GINSMS Enters into Definitive Agreement to Acquire Inphosoft Group Pte Ltd.

GINSMS Enters into Definitive Agreement to Acquire Inphosoft Group Pte Ltd.

Calgary, Alberta CANADA, January 12, 2012 /FSC/ - GINSMS Inc. (GOK - TSX Venture)("GINSMS" or the "Corporation") is pleased to announce that it has entered today into an arm's length definitive share purchase agreement (the "SPA") with Inphosoft Pte. Ltd. ("Inphosoft"), a private corporation governed by the laws of Singapore, to acquire all of the issued and outstanding shares of Inphosoft's wholly-owned subsidiary, Inphosoft Group Pte. Ltd. ("IGPL"), a corporation also governed by the laws of Singapore, for total consideration of $11.6 million. The transaction will constitute a reverse take-over (the "RTO") of GINSMS under the policies of the TSX Venture Exchange (the "Exchange"). The consideration payable to Inphosoft will consists of: (i) $1,100,000 in cash of which $700,000 is payable at closing and the balance payable within 30 days after the closing date of the acquisition, failing which, the balance of $400,000 shall be converted into a non-interest bearing promissory note payable to Inphosoft; (ii) and by the issuance of non interest-bearing convertible debentures for an aggregate principal amount of $10.5 million (the "Debentures").

Each Debenture shall be issued for a term of three years and no Debenture holder may, at any time, convert such principal amount of the Debenture if, as a result: (i) the Debenture holder would hold more than 10% of the then issued and outstanding common shares of the Corporation; and (ii) any Debenture holder with any person with which it is acting jointly or in concert with, collectively, as a group would hold 20% or more of the then issued and outstanding common shares of the Corporation.

In addition, of the $10.5 million Debentures, Debentures with an aggregate principal amount of $4,000,000 will be deposited at closing in escrow and will be released upon the achievement of certain established profit levels by IGPL over the next two years.  If the profit level of IGPL for the financial year ending on December 31, 2011 is equal to or greater than $600,000, then Debentures having an aggregate principal amount of $2,000,000 shall be released from escrow to Inphosoft, otherwise Debentures having an aggregate principal amount of $2,000,000 shall be cancelled. If the profit level of IGPL for the financial year ending on December 31, 2012 is equal to or greater than $1,000,000, then the balance of the escrowed Debentures shall be released to the vendor, otherwise for every $2 of profit, $1 principal amount of escrowed Debentures shall be released from escrow to the vendor and the remaining escrowed Debentures shall be cancelled.

Inphosoft is controlled by One Heart International Limited (a company incorporated under the laws of the British Virgin Islands), Wang Xian Xiang (of Singapore), Chin Siang Hui (of Singapore) and Xu Hongwei (of China), who together hold a 91.79% interest in Inphosoft.

GINSMS expects to complete the transaction by the end of March, 2012.

Mr. Jonathan, Lai the Chairman of GINSMS believes that the proposed acquisition of IGPL is an excellent strategic fit and very timely: "As we are just now entering the mobile data era, our SMS platform combined with IGPL's impressive and numerous deployments, not just in the field of telecommunications where we are active, but also in the field of financial institutions, media and enterprises, will create substantial opportunities for growth."

Mr. Lai goes on to say: "Our service delivery gateway offers the opportunity to open up new innovative campaign services to IGPL's existing services in North Asia on the one hand, and achieve synergies and efficiencies principally in the areas of mobile advertising and mobile banking services in our respective markets on the other."

Mr. Hann Lian, the Chairman of IGPL stated: "For the past nine years, Inphosoft has been deploying our mobile internet platforms in carriers around the world. We are excited about the merger with GINSMS as it distinguishes us from our competitors in many ways. First, through GINSMS' position as a telecommunications service provider in Hong Kong, we could execute our strategy of connecting service providers in China to the rest of the world. Second, we could deploy our proprietary platforms in GINSMS much more quickly and receive first hand feedback from the market, thereby accelerating our development and global deployment of our suite of next generation products."

Mr. Joel Chin, the Chief Executive Officer of IGPL added: "It's a perfect marriage of two companies with leading technology and access to market. GINSMS would be able to immediately offer mobile value-added services to the telecommunications and financial sectors in Northeast Asia and IGPL gets substantial leverage from GINSMS' existing IOSMS gateway to expand its mobile advertising business. Together, we are well poised to accelerate business growth in the mobile data and mobile internet space."


Contemplated financing

The Corporation may also complete a brokered private placement of up to $500,000 (the "RTO Private Placement") in conjunction with the completion of the RTO to benefit from a waiver of the Exchange sponsorship requirement applicable to reverse take-overs.


Closing conditions

The closing of the RTO with Inphosoft is subject to a number of conditions, including, but not limited to the following:

1. receipt of an exemption or waiver of sponsorship; if not available, a sponsor for the RTO shall have conducted due diligence and filed with the Exchange a sponsorship report satisfactory to the Exchange;

2. receipt of all required regulatory approvals, including the approval by the Exchange of the RTO; and

3. no material adverse change in the condition (financial or otherwise), of the assets, liabilities, capitalization or business of IGPL and its wholly-owned subsidiaries as stated in the latest financial statements of IGPL or the date of the SPA.


Sponsorship

Sponsorship of a reverse take-over is required by the Exchange unless exempt in accordance with Exchange policies. GINSMS has the option to apply from an exemption from sponsorship requirements if it proceeds with the RTO Private Placement, however, even if it decides to do so, there is no assurance that GINSMS will obtain this exemption or proceed with the RTO Private Placement. In addition, the common shares of GINSMS will likely remain halted pending completion of the RTO.


Disclosure documents about the RTO

A Filing Statement in respect of the proposed RTO will be prepared and filed in accordance with Policy 5.2 of the Exchange on SEDAR at www.sedar.com within 75 days of the date of this announcement.


Management and Directors of GINSMS post RTO

Following the closing of the RTO, there will be no change in the management or board of GINSMS.


Summary Financial Information

The selected financial information set below is based on and derived from the consolidated audited financial statements of IGPL for the financial period beginning September 18, 2009, the date of its incorporation, to December 31, 2010 and the unaudited interim financial statement of IGPL for the nine-month periods ended September 30, 2011 and 2010.


SUMMARY STATEMENT OF COMPREHENSIVE INCOME

-***-
-------------------------------------------------------------------------
Financial Highlights                  Nine-month period       Fifteen and
($ amounts in Singapore dollars)                  Ended          one-half
                                          September 30,      month period
                                            (Unaudited)              from
                                                        Sept. 18, 2009 to
                                                            Dec. 31, 2010
                                        2011         2010       (Audited)
-------------------------------------------------------------------------
Revenues $                         1,921,777    2,041,693       3,402,822
Cost of sales $                    (449,282)    (462,223)       (770,371)
-------------------------------------------------------------------------
Gross profit $                     1,472,495    1,579,470       2,632,451
Gross margin                           76.6%        77.4%           77.4%
-------------------------------------------------------------------------
Other Income $                        37,240      280,657         467,762
-------------------------------------------------------------------------
Selling, distribution and          (933,970)  (1,432,657)     (2,387,761)
administrative expenses $
-------------------------------------------------------------------------
Net finance costs $                 (28,475)    (121,712)       (202,854)
-------------------------------------------------------------------------
Profit for the period $              547,290      305,758         509,597
Net profit margin                      28.5%          15%             15%
-------------------------------------------------------------------------
Currency translation on
   consolidation $                         -      (8,034)        (13,390)
-------------------------------------------------------------------------
Total comprehensive Income
  for the period $                   547,290      297,724         496,208
-------------------------------------------------------------------------
-****-

The 5.9% drop in total revenue in the nine months ended September 30, 2011, compared to the corresponding period in 2010 stems from management's decision to focus on projects that generate the highest margins. This resulted in a decline in revenue from professional services classified as contract revenue, largely offset by an increase in license sales, particularly in connection with mobile advertising ads, an area of increased potential.

Expenses were down 34.8% as a result of this focus on higher-margin products which require much less sales and marketing efforts, thereby reducing overhead substantially.

-***-
------------------------------------------------------------------------
($ amounts in Singapore dollars)        Consolidated       Consolidated
                                   September 30, 2011  December 31, 2010
                                          (Unaudited)          (Audited)
------------------------------------------------------------------------
Working Capital $ (1)                       1,212,886          1,768,546
Total assets $                              4,743,558          4,410,773
Total liabilities $                         3,120,334          2,366,301
Shareholders' equity $                      1,623,224          2,044,472
------------------------------------------------------------------------
-****-

(1) Includes cash and bank balances of $198,306 as of September 30, 2011 and of $193,075 as of December 31, 2010.



About GINSMS

GINSMS owns 100% of GIN International Ltd., a technology company focused on providing inter-operator short messaging services to mobile telecom operators in Hong Kong. GINSMS' stated business objective is to become a leading short messaging service ("SMS") and data hubbing service provider to mobile network operators in Hong Kong and China and to establish an international SMS and value added services business.


About Inphosoft

Inphosoft is a leader in providing innovative mobile data services and solutions in the areas of mobile advertising, mobile payment and banking, mobile service delivery platforms and mobile social networking services. Since its inception, Inphosoft has accelerated mobile data adoption through more than 100 deployments for mobile operators, financial institutions, media companies and enterprises. Inphosoft operates out of three offices in Singapore, Malaysia and Indonesia.


Caution Regarding Forward-Looking Information

This news release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with GINSMS' business and the environment in which the business operates.  Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by expressions such as "may", "could", "will", "expect", "intend", "estimate", "anticipate", "believe" or "continue" or the negative thereof or variations thereon or similar terminology. 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, without limitation, the risks factors discussed in the section entitled "Risk Factors" in GINSMS' long form prospectus dated November 12, 2009 which is available under GINSMS' profile on SEDAR at www.sedar.com. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, GINSMS cannot assure the reader that actual results will be consistent with these forward-looking statements. These assumptions are further described in GINSMS' management discussion & analysis for the six month period ended September 30, 2011, which is also available on SEDAR at www.sedar.com. These forward-looking statements are made as of the date hereof and GINSMS 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.

Completion of the transaction is subject to a number of conditions, including Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Filing Statement to be prepared in connection with the transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither the Exchange nor its Regulation Services Provider (as that term is defined in policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.


For further information, please contact:

GINSMS Inc.
Raymond Richard, Corporate Secretary
Tel.: 450-466-2921

Inphosoft Group Pte. Ltd.
Joel Chin, Chief Executive Officer
Tel.: +65 9477-7797


- 30 -



To view this release as a web page, please click on the following link:
http://www.usetdas.com/pr/ginsms01122012.htm  



Source: GINSMS Inc. (TSX-V GOK) www.ginsms.com
Maximum News Dissemination by Filing Services Canada Inc. http://www.usetdas.com