AI assistant
GINSMS Inc. Management Reports 2025
46448_rns_2025-05-12_1fc67802-70c3-4187-99ee-4a7137f7ab2f.pdf
Management Reports
Open in viewerOpens in your device viewer
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
1. DATE AND GENERAL INFORMATION
This management’s discussion and analysis (“MD&A”) of GINSMS Inc. (“GINSMS” or the “Corporation”) has been prepared by management and should be read in conjunction with the Corporation’s annual audited financial statements and MD&A as at and for the year ended December 31, 2024, the Corporation’s consolidated unaudited financial statements as at and for the three months ended March 31, 2025, and the notes thereto which were prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.
This MD&A was prepared as of May 12, 2025. Additional information regarding the Corporation is available on SEDAR at www.sedar.com. All monetary amounts set forth in the MD&A are expressed in Canadian dollars, except where otherwise stated. Other currencies are mainly United States dollars (“USD”), Hong Kong dollars (“HKD”), China renminbi (“RMB”), Singapore dollars (“SGD”), Malaysian ringgit (“MYR”), Indonesian rupiah (“IDR”) and Euro dollars (“EUR”).
The Corporation Board of Directors has reviewed and approved this MD&A.
Caution Regarding Forward-Looking Information
Certain information included in this MD&A may contain forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “could”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, or “continue” or the negative thereof or variations thereon or similar terminology. These statements are not historical facts, but reflect management’s current beliefs and are based on information currently available to management regarding future results and events. Particularly, these forward-looking statements are based on management’s estimate of future events based on technological advances relating to the Corporation’s services, current market conditions and past experiences of management in relation to how certain contracts will affect revenues. Forward-looking statements, by their very nature, involve significant risks, uncertainties and assumptions.
A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to dependence on required licenses, dependence on major customers, system failures, delays and other problems, security and privacy breaches, adequacy of network resilience, network diversity and backup systems, loss of significant information, failure to develop, enhance or introduce new value-added services, competition, dependence on third-party software and equipment, market acceptance at desired pricing levels, key members of the management team, credit risk of accounts receivables, conflicts of interest, inability to satisfy customer demand for performance, price or terms, international risks. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, the Corporation cannot assure the reader that actual results will be consistent with these forward-looking statements.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
In particular, forward-looking statements include the following assumptions:
- Management's belief that the Corporation's software products and services are expected to take on a different focus based on an outsourcing model approach leveraging on the lower cost base in Indonesia and Malaysia. Consequently, the revenue for the software segment in Indonesia and Malaysia should continue to increase.
- Management's belief that the future growth in messaging is in the area of application-to-person ("A2P") messaging and the Corporation's investment in this area will create a viable and profitable business in the future.
- Management's belief that the Corporation is able to generate sufficient amounts of cash through operations and financing activities to fulfil the working capital requirements of its present operations.
These forward-looking statements are made as of the date of this MD&A and the Corporation assumes no obligation to update or revise them to reflect new events or circumstances except as may be required by law. Accordingly, readers should not place undue reliance on the forward-looking statements. All forward-looking statements contained in this MD&A are qualified by this cautionary statement.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
2. OVERALL PERFORMANCE – DESCRIPTION AND OUTLOOK OF BUSINESS
Group Structure
The following chart depicts the structure of the group. The country of incorporation for each entity in the group is enclosed in brackets next to the name of the entity.
*The remaining 1% is held by Joel Siang Hui Chin, the Chief Executive Officer of the Corporation.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
The Corporation has two main business segments:
A. Messaging Business
B. Software Products and Services
The Corporation has faced considerable competition in its existing principal activities, and the profitability of the businesses has been affected.
A. Messaging Business
The Corporation operates its messaging business through GIN International Ltd ("GIN"), its wholly-owned subsidiary in Hong Kong and focus exclusively on the delivery of application-to-peer service ("A2P messaging service").
The A2P messaging service allows the transmission of short message services ("SMS") to mobile subscribers of more than 100 mobile operators globally. This is achieved through partnerships with service providers and direct connections with mobile operators globally. GIN's close working relationships with mobile operators in China, Hong Kong and Southeast Asia puts it in a good position to become a leading provider of A2P messaging service in Asia.
Through its cloud-based A2P messaging service, GIN enables mobile application developers, SMS gateways, enterprises and financial institutions to deliver with GIN's application programming interface ("API") SMS worldwide without any upfront capital investment.
Mobile application developers use A2P messaging service to deliver one-time-passwords ("OTP") for authentication of over-the-top ("OTT") mobile applications, in-app purchase confirmations or promotion of latest game releases. Enterprises and financial institutions use the A2P service in the areas of mobile marketing, mobile transactions, security, customer relationship management ("CRM") and enterprise resource planning ("ERP").
A Transparency Market Research report on 2022-2031 A2P SMS market (https://www.transparencymarketresearch.com/global-a2p-sms-market.html) stated that the global A2P SMS market revenue is expected to reach US$105.4 billion by 2031, expanding at a compound annual growth rate ("CAGR") of 4.8% therein.
For the three months ended March 31, 2025, GIN generated lower revenue of $73,365 for its A2P messaging service as compared to $148,960 for the three months ended March 31, 2024. This is due to the fact that the Corporation faced stiff competition which caused a decrease in the volume of messaging traffic of some customers for the three months ended March 31, 2025.
B. Software Products and Services
GINSMS operates its software products and services 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:
i. Provision of support and maintenance services to customers that have purchased its products and solutions.
ii. Maintenance of the A2P Cloud platform and development of new features as and when necessary, to support the Corporation's A2P messaging business.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
iii. Outsourcing of technical resources to customers for the purpose of software development based on a time and material basis.
Inphosoft Singapore Pte. Ltd. ("ISPL")
ISPL provide mobile application development services and support and maintenance services to its existing customers that have purchased its products and services through IMSB, its fellow subsidiary in Malaysia.
ISPL has time and material agreements ("T&M Agreements") with Activate Interactive Pte. Ltd. ("Activate") and Actxa Pte. Ltd. ("Actxa") for the purpose of developing software for Activate's and Actxa's customers and to perform certain pre-sales roles, on a time and material basis. Activate and Actxa are currently 98% and 99% beneficially owned by Mr. Chin, respectively. At the same time, IMSB and PTIN have T&M agreements with ISPL, to provide technical resources to ISPL to support the software products and services business operations of ISPL.
Inphosoft Malaysia Sdn. Bhd. ("IMSB")
IMSB is providing services to enterprise customers in Malaysia and global companies in the telecommunication industry to develop bespoke software solutions that meet the requirements of customers. IMSB will charge a customer a negotiated fixed fee for each project. The cost of sales incurred consists mainly of the salary of employees working on these projects. IMSB provides technical and sales resources to support GIN's A2P messaging business operations.
IMSB has T&M agreements with ISPL, to provide technical resources to ISPL to support the software products and services business operations of ISPL.
In addition, IMSB provides technical support for the A2P Cloud platform and develops new features as and when necessary, to support the Corporation's A2P messaging business.
Salaries and office rental are the major costs of IMSB.
PT Inphosoft Indonesia ("PTIN")
PTIN has T&M agreements with ISPL, to provide technical resources to ISPL to support the software products and services business operations of ISPL.
Salaries, subcontractor costs and office rental are the major costs of PTIN.
The current focus of Inphosoft is to provide solution to support the need of existing customers and to look for additional enterprise customers to increase sales. Hence, professional fees and support and maintenance revenue will continue to increase or be stable.
The improvement of gross margin of software products and services segment was caused by an increase in chargeable hours and man-hour charge out rates of Inphosoft staff providing technical and support resources to Activate and other key customers.
This segment of the Corporation's business generated lower revenue of $272,528 for the three months ended March 31, 2025, compared to $561,345 for the months ended March 31, 2024. This was mainly due to reduced outsourced headcount billing to key customers during the quarter ended March 31, 2025.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
3. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2025
Selected Profit and Loss Information
| Financial Highlights | Three-month period ended March 31, 2025 (Unaudited) $ | Three-month period ended March 31, 2024 (Unaudited) $ | Twelve-month period ended December 31, 2024 (Audited) $ | Twelve-month period ended December 31, 2023 (Audited) $ |
|---|---|---|---|---|
| Revenues $ | ||||
| A2P Messaging Service | 73,365 | 148,960 | 715,934 | 986,715 |
| Software Products & Services | 272,528 | 561,345 | 1,790,173 | 2,201,790 |
| 345,893 | 710,305 | 2,506,107 | 3,188,505 | |
| Cost of sales $ | ||||
| A2P Messaging Service | 66,482 | 95,150 | 344,322 | 661,385 |
| Software Products & Services | 173,429 | 314,037 | 1,006,829 | 1,210,168 |
| 239,911 | 409,187 | 1,351,151 | 1,871,553 | |
| Gross profit $ | ||||
| A2P Messaging Service | 6,883 | 53,810 | 371,612 | 325,330 |
| Software Products & Services | 99,099 | 247,308 | 783,344 | 991,622 |
| 105,982 | 301,118 | 1,154,956 | 1,316,952 | |
| Gross margin % | ||||
| A2P Messaging Service | 9.4% | 36.1% | 51.9% | 33.0% |
| Software Products & Services | 36.4% | 44.1% | 43.8% | 45.0% |
| 30.6% | 42.4% | 46.1% | 41.3% | |
| Adjusted EBITDA(1) $ | (273,498) | 29,189 | 188,661 | (38,624) |
| Adjusted EBITDA margin | (79.1)% | 4.1% | 7.5% | (1.2)% |
| Net (loss)/profit $ | (297,125) | 1,914 | 21,485 | (129,656) |
| Net (loss)/profit margin | (85.9)% | 0.3% | 0.9% | (4.1)% |
| Net (loss)/earnings per share $ | ||||
| Basic and Diluted (in Canadian cents) | (0.158) | 0.001 | 0.012 | (0.069) |
(1) Adjusted EBITDA is a non-IFRS measure which does not have any standardized meaning under IFRS Accounting Standards. Adjusted EBITDA is related to cash earnings and is defined for these purposes as earnings before income taxes, depreciation and amortization (in both cost of sales and general and administration expenses), interest expenses, and also excludes certain non-recurring or non-cash expenditure and income. This non-IFRS measure is not recognized under IFRS Accounting Standards and accordingly, shareholders are cautioned that this measure should not be construed as an alternative to net income determined in accordance with IFRS Accounting Standards. The non-IFRS measure presented is unlikely to be comparable to similar measure presented by other issuers. The Corporation believes that Adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations which the Corporation can use to fund working capital requirements, service interest and principal debt repayment and fund future growth initiatives.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
Revenue
For the three months ended March 31, 2025, revenue was $345,893 compared to $710,305 for the three months ended March 31, 2024, respectively. Lower revenue for the three months ended March 31, 2025 was mainly due to the decrease in revenue in both messaging business segment and software products and services segment.
a) Messaging business segment
The A2P messaging business generated revenue of $73,365, $92,877, $198,849, $275,248 and $148,960, for the three-month periods ended March 31, 2025, December 31, 2024, September 30, 2024, June 30, 2024 and March 31, 2024, respectively.
Pricing of the A2P messaging business is affected by volume, regulatory requirement in each country (i.e. destination of messages delivered), competition within the country and other factors. The margin varies from country to country and varies from customer to customer as the Corporation attempts to gain market share in different countries. The price per message is fixed for each customer but different customers may have different price per message. The margin is lower in some countries where the messaging market is more competitive. In other markets, due to the regulatory requirement, the Corporation can earn higher margin. The following analysis is based on the volume of messages delivered to various destinations. This differs from the segmented information for revenue by geographical location, which is based on the location of operations of our customers.
The decrease in the revenue of the A2P messaging business for the quarter ended March 31, 2025 as compared to the quarter ended December 31, 2024 is primarily caused by the decrease in the volume of A2P messages delivered to all regions.
Messages delivered to the Southeast Asia region represent 44.0% of the total volume for the three months ended March 31, 2025 which represents an increase of 76.6% from the three months ended December 31, 2024. During the quarter ended March 31, 2025, the Corporation saw an increase in volume of messaging traffic and sales by some major customers located in this region.
Messages delivered to the North Asia region represent 54.9% of the total volume for the three months ended March 31, 2025, which represents a moderate increase of 5.9% from the three months ended December 31, 2024. During the quarter ended March 31, 2025, the Corporation saw a slight increase in volume of messaging traffic by some major customers located in this region.
There was minimal volume of messages delivered to the South Asia region for the three months ended March 31, 2025 which represents a steep decrease of 100.0% from the three months ended December 31, 2024. During the quarter ended March 31, 2025, the Corporation saw huge decline in volume of messaging traffic in this region as a key customer no longer sent messages to the South Asia region from 2025. The volume delivered to this region is mainly contributed by this key customer.
The average price per message charged to customers was $0.0238 for the three months ended March 31, 2025, compared to $0.0229 for the three months ended December 31, 2024. The price per message charged to customers may differ greatly depending on the location where the A2P message is delivered. For example, A2P messages delivered to China are priced at less than 50% of A2P messages delivered to Indonesia, Malaysia and Taiwan. Consequently, the average price per message for the A2P messaging business is dependent on the number of messages delivered to each country. Furthermore, the price per message per country charged to a customer may depend on
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
the volume commitment of the customer. For the three months ended March 31, 2025, the overall average price per message is comparable to that for the three months ended December 31, 2024.
b) Software products and services segment
Revenue in the software products and services segment decreased by 51.5% from $561,345 for the three months ended March 31, 2024 and decreased by 25.7% from $366,956 for the three months ended December 31, 2024 and, to $272,528 for the three months ended March 31, 2025. This was mainly due to continuous reduced demand of outsourced headcount from key customers since the quarter ended September 30, 2024.
Cost of Sales
| Three-month period ended March 31, 2025 (Unaudited) $ | Three-month period ended March 31, 2024 (Unaudited) $ | Twelve-month period ended December 31, 2024 (Audited) $ | Twelve-month period ended December 31, 2023 (Audited) $ | |
|---|---|---|---|---|
| Depreciation | 9,560 | 11,138 | 44,891 | 40,610 |
| - Property, plant and equipment | ||||
| Salaries and wages | 159,956 | 289,914 | 906,724 | 1,118,788 |
| Subcontractor costs | 63,342 | 100,815 | 367,611 | 673,912 |
| Software and hardware | - | 539 | - | 1,951 |
| Others | 7,053 | 6,781 | 31,925 | 36,292 |
| 239,911 | 409,187 | 1,351,151 | 1,871,553 |
For the three months ended March 31, 2025, cost of sales was $239,911 compared to $409,187 for three months ended March 31, 2024.
Messaging business segment
For the A2P messaging business, the subcontractor costs are the costs paid to mobile operators and gateway providers ("A2P Suppliers") for usage of their infrastructure to deliver A2P messages to mobile subscribers. The A2P Suppliers charged GIN a per-message cost for delivering the message. The cost per message differs depending on the country where the message was delivered and the volume commitment that GIN has made with the A2P suppliers. The higher the volume commitment, the lower the rates that GIN will be charged by the providers.
The decrease in the subcontractor costs in the quarter ended March 31, 2025 from the quarter ended March 31, 2024 was lower than the decrease in revenue in the A2P messaging service segment in the same quarter mainly due to the strengthening of EUR against USD and the fact that subcontractor costs were primarily transacted in EUR as compared to the revenue billed which were primarily transacted in both EUR and USD.
Software product and services segment
Revenues for the software products and services segment are not dependent on the amount of message volume. The cost of sales for the software products and services business is comprised of salaries and wages, depreciation and purchase of software and hardware.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
Decrease in salaries and wages under costs of sales for the quarter ended March 31, 2025 was in line with the decrease in revenue for the software products and services segment in the same quarter.
Gross Margin
The overall gross margin of the Corporation of 30.6% in the three months ended March 31, 2025 was lower than the gross margin of 42.4% experienced during the three months ended March 31, 2024.
Revenue from the contracts with Activate and other key customers contributed to the significant increase in gross margin of the software products and services segment in recent years. Revenue from broad-based professional services provided to Activate is based on a time and material costs. Activate is a government contractor that provides software products and services tailored to the needs of agencies and ministries of the Singapore government. Activate values Inphosoft's skills and expertise. This enables Inphosoft to charge Activate a premium for its services. Gross margin of 49.0% was earned from the services rendered to Activate for the quarter ended March 31, 2025.
For the A2P messaging business, the gateway fee charged depends on how GIN negotiated the fees based on the estimated volume of messages to pass through the gateway. During the quarter ended March 31, 2024, gross margin dropped to 36.1% due to the fact that the A2P Suppliers invoices mainly in Euro whose value has improved and strengthened against USD. During the quarter ended June 30, 2024, gross margin surged to 61.4% due to the fact that increase in traffic came from the North Asia and the South Asia regions that normally earned higher gross margins. During the quarter ended September 30, 2024, gross margin reduced to 57.5% due to decrease in traffic from the North Asia region that normally earned higher gross margin. During the quarter ended December 31, 2024, gross margin dropped to 37.0% due to the lower sale price as the Corporation faced stiff competition. During the quarter ended March 31, 2025, gross margin dropped to 9.4% due to the lower sale price as the Corporation faced stiff competition. In addition, EUR strengthened against USD that led to higher cost of sales and lower gross margin.
For the software products and services segment, the revenue is mainly generated from the following two streams:
a) Professional services fees
Professional services revenue is generated by two methods:
- Charging a fixed fee to a customer for a project with a defined scope of work. This is mainly for developing be-spoke software solutions that meet the need of such customers.
- Charging a customer for the resources provided to this customer on a time and material basis. A fixed fee per resource per unit time (usually hour or day) is charged to the customer based on a negotiated fee for the said resource. An example is the time and materials contract with Activate.
The cost of sales incurred consists of the salary of employees working on these projects (tracked by the timesheets they fill). For the development of a be-spoke software solution based on a fixed fee, the gross margin can fluctuate depending on the fee that was negotiated and the ability to deliver the project as planned. Historically, the Corporation was able to achieve a gross margin between 10% to 20%. For time and material contracts, the gross margin is based on the mark-up for each resource, which ranges from 30% to 50% for resources based in Malaysia and Indonesia.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
b) Support and maintenance fees
Inphosoft charges a fee to customers who have elected to purchase after sale support and maintenance services. The fee is usually charged on a yearly basis pre-paid in advance. Support and maintenance is provided round the clock seven days a week to customers who have purchased Inphosoft's products or bespoke software, or both, and the support and maintenance services. Cost of sales incurred is mainly the salary of the employees providing round the clock support services. The gross margin for the support and maintenance contracts is usually more than 20%.
Inphosoft research and develops its own software products for the telecommunication industry and these software products are sold by charging customers the license fees in return for the right-to-use the software. The license fee revenue has been decreasing because Inphosoft has not been creating new products and the old products did not achieve the sales volume initially expected. The revenue from license fees is now insignificant.
The gross margin for the software products and services of 36.4% for the three months ended March 31, 2025 was lower than the gross margin of 44.1% for the three months ended March 31, 2024 as there were fewer full-time staff outsourced to customers resulted in a lower gross margin.
The gross margin exceeded the management's long-term expectations of approximately 20% to 25% as the Corporation adjusted the employee hourly charge out rates to be in line with market rates. This margin could be adversely affected if there are cases of project cost overrun. Project cost overrun can occur during the delivery of a software solution to customers.
Operating Expenses and Finance Costs
| Three-month period ended March 31, 2025 (Unaudited) $ | Three-month period ended March 31, 2024 (Unaudited) $ | Twelve-month period ended December 31, 2024 (Audited) $ | Twelve-month period ended December 31, 2023 (Audited) $ | |
|---|---|---|---|---|
| Salaries and wages | 161,794 | 118,813 | 377,658 | 617,261 |
| Directors' fees | 10,000 | 10,000 | 40,000 | 40,000 |
| Professional fees | 85,541 | 88,089 | 301,269 | 271,009 |
| Foreign currency exchange loss/(gain) | 34,171 | (2,781) | 3,913 | 50,584 |
| Other general & administrative expenses | 57,914 | 68,946 | 254,414 | 312,666 |
| Allowance for doubtful debts | - | - | 33,932 | 104,666 |
| Research & development costs | 39,620 | - | 69,184 | - |
| Depreciation | ||||
| - Property, plant and equipment | 364 | 77 | 778 | 356 |
| - Right-of-use assets | 12,318 | 11,356 | 46,250 | 46,901 |
| Lease interests on lease liabilities | 1,385 | 872 | 3,607 | 7,159 |
| 403,107 | 295,372 | 1,131,005 | 1,450,602 |
Operating expenses and finance costs amounted to $403,107 for the three months ended March 31, 2025, and were higher than the operating expenses and finance costs for the three months ended March
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
31, 2024.
This was mainly due to higher salaries and wages during the quarter ended March 31, 2025 compared to the quarter ended March 31, 2024 as there was lower demand for full time outsourced headcount by key customers. In addition, there were research and development costs incurred for the quarter ended March 31, 2025 and similar research and development costs was not present in the quarter ended March 31, 2024. The weakening of all functional currencies against USD also contributed to the higher operating expenses and finance costs for the current quarter.
Net loss
The net loss for the three months ended March 31, 2025 amounted to $297,125 compared to a net profit of $1,914 for three months ended March 31, 2024.
The net loss for the three months ended March 31, 2025 was due to lower gross margin, higher salaries and wages as there was lower demand for full time outsourced headcount by key customers. In addition, there were research and development costs incurred for the quarter ended March 31, 2025 and similar research and development costs was not present in the quarter ended March 31, 2024. The weakening of all functional currencies against USD also contributed to the higher operating expenses and finance costs for the current quarter.
11
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
Selected Balance Sheet Information
The figures reported below are based on the unaudited consolidated financial statements of the Corporation which have been prepared in accordance with IFRS Accounting Standards.
| March 31, 2025 (Unaudited) $ | December 31, 2024 (Audited) $ | |
|---|---|---|
| Current Assets | ||
| Accounts receivable | 736,968 | 671,730 |
| Deposits and prepayments | 68,067 | 68,360 |
| Current tax assets | 154 | 156 |
| Bank and cash balances | 82,611 | 191,903 |
| 887,800 | 932,149 | |
| Non-Current Assets | ||
| Property, plant and equipment | 38,323 | 48,375 |
| Right-of-use assets | 68,878 | 81,912 |
| TOTAL ASSETS | 995,001 | 1,062,436 |
| Current Liabilities | ||
| Accounts payable and accrued liabilities | 816,418 | 719,374 |
| Advances from related parties | 879,402 | 780,755 |
| Loans from related parties | 1,476,073 | 1,453,662 |
| Promissory note payable | 580,000 | 580,000 |
| Lease liabilities | 45,192 | 49,116 |
| 3,797,085 | 3,582,907 | |
| Non-Current Liabilities | ||
| Lease liabilities | 17,163 | 25,874 |
| TOTAL LIABILITIES | 3,814,248 | 3,608,781 |
| Equity | ||
| Share capital | 15,148,160 | 15,148,160 |
| Deficit | (18,187,375) | (17,891,667) |
| Accumulated other comprehensive income | 236,712 | 212,655 |
| Total deficiency attributable to equity shareholders | (2,802,503) | (2,530,852) |
| Non-controlling interests | (16,744) | (15,493) |
| TOTAL DEFICIENCY | (2,819,247) | (2,546,345) |
| TOTAL LIABILITIES & EQUITY | 995,001 | 1,062,436 |
Total assets of GINSMS including bank and cash balances, accounts receivable, deposits and prepayments, current tax assets, property, plant and equipment and right-of-use assets as at March 31, 2025 amounted to $995,001 compared to $1,062,436 as at December 31, 2024. Bank and cash balances amounted to $82,611 as at March 31, 2025, a decrease of 57.0% compared to $191,903 as at December 31, 2024. The decrease was mainly due to more net cash outflow from operating activities offset with net cash inflow from financing activities during the current quarter.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
Accounts receivable
| March 31, 2025 (Unaudited) $ | December 31, 2024 (Audited) $ | |
|---|---|---|
| Trade receivables (third parties) | 56,796 | 83,535 |
| Trade receivables from related parties | 829,513 | 737,688 |
| Trade receivables from ultimate parent | 6,422 | 6,270 |
| Less: Allowance for doubtful debts | (155,763) | (155,763) |
| 736,968 | 671,730 |
Included in accounts receivable at March 31, 2025 are receivables of $75,235 due from Activate and receivable of $754,278 due from Actxa, which are, respectively, 98% and 99% (directly and indirectly) beneficially owned by the Chief Executive Officer of the Corporation.
Increase in trade receivables (third parties) for the quarter ended March 31, 2025 despite lower revenue earned for the quarter is due to less settlement of receivables by the customers during the current quarter.
Accounts payable and accrued liabilities
| March 31, 2025 (Unaudited) $ | December 31, 2024 (Audited) $ | |
|---|---|---|
| Trade payables (third parties) | 24,452 | 11,505 |
| Other payables to related parties | 26,878 | 22,107 |
| Contract liabilities | 30,061 | - |
| Accrued liabilities and other payables | 735,027 | 685,762 |
| 816,418 | 719,374 |
a) Increase in trade payables as at March 31, 2025 compared to December 31, 2024 is due to slower payment of the invoices to suppliers.
b) 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.
c) Increase in accrued liabilities and other payables as at March 31, 2025 as compared to December 31, 2024 was due to higher cost of sales unbilled but accrued for the current quarter.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
Loans from Related Parties
| March 31, 2025 (Unaudited) $ | December 31, 2024 (Audited) $ | ||
|---|---|---|---|
| Loans from a director | (a) | 153,738 | 152,269 |
| Loan from Inphosoft Pte. Ltd. ("IPL") | (b) | 909,147 | 887,684 |
| Loan from the immediate parent | (c) | 413,188 | 413,709 |
| 1,476,073 | 1,453,662 |
All above loans from related parties are interest-free, non-trade in nature, unsecured and repayable on demand.
(a) The loans are from the Corporation’s director and Chief Executive Officer, Mr. Chin who confirmed to the Corporation that he will not demand settlement of the loans until the Corporation is in sound financial position to repay.
(b) The loan is from IPL. A director and the Chief Executive Officer of the Corporation, Mr. Chin, and a director of the Corporation’s subsidiaries, Mr. Xu Hongwei, 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.
(c) The loan is from Xinhua Mobile, the immediate parent of the Corporation. During the quarter ended March 31, 2025, Xinhua Mobile agreed to extend the due date of the loan to March 31, 2026 and confirmed to the Corporation that it will not demand settlement of the loan until the Corporation is in sound financial position to repay.
In addition to the above loans, Mr. Chin, the Corporation’s ultimate parent, and IPL have also provided interest-free advances of $256,139, $584,119, and $37,619 to the Corporation, respectively. The loans and advance are used to finance the operations of the Corporation.
Promissory note payable
The promissory note payable is from IPL and is interest-free, unsecured and repayable on demand. IPL has confirmed to the Corporation that it will not demand settlement of the note payable until the Corporation is in sound financial position.
14
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
4. SUMMARY OF QUARTERLY RESULTS
The quarterly information set forth below has been presented on the same basis as the unaudited consolidated financial statements, and all necessary adjustments have been included in the amounts stated below to present fairly the unaudited quarterly results when read in conjunction with the unaudited consolidated financial statements and the notes thereto.
| Apr-Jun 23 | Jul-Sep 23 | Oct-Dec 23 | Jan-Mar 24 | Apr-Jun 24 | Jul-Sep 24 | Oct-Dec 24 | Jan-Mar 25 | |
|---|---|---|---|---|---|---|---|---|
| Revenue | ||||||||
| A2P Messaging Service | 314,359 | 221,750 | 162,229 | 148,960 | 275,248 | 198,849 | 92,877 | 73,365 |
| Software Products & Services | 526,013 | 550,562 | 592,935 | 561,345 | 539,942 | 321,930 | 366,956 | 272,528 |
| 840,372 | 772,312 | 755,164 | 710,305 | 815,190 | 520,779 | 459,833 | 345,893 | |
| Cost of sales | ||||||||
| A2P Messaging Service | 242,131 | 149,254 | 90,242 | 95,150 | 106,119 | 84,536 | 58,517 | 66,482 |
| Software Products & Services | 291,822 | 304,780 | 317,123 | 314,037 | 280,346 | 205,187 | 207,259 | 173,429 |
| 533,953 | 454,034 | 407,365 | 409,187 | 386,465 | 289,723 | 265,776 | 239,911 | |
| Operating expenses(1) | 209,153 | 328,688 | 530,451 | 294,500 | 232,918 | 184,141 | 313,896 | 362,102 |
| Net profit/(loss) before Income tax | 95,262 | (12,026) | (288,554) | 5,746 | 195,807 | 46,915 | (224,517) | (297,125) |
| Income tax (credit)/expense | (7,175) | 10,796 | (7,615) | 3,832 | (7,357) | 5,967 | 24 | - |
| Net profit/(loss) | 102,437 | (22,822) | (280,939) | 1,914 | 203,164 | 40,948 | (224,541) | (297,125) |
| Net earnings/(loss) (per share) | ||||||||
| Basic and Diluted (in Canadian cents) | 0.054 | (0.013) | (0.149) | 0.001 | 0.108 | 0.022 | (0.119) | (0.158) |
(1) Represent the sum of selling, general and administrative expense. For comparative purpose, interest expenses, allowance for doubtful debts, reversal of allowance for doubtful debts, and non-recurring expenditure and income were excluded from the Operating Expenses calculation.
The Corporation faced stiff competition in the A2P messaging service segment in all the regions and revenue fluctuated from quarter to quarter. During the quarter ended March 31, 2024, the Corporation managed to increase messaging traffic in all regions except the Southeast Asia region. The continued loss in messaging traffic in the Southeast Asia region caused drastic decline in sales prices for the region. This led to overall decline in revenue earned for the quarter. During the quarter ended June 30, 2024, there was a surge in messaging traffic in the North Asia and the South Asia regions that increased the revenue. During the quarter ended September 30, 2024, the Corporation lost messaging traffic in all regions due to stiff competition, except the South Asia region. During the quarter ended December 31, 2024, the Corporation lost messaging traffic in all regions due to stiff competition. During the quarter ended March 31, 2025, there was a surge in messaging traffic in the North Asia and the Southeast Asia regions that increased the revenue. However the increase was completely offset by the drastic decline in messaging traffic in the South Asia region.
Management has set a goal to steer the A2P messaging business to more growth in the coming quarters. The Corporation intends to continue its focus on increasing the revenue from existing markets in the North Asia and the Southeast Asia regions.
The revenue from the software products and services segment remained stable as the Corporation increased the employee hourly charge out rates and chargeable hours from the quarters ended March 31, 2023 to December 31, 2023. However, the chargeable hours had decreased from the quarters ended March 31, 2024 to March 31, 2025 as there was a continued reduced demand of outsourced headcount staff on the projects of Activate and Actxa.
15
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
5. LIQUIDITY AND CAPITAL RESOURCES
| Financial Highlights | Three-month period ended March 31, 2025 (Unaudited) $ | Three-month period ended March 31, 2024 (Unaudited) $ | Twelve-month period ended December 31, 2024 (Audited) $ | Twelve-month period ended December 31, 2023 (Audited) $ |
|---|---|---|---|---|
| Cash, beginning of period/year | 191,903 | 239,824 | 239,824 | 191,126 |
| Operating activities | ||||
| Net (loss)/profit before tax | (297,125) | 5,746 | 23,951 | (133,650) |
| Interest expenses | 1,385 | 872 | 3,607 | 7,159 |
| Foreign currency exchange loss/(gain) | 34,171 | (2,781) | 3,913 | 50,584 |
| Allowance for doubtful debts | - | - | 33,932 | 104,666 |
| Depreciation of property, plant and equipment | 9,924 | 11,215 | 45,669 | 40,966 |
| Depreciation of right-of-use assets | 12,318 | 11,356 | 46,250 | 46,901 |
| Changes in working capital items | 32,103 | (147,363) | (400,792) | 41,902 |
| Interest expenses on lease liabilities | (1,385) | (872) | (3,607) | (7,159) |
| Income tax (paid)/refunded | - | - | (6,180) | 884 |
| Net cash (used in)/generated from operating activities | (208,609) | (121,827) | (253,257) | 152,253 |
| Financing activities | ||||
| Advances from related parties | 89,534 | 103,633 | 406,621 | 431,853 |
| Repayment of advances from related parties | (1,576) | (922) | (151,184) | (385,951) |
| Principal elements of lease payments | (11,991) | (12,215) | (47,504) | (46,816) |
| Net cash generated from/(used in) financing activities | 75,967 | 90,496 | 207,933 | (914) |
| Investing activities | ||||
| Purchase of property, plant and equipment | - | (3,155) | (10,730) | (61,919) |
| Net cash used in investing activities | - | (3,155) | (10,730) | (61,919) |
| Effect of exchange rate changes on cash held in foreign currencies | 23,350 | 13,761 | 8,133 | (40,722) |
| (Decrease)/increase in cash | (109,292) | (20,725) | (47,921) | 48,698 |
| Cash, end of period/year | 82,611 | 219,099 | 191,903 | 239,824 |
The capital resources of the Corporation are comprised mainly of the equity of the Corporation. The debts of the Corporation are comprised mainly of a promissory note payable, loans and advances from related parties.
The Corporation has a deteriorated liquidity position for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to more cash used in its operation in the quarter ended March 31, 2025, in view of the lower revenue earned in the quarter.
The Corporation is facing a slightly higher liquidity risk as it has a working capital deficiency of $2,909,285 as at March 31, 2025 as compared of $2,650,758 as at December 31, 2024. The
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
Corporation’s liabilities now include a promissory note payable, advances from related parties and the loans from related parties.
The operation of the Corporation is partially financed by the loans from related parties and the advances from related parties amounting to $1,476,073 and $879,402 respectively as at March 31, 2025. The terms and conditions of the loans are described above under Selected Balance Sheet Information – Loans from Related Parties.
Mr. Chin, Xinhua Mobile and IPL confirmed that they will not demand settlement of the loans until the Corporation is in sound financial position to repay them.
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 from March 27, 2025.
The Corporation renewed an office lease for its operations during the quarter ended December 31, 2024 and another office lease during the quarter ended September 30, 2024. The first lease is renewed for a fixed term of 1 year and the second lease is for a fixed term of 2 years. Lease liabilities of $62,355 (December 31, 2024: $74,990) are recognised with related right-of-use assets of $68,878 (December 31, 2024: $81,912) as at March 31, 2025. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessors. Leased assets may not be used as security for borrowing purposes.
The directors will continue to closely monitor the Corporation’s liquidity position and financial performance and implement if needed, measures to improve the Corporation’s cash flow.
Based on these actions, the Corporation expects to generate/obtain sufficient cash flows to fund its operations, working capital requirements and capital program for the next twelve months.
6. OFF BALANCE SHEET ARRANGEMENTS
The Corporation does not have off-balance sheet arrangements.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
7. TRANSACTIONS WITH RELATED PARTIES
The Corporation was a party to the following related party transactions that have been recorded at their exchange amounts for the three months ended March 31, 2025 and March 31, 2024 and twelve months ended December 31, 2024 and December 31, 2023:
| Three-month period ended March 31, 2025 (Unaudited) $ | Three-month period ended March 31, 2024 (Unaudited) $ | Twelve-month period ended December 31, 2024 (Audited) $ | Twelve-month period ended December 31, 2023 (Audited) $ | |
|---|---|---|---|---|
| Software products and services revenue from companies controlled by a director^{1} | 242,222 | 455,982 | 1,413,231 | 1,989,462 |
| Administrative fee income from ultimate parent | 6,386 | 6,032 | 24,526 | 24,077 |
| Accounting fee paid to an officer^{2} | 9,016 | 6,394 | 11,735 | 14,915 |
| Research & development costs to a company controlled by a director | 1,612 | - | 4,501 | - |
Notes:
- Software products and services revenue earned from Activate and/or Actxa, companies controlled by Mr. Chin, for the professional services rendered by subsidiaries of Inphosoft on a time and material basis.
- Accounting fees paid to the Interim Chief Financial Officer, Ms. Shum Chee Ming, in relation to her role as finance manager preparing management reports of the Corporation.
As of March 31, 2025, the Corporation has non-trade loans from related parties of $1,476,073 (Selected Balance Sheet Information – Loans from Related Parties) and advances of $879,402 (December 31, 2024 - $1,453,662 and $780,755). The loans and advances are used to finance the operations of the Corporation.
As of March 31, 2025, included in accounts payables and accrued liabilities are amounts of $119,428 (December 31, 2024 - $102,220) owed to related parties. As of March 31, 2025, included in accounts receivable are trade receivables of $835,935 (December 31, 2024 - $743,958) owed by related parties and ultimate parent.
ISPL has T&M Agreements with Activate and engages the resources from IMSB and PTIN. Activate generate revenue by providing software products and services, primarily in the area of mobile applications and games to its customers that include various agencies and ministries of the Singapore government. Activate can subcontract parts of its projects to ISPL that uses the staff of IMSB and PTIN which possess software development skill sets and also perform certain pre-sales roles, on a time and material basis. The professional services provided by IMSB and PTIN are broad-based ranging from account management, pre-sales support, design and development of software programs, project management, testing, deployment and support and maintenance of software programs.
The non-exclusive T&M Agreements were initially entered into for a period of one year and have been subsequently automatically renewed on a yearly basis. These T&M Agreements can be terminated at any time upon one party giving to the other a 30-day termination notice. Under these T&M Agreements, Activate will settle invoices within 14 days, any late payment is subject to a $1\%$ late interest charge. The IMSB and PTIN and Activate are bound by the terms and conditions of a non-disclosure agreement.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
ISPL agreed to provide intellectual property indemnity to Activate and its customers in the event of any suit or proceeding being brought against Activate and its customers for a violation of intellectual property rights by ISPL. All rights, titles and interests to any copyrights and other intellectual property rights produced by ISPL solely in the course of services provided to Activate are the sole and exclusive properties of Activate once the services provided by ISPL have been paid in full. Activate has the right to assign to its customers any and all such intellectual property rights, without limitation.
The above transactions are in the normal course of business, are at arm's-length and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.
8. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION (CHANGES) AND BASIS OF PRESENTATION AND ADOPTION OF IFRS ACCOUNTING STANDARDS
The basis of presentation is described in Note 2 of the unaudited condensed interim consolidated financial statements for the three months ended March 31, 2025.
The material accounting policy information used in the preparation of the Corporation's unaudited condensed interim consolidated financial statements are described in Note 4 of the unaudited condensed interim consolidated financial statements for the three months ended March 31, 2025. The unaudited condensed interim consolidated financial statements do not include all of the information required for annual financial statements and should be read in conjunction with the audited consolidated financial statement for the twelve months ended December 31, 2024 which has been prepared in accordance with IFRS Accounting Standards. The accounting policies (including the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty) and methods of computation used in the preparation of these unaudited condensed interim consolidated financial statements are consistent with those used in the annual financial statements for the twelve months ended December 31, 2024.
9. FINANCIAL INSTRUMENTS
Financial instruments of the Corporation consist of cash, accounts receivable, accounts payable, accrued liabilities, advances from related parties, loans from related parties and a promissory note payable. GINSMS limits exposure to credit loss by placing its cash with high credit quality financial institutions.
The carrying amounts of cash, accounts receivable and other accounts payable, accrued liabilities, advances from related parties and loans from related parties approximate their values due to the short-term nature of these instruments. The functional currency of Global Edge Technology Limited and GIN is the HKD. In the case of Inphosoft Group, the functional currency is principally that of the SGD but also the IDR and the MYR. In accordance with Canadian GAAP, the consolidated financial statements of the Corporation, which are prepared using the functional currencies, have been translated into Canadian dollars. Assets and liabilities are translated at exchange rates applicable at the balance sheet dates; revenues and expenses are translated at the average exchange rates applicable during the period covered by the financial statements; and capital and statutory capital reserves are translated at historical exchange rates.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
10. SHAREHOLDERS' EQUITY & DISCLOSURE OF OUTSTANDING SHARE DATA
Shareholders' equity
| | March 31, 2025
(Unaudited)
$ | December 31, 2024
(Audited)
$ |
| --- | --- | --- |
| Share capital | 15,148,160 | 15,148,160 |
| Deficit | (18,187,375) | (17,891,667) |
| Accumulated other comprehensive income | 236,712 | 212,655 |
| Non-controlling interests | (16,744) | (15,493) |
| | (2,819,247) | (2,546,345) |
Shareholders' equity as at March 31, 2025 which showed a deficit of $2,819,247 is deteriorating from a deficit of $2,546,345 as at December 31, 2024. The deterioration in shareholders' equity is due to the net loss of $297,125 partially offset by other comprehensive income of $24,223 for the quarter ended March 31, 2025.
To address the going concern issue, the Corporation has instituted the following plans:
(a) The Corporation intends to focus on increasing its gross profit margin in both its A2P messaging business and its software products and services business by scrutinizing existing and new business contracts to ensure that they generate satisfactory gross profit margins. Management has seen significant improvement in both gross profit margin and adjusted EBITDA and believes that the Corporation will have the ability to continue its operations for the next twelve months.
(b) Despite of the Corporation's liabilities which include a promissory note payable, the advances from related parties and the loans from the related parties, the liquidity risk is addressed and mitigated by the fact that 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.
(c) The ultimate parent of the Corporation, has agreed to provide financial support at a level sufficient to finance the working capital requirements of the Corporation and to meet all third party obligations for at least the ensuing twelve-month period from March 27, 2025.
As a result, management has concluded that the Corporation is able to continue as a going concern.
Authorised share capital
The authorised share capital of the Corporation consists of an unlimited number of common shares and an unlimited number of preferred shares.
The holders of the common shares are entitled to dividends, if, as and when declared by the Board of Directors, to one vote per share at meetings of the shareholders and, upon dissolution, to share equally in such assets of the Corporation as are distributable to the holders of common shares. The holders of the preferred shares are entitled to preference over the holders of common shares with respect to the payment of dividends, dissolution or winding-up or any other return of capital or distribution of assets for the purpose of winding up the Corporation's affairs. As at the date thereof, there are no preferred shares issued and outstanding.
The table below summarizes the issued and outstanding shares of the Corporation for the three months ended March 31, 2025 versus the year ended December 31, 2024.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
| Issued | March 31, 2025
(Unaudited) | | December 31, 2024
(Audited) | |
| --- | --- | --- | --- | --- |
| | Shares | Amount ($) | Shares | Amount ($) |
| Balance, beginning of year | 187,118,368 | 15,148,160 | 187,118,368 | 15,148,160 |
| Balance, end of year | 187,118,368 | 15,148,160 | 187,118,368 | 15,148,160 |
Information on the Corporation's capital, including the numbers of common shares issued and outstanding is contained in the Corporation's audited consolidated financial statements which are available at www.sedarplus.com.
11. SEGMENTED INFORMATION
a) Revenue by customers
| | Three-month period ended March 31, 2025
(Unaudited) | | Three-month period ended March 31, 2024
(Unaudited) | |
| --- | --- | --- | --- | --- |
| | $ | % of total revenue | $ | % of total revenue |
| Customer A | 127,404 | 36.8 | 341,728 | 48.1 |
| Next five top customers | | | | |
| Customer B | 114,818 | 33.2 | 114,254 | 16.1 |
| Customer C | 32,718 | 9.5 | 19,097 | 2.7 |
| Customer D | 23,916 | 6.9 | 32,881 | 4.6 |
| Customer E | 10,006 | 2.9 | 13,463 | 1.9 |
| Customer F | 6,386 | 1.8 | 6,032 | 0.8 |
| All other customers | 30,645 | 8.9 | 182,850 | 25.8 |
| Total | 345,893 | 100.0 | 710,305 | 100.0 |
b) Revenue by geographical location (by location of operations)
| | Three-month period ended March 31, 2025
(Unaudited) | | Three-month period ended March 31, 2024
(Unaudited) | |
| --- | --- | --- | --- | --- |
| | $ | % of total revenue | $ | % of total revenue |
| Singapore | 248,608 | 71.9 | 462,015 | 65.0 |
| Indonesia | 32,718 | 9.5 | 85,547 | 12.0 |
| Other Asia countries | 17,595 | 5.1 | 76,768 | 10.8 |
| Europe | 35,687 | 10.3 | 46,387 | 6.5 |
| United States | 9,614 | 2.8 | 34,957 | 4.9 |
| Other regions | 1,671 | 0.4 | 4,631 | 0.8 |
| Total | 345,893 | 100.0 | 710,305 | 100.0 |
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
c) Total non-current assets by geographical location
| | As at March 31, 2025
(Unaudited) | | As at December 31, 2024
(Audited) | |
| --- | --- | --- | --- | --- |
| | $ | % of total assets | $ | % of total assets |
| Indonesia | 101,065 | 94.3 | 122,695 | 94.2 |
| Other Asia countries | 6,136 | 5.7 | 7,592 | 5.8 |
| Total | 107,201 | 100.0 | 130,287 | 100.0 |
d) Financial information by business segments
| Messaging | Software products and services | Unallocated | Total | |
|---|---|---|---|---|
| $ | $ | $ | $ | |
| Three-month period ended March 31, 2025 (Unaudited) | ||||
| Revenue | 73,365 | 272,528 | - | 345,893 |
| Intersegment revenue | 4,992 | 71,582 | - | 76,574 |
| Amortisation and depreciation | 4,583 | 17,659 | - | 22,242 |
| Other material items of income and expense: | ||||
| Staff costs | 76,933 | 244,817 | - | 321,750 |
| Interest income | - | 115 | - | 115 |
| Interest and finance expenses | 51 | 1,334 | - | 1,385 |
| Segment losses | (65,149) | (160,215) | (71,761) | (297,125) |
| At March 31, 2025 (Unaudited) | ||||
| Segment assets | 103,488 | 878,491 | 13,022 | 995,001 |
| Segment liabilities | (488,702) | (1,660,645) | (1,664,901) | (3,814,248) |
| Messaging | Software products and services | Unallocated | Total | |
| --- | --- | --- | --- | --- |
| $ | $ | $ | $ | |
| Three-month period ended March 31, 2024 (Unaudited) | ||||
| Revenue | 148,960 | 561,345 | - | 710,305 |
| Intersegment revenue | 18,735 | 67,165 | - | 85,900 |
| Amortisation and depreciation | 1,759 | 20,812 | - | 22,571 |
| Other material items of income and expense: | ||||
| Staff costs | 51,188 | 357,539 | - | 408,727 |
| Interest income | - | 103 | - | 103 |
| Interest and finance expenses | 494 | 378 | - | 872 |
| Income tax credit | 179 | 3,653 | - | 3,832 |
| Segment (losses)/profits | 24,289 | 44,225 | (66,600) | 1,914 |
| Additions to segment non-current assets | 147 | 3,008 | - | 3,155 |
| At March 31, 2024 (Unaudited) | ||||
| Segment assets | 205,452 | 936,565 | 21,048 | 1,163,065 |
| Segment liabilities | (484,295) | (1,737,142) | (1,406,827) | (3,628,264) |
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
12. 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 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, SGD, MYR and IDR. The Corporation is mainly exposed to the effects of fluctuation in SGD against USD, USD against EUR and CAD against 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.
13. OTHER MD&A REQUIREMENTS
The Company announced its financial forecasts for the twelve months ending December 31, 2025 on February 13, 2025. The table below shows an analysis of the difference between the actual and forecasted financial highlights for the three months ended March 31, 2025.
Financial Outlook
| Financial Highlights | Actual ($) | Forecast ($) | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Jan-Mar 2025 | Jan-Mar 2025 | Jan-Mar 2025 | Jan-Mar 2025 | |
| Revenues $ | ||||
| A2P Messaging Service | 73,365 | 102,217 | (28,852) | (28.2)% |
| Software Products & Services | 272,528 | 428,279 | (155,751) | (36.4)% |
| 345,893 | 530,496 | (184,603) | (34.8)% | |
| Cost of sales $ | ||||
| A2P Messaging Service | 66,482 | 64,451 | 2,031 | 3.2% |
| Software Products & Services | 173,429 | 266,933 | (93,504) | (35.0)% |
| 239,911 | 331,384 | (91,473) | (27.6)% | |
| Gross profit $ | ||||
| A2P Messaging Service | 6,883 | 37,766 | (30,883) | (81.8)% |
| Software Products & Services | 99,099 | 161,346 | (62,247) | (38.6)% |
| 105,982 | 199,112 | (93,130) | (46.8)% | |
| Gross margin % | ||||
| A2P Messaging Service | 9.4% | 36.9% | (27.6)% | (74.6)% |
| Software Products & Services | 36.4% | 37.7% | (1.3)% | (3.5)% |
| 30.6% | 37.5% | (6.9)% | (18.4)% | |
| Selling, general and administrative expenses | (367,666) | (173,191) | (194,475) | 112.3% |
| Operating (loss)/profit | (261,684) | 25,921 | (287,605) | (1109.5)% |
| Non-operating income | 115 | - | 115 | - |
| Non-operating expenses | (35,556) | (755) | (34,801) | 4609.4% |
| Ordinary (loss)/profit | (297,125) | 25,166 | (322,291) | (1280.7)% |
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
| Financial Highlights | Actual ($) | Forecast ($) | Variance ($) | Variance (%) |
|---|---|---|---|---|
| Jan-Mar 2025 | Jan-Mar 2025 | Jan-Mar 2025 | Jan-Mar 2025 | |
| Extraordinary gains | - | - | - | - |
| Extraordinary losses | - | - | - | - |
| (Loss)/profit before tax and non-controlling interests | (297,125) | 25,166 | (322,291) | (1280.7)% |
| Non-controlling interests | 1,417 | - | 1,417 | - |
| Net (loss)/profit attributable to shareholders | (295,708) | 25,166 | (320,874) | (1275.0)% |
| Adjusted EBITDA | (273,498) | 49,281 | (322,779) | (655.0)% |
Notes:
(1) Adjusted EBITDA is a non-GAAP measure related to cash earnings and is defined for these purposes as earnings before income taxes, depreciation & amortisation (in both cost of sales and general and administration expenses), interest expenses and also excludes certain non-recurring or non-cash expenditure and income.
(2) Non-operating income included interest income and other non-operating income. Non-operating expenses included loss on foreign exchange and interest expense.
For the three months ended March 31, 2025,
- Revenue for the A2P messaging service segment was much lower than forecast as the Corporation lost messaging traffic in all regions due to stiff competition.
- The actual gross margin of 9.4% for the A2P messaging service segment was lower than forecast due to weakening of USD against EUR. The billings were denominated in USD and EUR and the cost of sales were mainly denominated in EUR.
- Revenue for the software products and services segment was lower than forecast as demand of outsourced headcount from key customers was lower than forecast.
- The actual gross margin of 36.4% for the software products and services segment was comparable to the forecasted gross margin.
- The selling, general and administrative expenses were higher than forecast primarily because of research and development cost and allowance for doubtful debts not budgeted for. In addition, with fewer staff as outsourced headcount due to reduced demand of outsourced headcount from key customers, there was more non-chargeable staff hours recorded in the selling, general and administrative expenses than forecast.
- Net loss attributable to shareholders of $295,708, contrasted to the net profit of $25,166 budgeted for primarily a results of lower revenue, lower gross margin and higher selling, general and administrative expenses than forecast.
24
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
Q3 to Q4 2025 Re-Forecast
Due to the decreasing revenue from both the software products and services segment and A2P messaging service segment for the first quarter of the year, the Corporation would like to provide a revised forecast for the remaining three quarters of 2025 as follows:
| Financial Highlights | Reforecast ($) | Reforecast ($) | Reforecast ($) |
|---|---|---|---|
| Apr-Jun 2025 | Jul-Sep 2025 | Oct-Dec 2025 | |
| Revenues $ | |||
| A2P Messaging Service | 68,993 | 69,546 | 70,104 |
| Software Products & Services | 331,642 | 338,567 | 322,054 |
| 400,635 | 408,113 | 392,158 | |
| Cost of sales $ | |||
| A2P Messaging Service | 49,104 | 49,498 | 49,895 |
| Software Products & Services | 214,451 | 243,244 | 243,244 |
| 263,555 | 292,742 | 293,139 | |
| Gross profit $ | |||
| A2P Messaging Service | 19,889 | 20,048 | 20,209 |
| Software Products & Services | 117,191 | 95,323 | 78,810 |
| 137,080 | 115,371 | 99,019 | |
| Gross margin % | |||
| A2P Messaging Service | 28.8% | 28.8% | 28.8% |
| Software Products & Services | 35.3% | 28.2% | 24.5% |
| 34.2% | 28.3% | 25.2% | |
| Selling, general and administrative expenses | (241,624) | (212,831) | (212,831) |
| Operating (loss)/profit | (104,543) | (97,460) | (113,812) |
| Non-operating income | - | - | - |
| Non-operating expenses | (713) | (713) | (713) |
| Ordinary (loss)/profit | (105,257) | (98,173) | (114,525) |
| Extraordinary gains | - | - | - |
| Extraordinary losses | - | - | - |
| (Loss)/profit before tax and non-controlling interests | (105,257) | (98,173) | (114,525) |
| Non-controlling interests | - | - | - |
| Net (loss)/profit attributable to shareholders | (105,257) | (98,173) | (114,525) |
| Adjusted EBITDA | (81,849) | (74,766) | (91,118) |
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
Risks and Uncertainties
Through its operations, the Corporation is exposed to various business risks and uncertainties which could have an impact on its capacity to achieve its growth objectives. Consequently, the following factors should be considered when evaluating the Corporation’s future prospects:
Dependence on Required Licenses
The A2P messaging business in Hong Kong is a highly regulated business activity and requires licenses from the Hong Kong Telecommunications Authority (“TA”), without which GIN would be unable to operate. GIN is subject to the rules and regulations of the TA, which regulates the telecom industry in Hong Kong, and the Hong Kong Office of Communications Authority (“HOCA”), which assists the TA in enforcing and administering the Telecommunications Ordinance. The TA’s authority includes regulating and licensing telecom facilities and managing the radio frequency spectrum. If the TA determines that GIN has violated Hong Kong’s telecom laws or regulations or the conditions of its licenses, the TA may suspend or cancel GIN’s licenses or take other action detrimental to GIN. GIN is also subject to various other rules, laws and ordinances applicable to companies operating in Hong Kong, including, for example, laws relating to obscenity and privacy. If GIN is found to be in violation of these laws, it may face judgments or consequences detrimental to its business. In addition, the Public Non-exclusive Telecommunications Service (PNETS) license granted by HOCA to GIN is normally valid for one year, subject to renewal at the discretion of HOCA and compliance of all terms and conditions of the licenses. In the event that HOCA refuses to renew any of the existing licenses of GIN, GIN’s ability to offer its services will be adversely affected. The Chief Executive in council of the HOCA may also cancel or suspend licenses if it considers that it is in the public’s interest to do so. Moreover, if the TA changes its existing regulations or policies such as those governing interconnection or competition, including the requirement on GIN to obtain separate or further licenses for its existing operations or services, or to obtain licenses in respect of its future operations or services based on new communication technologies, the Corporation’s results of operations, financial condition, business and prospects could be adversely affected. GIN may also incur extra costs in order to comply with technical specifications or other conditions resulting from any enacted or proposed changes in the applicable laws and regulations. As a result, the Corporation’s financial condition, results of operations and/or prospects may be adversely affected. The business of the Corporation’s customers is also subject to regulations. As a result, such regulations could indirectly affect the Corporation’s business. As communications technologies and the telecom industry continue to evolve, the regulations governing the telecom industry may change. If this were to occur, the demand for the Corporation’s services could change in ways that GIN cannot easily predict and may result in a decline in the Corporation’s revenue.
Dependence on Major Customers
The Corporation depends on major customers for a significant portion of its business and the loss of any of such customers could materially and adversely affect the Corporation, and hence the Corporation’s business and financial position. A significant portion of the Corporation’s revenue has been and is expected to continue to be, derived from a limited number of customers. Most of these customers are major operators of telecom services in the Asia Pacific region. There can be no assurance that its major customers will continue to use its services. In the event that any of these customers cease to use the services of the Corporation and the Corporation fails to replace such customer(s), the Corporation’s business and financial position may be materially and adversely affected.
System Failures, Delays and Other Problems
System failures, delays and other problems could harm the Corporation’s reputation and business, cause it to lose customers and expose GINSMS to customer liability. GIN’s system architecture is
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
contingent on its ability to process a high volume of transactions in a timely and effective manner. GIN may experience failures or interruptions of its systems and services, or other problems in connection with its operations as a result of, amongst other things:
- damage to or failure of its computer software or hardware or its infrastructure and connections;
- data processing errors by its systems;
- computer viruses or software defects;
- physical or electronic break-ins, sabotage, intentional acts of vandalism and similar events; and
- failure of GIN to adapt to rapid technological changes in the telecom industry.
If GIN cannot adequately ensure that its network services perform consistently at a high level or otherwise fails to meet its customers' expectations:
- it may experience damage to its reputation, which may adversely affect its ability to attract or retain customers for its existing services, and may also make it more difficult for GIN to market its existing or future services;
- it may suffer significant damage or expose itself to customer liability claims, under its contracts or otherwise, including the requirement to pay penalties relating to service level requirements in its contracts;
- its operating expenses or capital expenditures may increase as a result of corrective actions that GIN must perform;
- GIN's customers may reduce their use of GIN's services; or
- one or more of its significant contracts may be terminated early, or may not be renewed.
These or other consequences would adversely affect the Corporation's revenue and performance.
Security and Privacy Breaches
Security or privacy breaches may result in an interruption of service or a reduced quality of service, which could increase GIN's costs or result in a reduction in the use of GIN's services by its customers. GIN's systems may be vulnerable to physical break-ins, computer viruses, attacks by computer hackers or similar disruptive problems. If unauthorized users gain access to GIN's databases, they may be able to steal, publish, delete or modify sensitive information that is stored or transmitted on GIN's networks and which GIN is required by its contracts to keep confidential. A security or privacy breach could result in an interruption of service or a reduced quality of service. Confidential information internal to GIN may also be disclosed to unauthorized personnel who may use such information in a manner adverse to the interests of GIN. Hackers may attempt to "flood" the network, thereby preventing legitimate network traffic or to disrupt the connection between two machines, thereby preventing access to a service or preventing a particular individual from accessing a service. The Corporation may therefore be required to make significant expenditures in connection with corresponding corrective or preventive measures. In addition, a security or privacy breach may harm GIN's reputation and cause its customers to reduce their use of GIN's services, which could harm the Corporation's revenue and business prospects. In addition, GIN's revenue may be adversely affected by un-captured usage, in the event that GIN's system is "hacked" into, resulting in transmissions that may not be detected by its billing system. Further, the increase in traffic as a result of such unauthorized "hacking" may slow or overload GIN's transmission network, thereby adversely affecting the overall quality of services which GIN provides to its paying customers. GIN's exposure to telecom security concerns is heightened as Hong Kong and Chinese laws relating to liability under such circumstances are relatively new. In addition, GIN does not carry "errors and omissions" or other insurance covering losses or liabilities caused by computer viruses or security breaches, which under such circumstances could mitigate damages that GIN may suffer. If GIN incurs any such losses or liabilities, the Corporation's operating results, financial condition, business and prospects may be adversely affected.
27
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
The introduction of new supply chain due diligence and reporting requirements could expose the Corporation to certain Risks
In May 2023, Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Acts”) was passed and came into force on January 1, 2024. Pursuant to this new legislation, any company that is subject to the reporting requirements is required to file an annual report with Public Safety Canada disclosing the steps the company has taken during its previous financial year to prevent and reduce the risk that forced labour and child labour is used at any step of the production of goods in Canada or elsewhere by the company. While the Corporation is currently unaware of any forced or child labour in any of its supply chains, the increased scrutiny on the supply chains of Canadian companies could uncover the risk or existence of forced or child labour in a supply chain to which the Corporation has a connection, which could negatively impact the reputation of the Corporation. Taking account of a revised interpretative guidance published by the ministry in charge of the Act, the Corporation has decided not to file an annual report under the Act for the financial year ended December 31, 2024.
Adequacy of Network Resilience, Network Diversity and Backup Systems
Inadequate network resilience, network diversity and backup systems may result in service disruptions. Any failure of GIN’s backup systems or any insufficiency in GIN’s redundancy capacity may disrupt GIN’s operations. GIN regularly reviews its network and assesses its vulnerability to such outside factors. However, there can be no assurance that GIN’s existing alternative routes and cable diversity will provide adequate backup for all types of service interruptions that may occur. Moreover, even with these contingency measures, service disruptions could last for a considerable period of time before complete service can be restored. This may cause customers to reduce their use of GIN’s services, which could harm the Corporation’s revenue and business prospects.
Loss of Significant Information
Loss of significant information may adversely affect the Corporation’s business. In cases of a failure of GIN’s data storage system, GIN may lose critical network or billing data, source code, proprietary production system designs or important email correspondence with its customers and suppliers.
Failure to Develop, Enhance or Introduce New Value-Added Services (“VAS”)
If the Corporation fails to develop or introduce on a timely basis new VAS, its business will suffer. Rapid change in technology, short product life cycles, changes in customer requirements and evolving industry standards characterize the markets for the Corporation’s products. The success of the Corporation depends on the Corporation’s ability to timely develop and introduce innovative new VAS that gain market acceptance. The Corporation may not be successful in forecasting future customer requirements or in selecting, developing and marketing new products or enhancing the Corporation’s existing products on a timely or cost-effective basis. Moreover, the Corporation may encounter technical problems in connection with its product development that could result in delayed introduction or its inability to introduce new products or product enhancements. Such cancellations or delays could result in a decrease in sales or a loss of customers, or both. The Corporation may also focus on technologies that do not function as expected or are not widely adopted. In addition, products or technologies developed by others may render the Corporation’s products non-competitive or obsolete and result in a significant reduction in traffic volume from the Corporation’s customers and the loss of existing and prospective customers.
Competition
The market for communications services is extremely competitive and rapidly changing. The Corporation faces competition from other providers of connectivity and value-added services, some of
28
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
which are larger and may be better funded than the Corporation. A number of the Corporation's current and potential competitors may have greater name recognition and/or more extensive customer bases than GIN. Increasing competition could result in reduced revenue, reduced sales margins and loss of market share, any one of which could harm the business of the Corporation.
Dependence on Third-Party Software and Equipment
The failure of third-party software and equipment that GIN uses in its systems may cause interruptions or failures of its systems. In addition to the use of the internet and certain telecom networks maintained by broker carriers and other third parties for the transmission of data traffic, GIN also incorporates hardware, software and equipment developed by third parties into its systems. As a result, GIN's ability to provide interoperability services depends in part on the continued performance and support of these third-party products. If these products experience failures or contain defects, and the third parties supplying these products fail to provide adequate remedial support, this may result in the interruption or unsatisfactory performance of GIN's systems or services.
Market Acceptance at Desired Pricing Levels
The Corporation's failure to achieve or sustain market acceptance at desired pricing levels may impact its ability to maintain profitability or positive cash flow. The Corporation's competitors and customers may cause the Corporation to reduce the prices it charges for its services which in turn could adversely affect the Corporation's profitability and cash flow. The primary sources of pricing pressure include:
- competitors offering competing services at reduced prices, or bundling and pricing services in a manner which makes it difficult for the Corporation to compete; and
- customers with a significant volume of transactions may have enhanced leverage in pricing negotiations with the Corporation;
GINSMS may not be able to offset the effects of all or any price reductions.
Key Members of the Management Team
The loss of any key members of the management team may impair the Corporation's ability to identify and secure new contracts with customers or otherwise manage its business effectively. The Corporation's success depends, in part, on the continued contributions of its senior management. Most of them are well experienced in the telecom industry and have in depth knowledge of various aspects of the development of a telecom business.
Credit Risk of Accounts Receivable
The Corporation is subject to credit risk in respect of its accounts receivable. GINSMS provides credit periods to its customers, which are calculated from the dates the invoices are issued by GINSMS to the dates of payment by the customers. Although GINSMS implements credit control policies and measures, GINSMS cannot assure that these measures are adequate in protecting GINSMS against material credit risks. GINSMS may provide services to customers who do not provide sufficient deposits, advance payments or bank guarantees for GINSMS' services. Moreover, should GINSMS' customers be unable to pay in full for any reason, the Corporation's profit and cash flow will be adversely affected. Any delay in the payment by customers may also adversely affect the Corporation's operations and financial position. The Corporation may have to sustain legal costs in pursuing unsettled invoices, a process which is time-consuming and may be affected by a variety of factors including any counterclaim from such non-paying customers. Even if the Corporation obtains favourable judgments, enforcement of such judgments may take time and may not always be successful.
GINSMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
AS AT AND FOR THE THREE MONTHS ENDED MARCH 31, 2025
Conflicts of Interest
Certain directors and officers of the Corporation are also directors, officers, or shareholders of other companies that may operate in the same sectors as the Corporation. Such associations may give rise to conflicts of interest from time to time. The directors of the Corporation are required by law to act honestly and in good faith with a view to the best interests of the Corporation and to disclose any interest which they may have in any project or opportunity of the Corporation. If a conflict of interest arises at a meeting of the board of directors, any director in a conflict is required under the Canada Business Corporations Act to disclose his interest and to abstain from voting on such matter.
Inability to Satisfy Customer Demand for Performance, Price or Terms
The market in which Inphosoft operates is highly competitive, and Inphosoft expects that the level of competition on pricing and product offering will continue to be intense. Additionally, certain emerging markets, such as countries in the Middle-East, Africa, South America and Southeast Asia, are particularly sensitive to pricing as a key differentiator. Where price is a primary decision driver, Inphosoft may not be able to effectively compete or it may choose not to compete due to unacceptable margins. If Inphosoft is not able or chooses not to compete against its current and future competitors, its current and potential customers may choose to purchase similar products offered by Inphosoft's competitors, which would negatively affect its revenues or profitability, or both. The markets for Inphosoft's products are subject to rapid technological changes, evolving industry standards and regulatory developments, and its operating results depend to a significant extent on its ability to adapt to these changes. Inphosoft competes principally on the basis of: (i) product performance and functionality; (ii) product quality and reliability; (iii) customer service and support; and (iv) price. Many of Inphosoft competitors have substantially broader product portfolios and financial and technological resources, product development, marketing, distribution and support capabilities, name recognition and established relationships with telecommunications service providers than it has. Certain competitors of Inphosoft may price their products at unsustainably low levels in an effort to acquire market share or delay or avoid business failures. Inphosoft may not be able to compete effectively against existing or future competitors or to maintain or capture meaningful market share, and Inphosoft's business could be harmed if its competitors' products and services provide higher performance, offer additional features and functionality or are more reliable or less expensive than its products. Increased competition could force Inphosoft to lower its prices or take other actions to differentiate its products, which could adversely affect its business.
International Risks
GINSMS's international operations are significant and it intends to continue to expand these international operations, particularly in Asia. Foreign operations face additional specific local risks, which may adversely affect GINSMS, including but not limited to, change in legal and regulatory requirements and less favourable intellectual property laws, change in local tax rates and other potentially adverse tax consequences (including the cost of repatriation of earnings), collectability of accounts in foreign jurisdictions, and burdens of complying with a wide variety of foreign laws, including changing import and export regulations.