EXPLANATORY NOTE
This Amendment on Form 6K of the press release of “Pansoft Announces Fiscal Second-Quarter 2012 Financial Results”, originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 9, 2012, includes a part of Balance Sheet which was missed in the original 6K filing on Page 7, due to technical error occurred to the Edgar converting process.
Company Contact: Pansoft Company Limited Allen Zhang, Chief Financial Officer Phone: +86-531-8887-4455 E-mail:allen.zhang@pansoft.com | Investor Contact: CCG Investor Relations Mr. John Harmon, CFA, Sr. Account Manager Phone: +86-10-8573 1014 (Beijing) E-mail: john.harmon@ccgir.com www.ccgirasia.com |
Pansoft Announces Fiscal Second-Quarter 2012 Financial Results
• Revenues Increased 28.0% Year-over-Year
JINAN, China, March 9, 2012 -- Pansoft Company Limited (NASDAQ: PSOF) (“Pansoft” or the “Company”), a leading ERP software service provider for the oil and gas industry in China, today announced unaudited financial results for the fiscal second quarter of 2012 ended December 31, 2011.
Highlights for Fiscal Second Quarter of 2012:
| • | Revenues were $9.2 million, an increase of 28.0% versus the year-ago quarter |
| • | Gross profit was $2.6 million,a decrease of 16.0% versus the year-ago quarter |
| • | Operating profitwas $1.2 million, compared to $1.6 million in the year-ago quarter |
| • | Net income attributable to Pansoft shareholders was $1.0 million, compared to $1.4 million in the year-ago quarter |
| • | Net income per diluted share attributable to Pansoft shareholders was $0.19, compared to $0.26 in the year-ago quarter |
| • | On February 10, 2012, Pansoft announced that the Special Committee formed to consider an offer by the Company's Chairman Hugh Wang representing Timesway Group Limited, to acquire all outstanding Pansoft shares that it did not already own, engaged Duff & Phelps, LLC as its independent financial advisor. |
Highlights for the First Six Months of Fiscal 2012:
| • | Revenues were $13.5 million, an increase of 25.7% from $10.7 million for the six months ended December 31, 2011 |
| • | Gross profit was $3.6 million,an decrease of 26.1% compared to $4.8 million in the year-ago period |
| • | Operating profit was $0.9 million, compared to $2.7 million in the year-ago period |
| • | Net income attributable to Pansoft common shareholderswas $0.95 million, compared to $2.4 million in the year-ago period |
| • | Net income per diluted share attributable to Pansoft shareholders was $0.17, compared to $0.44 in the year-ago period |
“During the fiscal second quarter, Pansoft achieved strong year-to-year revenue growth that exceeded our expectations due to strong revenue recognition among recently acquired subsidiaries from their major clients at the end of the calendar year, including Langji. We are pleased to have reported a modest profit, as recent acquisitions have started to make a contribution to our bottom line," said Hugh Wang, Pansoft’s Chairman of the Board. "The delay in reaching breakeven at Pansoft-Japan and the slower pace of generating revenue atHongAo continue to pose a challenge for our bottom line results, yet we remain confident that we will successfully execute our strategy to improve profitability at our new ventures.”
Financial Results Highlights for the Fiscal Second-Quarter of 2012
Revenues for the fiscal second quarter ended December 31, 2011 were $9.2 million, compared to $7.2 million in the prior fiscal year, an increase of 28.0%. The year-over-year revenue growth exceeded the Company’s earlier guidance of about 10%, due to: 1) the Langji acquisition, which contributed 8% of revenue growth; 2) HongAo, which contributed 10% of revenue growth, due to in large part because the prior fiscal-year quarter included only two months of revenue; 3) ITLamp, which contributed 7% of the revenue growth due to higher level of business activity; and 4) Pansoft-Japan, which contributed 4% of the revenue increase due to an increase in the scale of its operations. A revenue decline at Pansoft-China hurt total Pansoft revenue growth by 1%. On a quarterly basis, revenues grew 118.0% from $4.2 million in the fiscal first quarter ended September 30, 2011, mainly due to seasonal trends.
Cost of sales was $6.6 million, an increase of 61.1% from $4.1 million in the year-ago quarter. Cost of sales increased faster than revenues, largely due to: 1) higher headcount and therefore, higher compensation expense; 2) start-up losses at Pansoft-Japan, the outsourcing joint venture for testing mobile-phone software; and 3) a higher proportion of lower-margin hardware purchases for clients at the HongAo subsidiary.
Gross profit was $2.6 million, a decrease of 16.0% from $3.1 million from the year-ago quarter. Gross margin was 28.2%, as compared to 42.9% in the year-ago quarter. The decline in the gross margin was mainly due to the aforementioned reasons. On a quarterly basis, the gross margin improved 58 basis points from 22.4% in the fiscal first quarter, primarily due to higher revenues.
Operating expenses were $1.4 million, a decrease of 2.4% from $1.5 million in the year-ago quarter. The decrease in operating expense was mainly due to lower selling expense, professional fees, and stock-based compensation.
Operating profit was $1.2 million, compared to $1.6 million in the year-ago quarter.
Net profit attributable to Pansoft shareholders as $1.0 million, compared to $1.4 million in the year-ago quarter and was mainly due to start-up losses at Pansoft-Japan and higher amortization charges related to recent acquisitions.
Net profit per diluted share attributable to Pansoft shareholders was $0.19, as compared to $0.26 in the year-ago quarter.
Financial Results Highlights for the First Six Months of Fiscal 2012
Revenues for the six months ended December 31, 2011 were $13.5 million, compared to $10.7 million in the same period last year, an increase of 25.7%. Cost of sales was $9.9 million, an increase of 67.9% from $5.9 million in the six months ended December 31, 2010. Gross profit was $3.6 million, a decrease of 26.1% from $4.8 million in the six months ended December 31, 2010. Gross margin was 26.4%, compared to 44.9% in the six months ended December 31, 2010. Operating expenses were $2.7 million, an increase of 25.9% from $2.1 million in the six months ended December 31, 2010. Operating profit was $0.9 million, compared to $2.7 million in the six months ended December 31, 2010. Net income attributable to Pansoft shareholders was $1.0 million, compared to $2.4 million in the corresponding period in 2010. Net profit per diluted share attributable to Pansoft shareholders was $0.17, compared to $0.44 in the corresponding period in 2010.
Subsidiary Performance
The Company reports financial results for four subsidiaries: (1) Pansoft-China with major business focusing on design, development, implementation and servicing of ERP systems for the energy industry such as oil/gas and coal mining; (2) HongAo, which provides technology solutions and related services to the thermal power industry; (3) Pansoft-Japan, which provides outsourcing services for mobile-phone software testing and development; and 4) Langji, which focuses on human-resource management software solution development and for sale to the coal mining industry
| · | Pansoft-China and ITLamprepresent the core business of the Company and are engaged in the design, development, implementation and servicing of ERP systems for the energy industry such as oil/gas and coal mining, which together contributed 61.0% of total revenue for the fiscal second quarter ended December 31, 2011. In the quarter, revenues were $5.6 million, and net income was $1.4 million. ITLamp, which was acquired in June 2010, operates as an oilfield software development and service provider, primarily serving the Tarim Oilfield in Xinjiang province. In the quarter, ITLamp recorded revenues of $1.0 million (10.6% of quarterly revenue) and net income of $0.2 million. |
| · | HongAo,in which Pansoftacquired a 55.01% stake in October 2010, serves the thermal power industry as a technical service provider in Shandong province. Net revenues were $2.5 million (26.7% of quarterly revenue), and net income was $0.01 million. |
| · | Pansoft-Japan was established in August 2010 to provide outsourcing functions for Japanese clients, initially in the area of cell-phone software testing. The new testing operation was set up in Jinan, China with a front office in Osaka, Japan. Pansoft-Japan continues to incur start-up losses exceeding initial budget expectations. Net revenues were $0.5 million (5.7% of quarterly revenue) and the net loss was $0.3 million. |
| · | Langji, which Pansoft acquired in October 2011, serves China’s coal-mining industry as a leading HR solution provider. Net revenues were $0.6 million (6.5% of quarterly revenue) and net income was $0.09 million. |
| | Pansoft Segment Income Statement
Three Months Ended December 31, 2011 | |
| (in USD) | | | | | | | | | | | | | | | | | | | | |
| | Pansoft-CN + ITLamp | | | HongAo | | | Pansoft-JP | | | LangJi | | | Total | |
| Revenues | | $ | 5,639,279 | | | $ | 2,467,771 | | | $ | 530,071 | | | $ | 602,916 | | | $ | 9,240,037 | |
| Cost of revenues | | | 3,525,062 | | | | 2,027,765 | | | | 730,412 | | | | 353,471 | | | | 6,636,710 | |
| Gross profit | | | 2,114,217 | | | | 440,006 | | | | (200,341 | ) | | | 249,445 | | | | 2,603,327 | |
| Total operating expenses | | | 697,395 | | | | 429,003 | | | | 140,144 | | | | 156,712 | | | | 1,423,254 | |
| Income from operations | | | 1,416,822 | | | | 11,003 | | | | (340,485 | ) | | | 92,733 | | | | 1,180,073 | |
| | Pansoft Segment Income Statement
Six Months Ended December 31, 2011 | |
| (in USD) | | | | | | | | | | | | | | | | | | | | |
| Revenues | | $ | 8,464,106 | | | $ | 3,356,022 | | | $ | 1,056,303 | | | $ | 602,916 | | | $ | 13,479,347 | |
| Cost of revenues | | | 5,460,523 | | | | 2,577,651 | | | | 1,532,877 | | | | 353,471 | | | | 9,924,522 | |
| Gross profit | | | 3,003,583 | | | | 778,371 | | | | (476,574 | ) | | | 249,445 | | | | 3,554,825 | |
| Total operating expenses | | | 1,351,238 | | | | 839,985 | | | | 308,690 | | | | 156,712 | | | | 2,656,625 | |
| Income from operations | | | 1,652,345 | | | | (61,614 | ) | | | (785,264 | ) | | | 92,733 | | | | 898,200 | |
Financial Condition
As of December 31, 2011, Pansoft had $10.8 million in cash and equivalents, as compared to $3.7 million as of June 30, 2011. Cash and cash equivalents exclude $1.1 million in short-term investments, versus $6.8 million as of June 30, 2011, as some certificates of deposit had matured during the quarter and were turned into cash. Total current assets were $29.1 million, as of December 31, 2011, versus $24.1 million as of June 30, 2011, including a $3.8 million increase in accounts receivable. Current liabilities were $11.5 million as of September 30, 2011, up from $6.8 million as of June 30, 2011. Total stockholders’ equity was $25.0 million as of December 31, 2011 versus $23.5 million as of June 30, 2011.
Recent Developments
On February 10, 2012, Pansoft announced that the Special Committee formed to consider an offer by the Company's Chairman Hugh Wang representing Timesway Group Limited, to acquire all outstanding Pansoft shares that it did not already own, engaged Duff & Phelps, LLC as its independent financial advisor. In addition, the Special Committee retained Morgan, Lewis & Bockius, LLP to serve as its United States legal counsel and Maples and Calder to serve as its British Virgin Islands legal counsel.
On January 7, 2012, the Company’s Board of Directors received an offer from Chairman Hugh Wang, representing Timesway Group Limited, to acquire all outstanding Pansoft shares that it did not already own at a price of $3.76 per share. Timesway Group Limited is controlled by Chairman High Wang and CEO Guoqiang Li, and had voting power over 64% of the Company’s voting securities as of June 30, 2011.
The Special Committee is continuing its evaluation of the offer. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.
Business Outlook
Pansoft continues to expand its team for future business growth. The Company will continue to focus on the coal mining and oil field markets, with a priority on software solutions and project development under the Business Process Management System. “We plan to provide a business update for the remaining quarters of 2012 fiscal year when visibility improves,” concluded Mr. Wang.
About Pansoft Company Limited
Pansoft is a leading enterprise resource planning (“ERP”) software and professional services provider for the oil and gas industry in China. Its ERP software offers comprehensive solutions in various business operations including accounting, order processing, delivery, invoicing, inventory control, and customer relationship management. For more information visit http://www.pansoft.com.
Forward-Looking Statements
This press release contains forward-looking statements concerning Pansoft Company Limited, including but are not limited to, statements regarding Pansoft’s acquisition strategies, projected revenue growth, contracts with customers, timing of development projects, and efforts to achieve business growth. The actual results may differ materially depending on a number of risk factors including but not limited to, the following: general economic and business conditions, development, shipment and market acceptance of products, additional competition from existing and new competitors, purchase cycle of major customers, changes in technology or product techniques, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risk factors detailed in the Company's reports filed with the Securities and Exchange Commission. Pansoft Company Limited undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
Pansoft Company Limited
Consolidated Statements of Operations and Comprehensive Income
For the Three- and Six-month ended December 31, 2011 and 2010
(in U.S. Dollars)
| | For the Three months ended Dec 31, | | | For the Six months ended Dec. 31, | |
| | | 2011 | | | 2010 | | | 2011 | | | 2010 | |
| | | | | | | | | | | | | |
| Sales | | $ | 9,240,037 | | | | 7,217,736 | | | $ | 13,479,347 | | | | 10,724,068 | |
| Cost of sales | | | 6,636,710 | | | | 4,119,349 | | | | 9,924,522 | | | | 5,912,196 | |
| Gross profit | | | 2,603,327 | | | | 3,098,387 | | | | 3,554,825 | | | | 4,811,872 | |
| Expenses | | | | | | | | | | | | | | | | |
| General and administrative expenses | | | 785,932 | | | | 616,681 | | | | 1,397,504 | | | | 1,032,161 | |
| Amortization expenses of the intangible assets | | | 311,038 | | | | 330,533 | | | | 552,396 | | | | 330,533 | |
| Selling expenses | | | 220,742 | | | | 328,078 | | | | 426,702 | | | | 403,549 | |
| Professional fees | | | 71,140 | | | | 123,229 | | | | 190,255 | | | | 188,527 | |
| Stock based compensation | | | 33,923 | | | | 59,505 | | | | 80,618 | | | | 154,354 | |
| (Gain) on disposition of property and equipment | | | 478 | | | | 366 | | | | 9,148 | | | | 366 | |
| | | | 1,423,253 | | | | 1,458,392 | | | | 2,656,623 | | | | 2,109,490 | |
| Income from operations | | | 1,180,074 | | | | 1,639,995 | | | | 898,202 | | | | 2,702,382 | |
| | | | | | | | | | | | | | | | | |
| Fair value change on liabilities (P&L) | | | 53,832 | | | | 53,832 | | | | - | | | | | |
| Extinguishment of liabilities | | | (1,753 | ) | | | (1,753 | ) | | | - | | | | | |
| Other income (expenses), net | | | 132,420 | | | | (1,777 | ) | | | 218,886 | | | | (3,712 | ) |
| Government Subsidy | | | 115,405 | | | | 157,655 | | | | 134,104 | | | | 201,755 | |
| Finance cost | | | (1,242 | ) | | | (15,922 | ) | | | 3,099 | | | | (22,710 | ) |
| Impairment loss on intangible assets | | | - | | | | - | | | | - | | | | | |
| Interest income | | | 4,053 | | | | 68,508 | | | | 6,273 | | | | 141,341 | |
| | | | | | | | | | | | - | | | | - | |
| Income before provision from income taxes | | | 1,482,789 | | | | 1,848,459 | | | | 1,312,643 | | | | 3,019,056 | |
| | | | | | | | | | | | | | | | | |
| Provision for current income taxes | | | 712,198 | | | | 603,288 | | | | 714,728 | | | | 603,288 | |
| Provision for deferred income taxes | | | (381,291 | ) | | | (192,910 | ) | | | (367,629 | ) | | | (15,409 | ) |
| Net income | | | 1,151,882 | | | | 1,438,081 | | | | 965,544 | | | | 2,431,177 | |
| | | | | | | | | | | | | | | | - | |
| Less: Net Income attributable to noncontrolling interests | | | 112,343 | | | | 52,579 | | | | 10,881 | | | | 52,579 | |
| | | | | | | | | | | | | | | | | |
| Net Income attributable to Pansoft Common Shareholders | | | 1,039,538 | | | | 1,385,501 | | | | 954,662 | | | | 2,378,598 | |
| | | | | | | | | | | | | | �� | | - | |
| Other comprehensive (loss) income | | | 512,853 | | | | 188,640 | | | | 491,242 | | | | 389,844 | |
| | | | | | | | | | | | | | | | | |
| Comprehensive income | | $ | 1,552,391 | | | | 1,574,141 | | | $ | 1,445,905 | | | | 2,768,442 | |
| | | | | | | | | | | | | | | | | |
| Basic net income per share | | $ | 0.19 | | | | 0.26 | | | $ | 0.18 | | | | 0.44 | |
| | | | | | | | | | | | | | | | - | |
| Diluted net income per share | | $ | 0.19 | | | | 0.26 | | | $ | 0.17 | | | | 0.44 | |
| | | | | | | | | | | | | | | | - | |
| Basic weighted average number of | | | - | | | | | | | | | | | | | |
| shares outstanding | | | 5,389,323 | | | | 5,438,232 | | | | 5,389,323 | | | | 5,438,232 | |
| | | | | | | | | | | | | | | | - | |
| Diluted weighted average number of | | | - | | | | | | | | | | | | | |
| shares outstanding | | | 5,572,695 | | | | 5,467,087 | | | | 5,572,695 | | | | 5,467,087 | |
Pansoft Company Limited
Consolidated Balance Sheet
(in U.S. Dollars)
| | Dec 31, | | | June 30, | |
| | | 2011 | | | 2011 | |
| Assets | | | | | | | | |
| Current assets | | | | | | | | |
| Cash and cash equivalents | | $ | 10,818,202 | | | | 3,680,716 | |
| Account receivables, net | | | 7,454,416 | | | | 3,678,463 | |
| Unbilled revenues, net | | | 4,292,659 | | | | 7,025,926 | |
| Prepayment, deposits and other receivables | | | 3,379,305 | | | | 1,868,101 | |
| Deferred and prepaid expenses | | | 80,757 | | | | - | |
| Inventory | | | 2,005,872 | | | | 1,010,582 | |
| Short term investments | | | 1,063,340 | | | | 6,829,841 | |
| | | | | | | | | |
| Total current assets | | | 29,094,551 | | | | 24,093,629 | |
| | | | | | | | | |
| Non-current assets | | | | | | | | |
| Property and equipment, net | | | 2,321,303 | | | | 2,312,590 | |
| Deposit for acquisitions | | | - | | | | - | |
| Long term equity investment | | | 29,188 | | | | 28,418 | |
| Deferred software development cost | | | 170,943 | | | | - | |
| Intangible assets | | | 2,583,847 | | | | 2,706,197 | |
| Goodwill on acquisition | | | 2,364,428 | | | | 1,373,708 | |
| | | | | | | | | |
| Total assets | | $ | 36,564,260 | | | | 30,514,542 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable | | $ | 2,044,478 | | | | 969,998 | |
| Accrual and other current liabilities | | | 2,490,456 | | | | 2,012,202 | |
| Acquisition payable | | | 1,978,318 | | | | 525,709 | |
| Short-term borrowing | | | - | | | | - | |
| Deferred revenue | | | 2,704,945 | | | | 2,048,859 | |
| Income tax payable | | | 607,803 | | | | 31,667 | |
| Deferred income taxes | | | 551,415 | | | | 570,711 | |
| Unearned government research revenue | | | 1,165,223 | | | | 683,286 | |
| | | | | | | | | |
| Total current liabitilies | | | 11,542,638 | | | | 6,842,432 | |
| | | | | | | | | |
| Non - Current liabilities | | | | | | | | |
| Deferred income taxes | | | - | | | | 181,611 | |
| | | | | | | | | |
| Total Liabilities | | | 11,542,638 | | | | 7,024,043 | |
| Shareholders' equity | | | | | | |
| Common stock (30,000,000 common | | | | | | |
| shares authorized; par value of $0.0059 | | | | | | |
| per share; 5,438,232 shares issued and | | | | | | |
| outstanding as of June 30, 2009) | | | | | | |
| Share capital | | | 32,080 | | | | 32,080 | |
| Treasury stocks, at cost | | | (641,714 | ) | | | (503,602 | ) |
| Additional paid-in capital | | | 9,468,626 | | | | 9,281,753 | |
| Retained earnings | | | 10,083,517 | | | | 9,782,874 | |
| Statutory reserves | | | 1,567,475 | | | | 1,429,858 | |
| Non-controlling interests | | | 2,471,488 | | | | 1,940,239 | |
| Accumulated other comprehensive income | | | 2,040,150 | | | | 1,527,297 | |
| Total stockholders's equity | | | 25,021,622 | | | | 23,490,499 | |
| | | | | | | | | |
| Total liabilities and stockholders equity | | $ | 36,564,260 | | | | 30,514,542 | |
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