMATION

The Corporation's reportable segments are (1) provision of Messaging Service ("MS") and (2) Software Products and Services ("SPS"). They are managed separately because each business requires different technology and marketing strategies. In addition, the Corporation has corporate expenses, assets and liabilities, and such information is included in the "unallocated" column.

The accounting policies of the segments are the same as those described in note 4 to the consolidated financial statements.

8. SEGMENT INFORMATION (CONT'D)

$(a)$ Revenue by customers

The revenues are primarily generated in HKD, USD, and SGD. Six major customers have contributed to sales revenue for the years ended December 31, 2020 and December 31, 2019 as indicated in the following table.

	2020		2019
	\$	% of total revenue	\$	% of total revenue
Customer A	967,115	34.3	715,735	27.1
Next five top customers
Customer B	466,487	16.5	306,676	11.6
Customer C	418,707	14.8	508,608	19.3
Customer D	233,917	8.3	301,059	11.4
Customer E	201,072	7.1	44.289	1.7
Customer F	164,597	5.8	134.064	5.1
All other customers	371,440	13.2	628,286	23.8
	2,823,335	100.0	2,638,717	100.0

$(b)$ Revenue by geographical location

	2020			2019
	\$	% of total revenue	\$	% of total revenue
Singapore	1,228,385	43.5	778,854	29.5
Indonesia	293,055	10.4	441,679	16.7
Other Asian countries	160,856	5.7	289,087	11.0
Europe	225,155	8.0	234,651	8.9
United States	885,199	31.4	815,840	30.9
Other regions	30,685	1.0	78,606	3.0
	2,823,335	100.0	2,638,717	100.0

$(c)$ Total assets by geographical location

	2020		2019
	\$	% of total assets	\$	% of total assets
Singapore	45,245	4.3	83,739	10.4
Indonesia	586,881	56.2	435,139	53.8
Other Asian countries	381,092	36.5	205,461	25.4
Europe	5,006	0.5	11,512	1.4
United States	20,717	2.0	51,005	6.3
Other regions	5,111	0.5	21,817	2.7
	1,044,052	100.0	808,673	100.0

$8_ii$ SEGMENT INFORMATION (CONT'D)

$(d)$ Financial information by business segments

	MS	SPS	Unallocated	Total
	S	Ŝ		S
Year ended December 31, 2020
Revenue	1,386,756	1,436,579		2,823,335
Intersegment revenue		11,382		11,382
Amortisation and depreciation		73,026		73,026
Interest income		200		201
Interest and finance expenses		15,486		15,486
Income tax expenses		949		949
Segment profits/(losses)	255,253	(102, 672)	(156,089)	(3,508)
Additions to segment
non-current assets		18,732		18,732
As at December 31, 2020
Segment assets	195,671	846,158	2,223	1,044,052
Segment liabilities	(3,730,960)	(1, 386, 298)	(2, 319, 955)	(7, 437, 213)
	MS	SPS	Unallocated	Total
	$\mathbf{s}$	\$	\$	\$
Year ended December 31, 2019
Revenue	1,589,957	1,048,760		2,638,717
Intersegment revenue		364,701		364,701
Amortisation and depreciation		37,568		37,568
Interest income	119	267		386
Interest and finance expenses		6,531	91,081	97,612
Income tax credit		(247)		(247)
Segment profits/(losses)	583,856	(104, 342)	(794, 825)	(315, 311)
Additions to segment non-current assets		37,579		37,579
As at December 31, 2019
Segment assets	171,894	636,021	758	808,673

The totals of above items disclosed in the segment information are the same as the consolidated totals.

9. INCOME TAX EXPENSE/(CREDIT)

$(a)$ Income tax has been recognised in profit or loss as following:

	2020	2019
	Φ	S
Current tax
Provision for the year	949	$\overline{\phantom{a}}$
Under-provision in prior years		787
	949	787
Deferred tax		(1,034)
	949	(247)

Tax charge on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Corporation operates, based on existing legislation, interpretation and practices in respect thereof.

Pursuant to relevant law and regulations in Canada, the corporate income tax applicable to the Corporation is 23% for the year ended December 31, 2020. (2019: $27\%$ ).

$(b)$ The reconciliation between the income tax credit and the product of loss before tax multiplied by the combined Canadian and foreign rates is as follows:

	2020 S	2019 S
Loss before tax Income tax rate	(2, 559) 23%	(315, 558) 27%
Computed income tax benefit Effects of tax rate in different countries Increase (decrease) resulting from:	(588) 25,458	(85, 201) (23, 136)
Non-taxable income Non-deductible expenses Change in unrecognised temporary differences Utilisation of tax loss not recognised	(18, 686) 66,530 (9,002) (62, 763)	(57, 916) 185,925 (1,034) (19, 672)
Under-provision in prior year		787
Income tax expense/(credit)	949	(247

9. INCOME TAX EXPENSE/(CREDIT) (CONT'D)

$(c)$ Deferred tax assets and liabilities

The Corporation has deferred tax losses which are being carried forward and which may be utilised to reduce future taxable income. Deferred taxes are also provided as a result of temporary differences between the income tax values and the carrying amount of assets and liabilities. The components of the net deferred tax assets (liabilities) were as follows:

	2020	2019
		S
Long-term deferred tax assets:
Non-capital loss carried forward	1,696,658	1,701,137
Capital allowance	(10, 590)	7.875
Timing difference of depreciation and amortisation	(14, 201)	(2)
Issue costs	(575)	1,349
Lapsed per tax regulations	(340,728)
Tax effect from change in corporate tax rate	(153, 244)
Less: Unrecognised temporary differences	(1, 177, 320)	(1,710,359)
Long-term deferred tax liabilities:
Property, plant and equipment

As of December 31, 2020, the Corporation had income tax losses of \$3,672,000, which arose from the Canadian jurisdiction and which will expire as follows; \$271,000 in 2030, \$329,000 in 2031, \$338,000 in 2032, \$527,000 in 2033, \$395,000 in 2034, \$194,000 in 2035, \$297,000 in 2036, \$285,000 in 2037, \$289,000 in 2038, \$365,000 in 2039, \$291,000 in 2040 and \$91,000 in 2041. The Corporation also had income tax losses of \$1,700,000 which arose from its subsidiaries' jurisdictions. The income tax benefits of these losses have not been recognised on the consolidated financial statements.

$10.$ EMPLOYEE BENEFITS EXPENSE

	2020	2019
	S	\$
Directors' fees	40,000	40,000
Employee benefits expense (including key management personnel):
Salaries, bonuses and allowances (Note)	1,044,046	950,360
Retirement benefit scheme contributions	127,798	116,507
	1,171,844	1,066,867
	1,211,844	1,106,867

Note: Included expenses of \$675,717 (2019:\$581,141) recognised in cost of sales.

$11_ii$ LOSS PER SHARE

The calculation of the basic loss per share is based on the following:

	2020	2019
Loss		S
Loss for the purpose of calculating basic loss per share	(2, 122)	(314, 819)
Number of shares
Weighted average number of ordinary shares for the purpose of calculating basic loss per share	149,793,861	149.793.861

The Corporation did not have any dilutive potential ordinary shares during the years ended December 31, 2020 and December 31, 2019.

$12.$ PROPERTY, PLANT AND EQUIPMENT

	Computer equipment and software
Cost	\$
At January 1, 2019 Additions Exchange difference	109,107 37,579 1,155
At December 31, 2019 and January 1, 2020 Additions Exchange difference	147,841 18,732 (3,075)
At December 31, 2020	163,498
Accumulated depreciation and impairment
At January 1, 2019 Depreciation Exchange difference	73,621 22,551 810
At December 31, 2019 and January 1, 2020 Depreciation Exchange difference	96,982 28,686 (2, 169)
At December 31, 2020	123,499
Carrying amount
As at December 31, 2020	39,999
As at December 31, 2019	50,859

$13.$ RIGHT-OF-USE ASSETS

	Leased
	properties	Total
		\$
At January 1, 2019
Additions	135,152	135,152
Depreciation	(15,017)	(15,017)
Exchange differences	250	250
At 31 December 2019 and January 1, 2020	120,385	120,385
Depreciation	(44, 340)	(44,340)
Exchange differences	(2,714)	(2,714)
At December 31, 2020	73,331	73,331

Lease liabilities of \$73,346 (2019: \$116,848) are recognised with related right-of-use assets of \$73,331 (2019: \$120,385) as at December 31, 2020. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

	2020	2019
		\$
Depreciation expenses on right-of-use assets	44.340	15.017
Interest expense on lease liabilities (included in finance cost)	15.486	6.531
relating Expenses to short-term lease (included)	ın
administrative)	25,220	49,317

Details of total cash outflow for leases is set out in note 23(b).

The Corporation leases an office, for its operations. Lease contract is entered into for fixed term of 3 years.

14. GOODWILL

Cost less impairment At January 1, 2019, December 31, 2019, January 1, 2020 and December 31, 2020

Due to changes in market condition, the recoverable amount of the goodwill was determined to be below its carrying value at March 31, 2015, and accordingly, the goodwill was considered fully impaired during the year ended March 31, 2015.

$\mathbf{\$}$

15. ACCOUNTS RECEIVABLE

	2020	2019 S
Trade receivables Allowance for doubtful debts Less:	583,710 (25, 876)	386,757 (25, 872)
Total	557,834	360,885

As at December 31, 2020, an allowance was made for estimated irrecoverable trade receivables of approximately \$26,000 (2019: \$26,000).

16. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	2020	2019
		S
Trade payables	76,515	34,958
Contract liabilities (Note 17)	60,874	55,657
Deferred income		1,942
Accrued liabilities and other payable	611,672	577,843
Total	749,061	670,400

Accrued liabilities consist mainly of accrued professional fees and general administration expenses.

$17.$ CONTRACT LIABILITIES

	2020	2019
Billings in advance of performance obligations
- Software products and services	60,874	55,657

Contract liabilities relating to software products and services are balances due to customers under software products and services. These arise if a particular milestone payment exceeds the revenue recognised to date under the cost-to-cost method.

There were no significant changes in the contract liabilities balances during the reporting period.

18. ADVANCES FROM RELATED PARTIES

The balances represent advances from an officer and related companies which are unsecured, interest-free and repayable on demand.

The officer and related companies have confirmed to the Corporation that they will not demand settlement of the advances until the Corporation is in sound financial position to repay to them.

19. PROMISSORY NOTE PAYABLE

	Total
As at January 1, 2019	532,000
Interest expenses for the year ended December 31, 2019	48,000
As at December 31, 2019 and January 1, 2020 and
December 31, 2020	580,000

Subsequent to the end of the reporting period, the Corporation negotiated with the note holder, Inphosoft Pte. Ltd. ("IPL") (Note 20(b)) on extending the due date of the note payable and IPL has agreed to extend the due date of the promissory note payable to March 31, 2022. Moreover, IPL confirmed that it will not demand settlement of the note payable until the Corporation is in sound financial position. IPL also agreed to convert the note payable from that with simple interest of 12% per annum to interest-free with effect from January 1, 2020.

20. LOANS FROM RELATED PARTIES

	Note	2020 S	2019 \$
Non-current: Loan from a related party	(b)		824,628
Current:			824 628
Loan from a related party	(b)	822,911
Loan from immediate parent	(c)	366,775	374,690
Loans from a director	(a)	3,743,500	3,794,150
		4,933,186	4,168,840
Total		4,933,186	4,993,468

All above loans from related parties are non-trade nature and unsecured.

• $(a)$ The loans are from the Corporation's director, Mr. Joel Siang Hui Chin, and are interest free loans, unsecured and repayable on demand. Mr. Joel Siang Hui Chin confirmed to the Corporation that he will not demand settlement of the loans until the Corporation is in sound financial position to repay to him.
• $(b)$ The loan is from IPL, the former holding company of Inphosoft Group Pte. Ltd., and is interest-free. On September 24, 2015, IPL converted its convertible debentures of the Corporation and became a shareholder of the Corporation. A director of the Corporation, Mr. Joel Siang Hui Chin, two directors of the Corporation's subsidiaries, Mr. Wang Xianxiang and Mr. Xu Hongwei, each has significant influence over IPL. IPL confirmed to the Corporation that it will not demand settlement of the loan until the Corporation is in sound financial position to repay.
• $\cdot$ (c) The Ioan is from Xinhua Mobile, the immediate parent of the Corporation, bears interest at nil% (2019: 12% per annum) (compounded daily based on a 365-day year) and due on March 31, 2021. Subsequent to the end of the reporting period, Xinhua Mobile agreed to extend the due date of the loan to March 31, 2022 and confirmed to the Corporation that it will not demand settlement of the loan until the Corporation is in sound financial position to repay.

$21.$ LEASE LIABILITIES

$\mathcal{D}_{\mathcal{A}}$

$\mathcal{L}$

	Minimum		Present value of minimum
	lease payments		lease payments
	2020	2019	2020	2019
		\$	Ŝ.	\$
Within one year	45,756	56,338	38,717	40,071
In the second to fifth years, inclusive	36,606	84,507	34,629	76,777
	82,362	140,845	73,346	116,848
Less: Future finance charges	(9,016)	(23, 997)	N/A	N/A
Present value of lease obligations Less: Amount due for settlement within 12	73,346	116,848	73,346	116,848
months (shown under current liabilities)			(38, 717)	(40,071)
Amount due for settlement after 12 months			34,629	76,777

The weighted average incremental borrowing rates applied to lease liabilities was 15% (2019; $15%$ ).

All lease liabilities are denominated in Indonesian Rupiah.

$22.$ SHARE CAPITAL

Authorised:

Unlimited common shares

Unlimited preferred shares, non-voting, non-participating, non-cumulative dividends, redeemable and retractable at the amount paid.

Issued:

	2020		2019
	Common		Common
	shares	Amount	shares	Amount
Balance, beginning and end of year	149,793,861	11,415,709	149,793,861	11,415,709

$\mathcal{L}_\lambda$

$\Delta$

23. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOW

$(a)$ Reconciliation of liabilities arising from financing activities

The table below details changes in the Corporation's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Corporation's consolidated statement of cash flows as cash flows from financing activities.

	January 1,2020	Cash flows \$		Interest expenses S	Exchange differences \$	December 31. 2020 \$
Advances from related parties (note 18) Promissory note payable	887,512	209,687		٠	2,931	1,100,130
(note 19) Loans from related parties	580,000	۰				580,000
(note 20) Lease liabilities (note 21)	4,993,468 116,848	(58,990)		15,486	(60, 282) 2	4,933,186 73,346
	6,577,828	150,697		15,486	(57, 349)	6,686,662
			Addition of
	January 1,2019	Cash flows	lease liabilities	Interest expenses	Exchange differences	December 31, 2019
		S	S	S	s	\$
Advances from related parties (note 18) Promissory note payable	398,659	488,048			805	887,512
(note 19) Loans from related parties	532,000	٠		48,000		580,000
(note 20)	4,972,632			43,081	(22, 245)	4,993,468
Lease liabilities (note 21)		(25,076)	135,152	6,531	241	116,848
	5,903,291	462,972	135,152	97,612	(21, 199)	6,577,828

$(b)$ Total cash outflow for leases

Amounts included in the consolidated statement of cash flow for lease comprise the following:

	2020	2019
Within operation cash flow Within financing cash flow	40,706 43,504	55,848 18,545
	84,210	74,393
The amount related to the following:	2020	2019
Lease rental paid	84,210	74,393

24. RELATED PARTY TRANSACTIONS

цk,

$\rightarrow$

The Corporation had the following related party transactions for the years ended December 31, 2020 and 2019: $(a)$

	2020	2019 S
Revenue and accounting fee income from companies controlled by immediate parent/ a director	1,172,133	880,611
Cost of consignment stocks paid to a company controlled by a director		159
Accounting fees paid to an officer	۰ 42,578	51,212
Interest charged on loan from immediate parent Interest charged on promissory note payable to a		43,081
related company		48,000

$(b)$ The Corporation had the following related party balances at the end of the reporting period:

	Accounts receivable	Accounts payables and accrued liabilities S	Advances payable	Promissory note payable	Loan payables S
As at December 31, 2020 Directors An officer Companies controlled by a		(80,000) (7, 357)	(289, 228)		(3,743,500)
director A related party Immediate parent	495,424	(3, 320)	(766, 088) (44, 814)	(580,000)	(822, 911) (366,775)
As at December 31, 2019 Directors An officer A company controlled by a		(80,000) (7, 372)	(293, 552)		(3,794,150)
director Companies controlled by	60,522	(3,322)
immediate parent A related party Immediate parent	191,058		(546, 574) (47, 386)	(580,000)	(824,628) (374, 690)

24. RELATED PARTY TRANSACTIONS (CONT'D)

$(c)$ Key management personnel compensation

	2020	2019
	S	\$
Salaries and related costs		468,503
Accounting fees Contributions to defined mandatory contribution	42,578	51,212
funds		36,827
	42,578	556,542
Directors' fees	40,000	40,000
Total	82,578	596,542

25. PARTICULARS OF SUBSIDIARIES

Particulars of the principal subsidiaries as at December 31, 2020 and December 31, 2019 are as follows:

Name	Place of incorporation / registration and operation	Particular of Issued share capital	Percentage of ownership interest / voting power / profit sharing Direct Indirect		Principal activities
Inphosoft Group Pte. Limited	Singapore	1,000,000 ordinary shares of SGD1.614.500	100%	œ	Investment holding
PT Inphosoft Indonesia	Indonesia	1,000 ordinary shares of IDR962,500,000		99%	Provision for messaging service and outsourcing of technical resources to customers
GIN International Limited	Hong Kong	100 ordinary shares of HKD100	٠.	100%	Provision for short message services

26. EVENTS AFTER THE REPORTING PERIOD

Uncertainty of the Coronavirus (COVID-19) Outbreak

The extent that the coronavirus (COVID-19) outbreak will spread widely and its impact on our result will depend on future developments, which are highly uncertain and unpredictable. Although uncertain at this time, the outbreak could impede our ability to sell, grow and attract new customers. A number of our employees travel frequently to establish and maintain relationships with our customers. Although we continue to monitor the situation and may adjust our current policies as more information and guidance become available, suspending travel, not doing business in-person, and employees government imposed quarantined or sanitary public health authority imposed closures could negatively impact our operations and marketing efforts and also challenge our ability to enter into new customer contracts in a timely manner, which in turn could harm our business performance and the recoverability of the account receivables.