GINSMS Restates Interim Financial Statements for Q1 to Q3 2013

CALGARY, ALBERTA--(Marketwired - Feb. 26, 2015) - GINSMS Inc. (TSX VENTURE:GOK) (the "Company") announced today that it is proceeding with a restatement and refilling of its interim financial statements and related MD&A for the three-month period ended June 30, 2013, the six-month period ended September 30, 2013 and the nine-month period ended December 31, 2013.

On August 8, 2013, the Company announced that the Profit, as such term is defined in the January 12, 2012 Share Purchase Agreement entered into among, inter alia, the Company and Inphosoft Pte Ltd. (the "Share Purchase Agreement"), as amended, for the fifteen-month period ended March 31, 2013 was $380,792. Pursuant to the Share Purchase Agreement, this lead to the release from escrow in favour of Inphosoft Pte Ltd. of convertible debentures with principal amount of $609,267 leaving the Company with issued and outstanding convertible debentures having an aggregate principal amount of $9,109,267. The resulting adjustment to the contingent consideration of approximately $109,000 was initially recorded as "other comprehensive income" in the Company's June 30, 2013, September 30, 2013 and December 31, 2013 interim financial statements based upon an estimate which was derived from factors then available to the Company as at the date of such interim financial statements.

In connection with preparation of the March 31, 2014 financial statements, the Company obtained a third-party appraisal of the convertible debentures. Based on this third-party appraisal, the Company increased the fair value of the convertible debentures by approximately $72,000 with a related increase in accretion of approximately $64,000. In the preparation of the audited financial statements for the financial year ended March 31, 2014 this adjustment was included in the computation of "net loss" as part of operating income instead of "other comprehensive income", with no adjustment to the purchase price allocation recorded on the acquisition date.

In the March 31, 2014 audited financial statements, the auditors have also reclassified the depreciation of development costs, computer and office equipment from the operating expenses to the costs of sales to reflect the revenue-generating nature of these assets.

In view of the reclassification of the fair value adjustment of convertible debentures and the depreciation of development costs, computer and office equipment for the year ended March 31, 2014, the Company has decided to proceed with a reclassification of the fair value adjustment and depreciation in each of its June 30, 2013, September 30, 2013 and December 31, 2013 interim financial statements using the same classification used in its March 31, 2014 audited financial statements. This is being done to be consistent with the classification used in the March 31, 2014 audited financial statements.