Background

GINSMS Inc. was incorporated in Alberta under the Canada Business Corporation Act on March 20, 2009. On June 9, 2009, the Corporation acquired 100% of the issued and outstanding common shares of Global Edge Technology Limited (“Global”) and continues operations through this subsidiary. Global is a private limited company incorporated in the British Virgin Islands.

The principal activity of the Corporation is the provision of inter-operator short message services (SMS).

The Corporation completed its initial public offering on December 16, 2009 by raising $1.7 million in share capital.

Our Business

GIN services all mobile operators and Mobile Virtual Network Operators (MVNOs) in Hong Kong as well as the two largest mobile telecom operators in China through a strategic business alliance. The company charges mobile telecom operators on a usage basis for inter-operator transmission of SMS within Hong Kong.

The Corporation is dedicated to becoming a significant player as an IOSMS in key regions of Asia, mainly Hong Kong and China, through its hub centre located in Hong Kong, and is determined to capture a growing share of the Hong Kong market and penetrate the China market for inbound traffic into the country. Toward this end, GINSMS recently established a new Wholly-Owned Foreign Enterprise in China.

The new system, which was implemented in late November 2009, became fully operational in the first quarter of this year and is capable of handling 10 times as much traffic as compared to the previous IOSMS system. The upgraded core system is able to handle substantially more SMS traffic having the capability to process different transmission standards used by mobile operators such as GSM¹ (the current mostpopular cellular phone standard), CDMA², PHS³ and fixed SMS transmission protocols.

The Corporation also intends to develop value-added services. To achieve its goals, the Corporation is planning to hire new marketing personnel and invest in software technologies either directly or through partners. Although management had targeted March 31, 2010 as a turning point, it now believes it will take at least a year before its strategy takes shape. The Corporation’s immediate objective is to gain market share for SMS traffic in Hong Kong..


The SMS Market

Hong Kong’s mobile phone market has continued to grow despite having reached saturation point in 2002. Going into 2010 penetration was close to 175%. This penetration level puts Hong Kong in third place behind Singapore and Macau in the Asian mobile market (all ahead of previous leader, Taiwan). Growth in the mobile sector started back in 1999 when the market was boosted by the introduction of number portability. With a population of over 7 million, the market is effectively saturated but has continued to remain competitive through preparedness among the operators to restructure and be innovative.

There are only two IOSMS hubs in Hong Kong, namely GINSMS and CITIC 1616. CITIC 1616 is a subsidiary of CITIC Pacific Limited, a large and strongly capitalized public company with a large portfolio of diversified businesses operating around the world. Despite the strong competition, GINSMS has been able to operate profitably since its formation in 2002, as the volume of SMS routed through its hub has grown substantially.

The use of mobile messaging (particularly the SMS) has been growing rapidly since 2000. The chart below indicates the increase in revenue and traffic on SMS. It shows a strong user acceptance on using messaging services as part of daily activity. The coming 3G and 4G services will further boost the growth of data and messaging business in Asia, especially in China.