Exhibit 99.1
Pansoft Company Limited Allen Zhang, Chief Financial Officer Phone: +86-531-8887-1159 Email: allen.zhang@pansoft.com | CCG Investor Relations Inc. Mr. Crocker Coulson, President Phone: +1-646-213-1915 (New York) Email: crocker.coulson@ccgir.com www.ccgirasia.com |
Pansoft Announces Third Fiscal Quarter 2010 Financial Results
JINAN, China, May 13, 2010, 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 financial results for the third fiscal quarter ended March 31, 2010.
Highlights for the Third Quarter 2010
| l | Total revenues were $2.3 million, an increase of 62% compared to $1.4 million for the quarter ended March 31, 2009 |
| l | Gross profit was $1.43 million, an increase of 120% compared to $0.65 million for the quarter ended March 31, 2009 |
| l | Gross margin was 62%, compared to 46% in the for the quarter ended March 31, 2009 |
| l | Operating profit was $0.8 million, an increase of 352% compared to $0.2 million for the quarter ended March 31, 2009 |
| l | Net income was $0.72 million, an increase of 145% compared to $0.3 million for the quarter ended March 31, 2009 |
| l | Diluted earnings per share was $0.13, an increase of 117% compared to $0.06 for the quarter ended March 31, 2009 |
| l | Adjusted net income excluding share-based compensation expenses was $0.8 million, an increase of 67% compared to $0.5 million for the quarter ended March 31, 2009. |
| l | Adjusted Diluted EPS excluding share-based compensation expenses was $0.14, an increase of 59% compared to $0.09 for the quarter ended March 31, 2009 |
On December 11, 2009, Pansoft’s Board of Directors authorized a change in the Company's fiscal year end to June 30 from December 31 because the new fiscal year end is more consistent with the purchasing cycle of its major customers. As a result of this change, the quarter ended March 31, 2010 represents the third quarter of the fiscal year ending June 30, 2010.
“We are very pleased to report another strong quarter with record growth in both our top and bottom line financial results,” said Guoqiang Lin, Pansoft’s CEO. “We continue to benefit from strong demand for our proprietary ERP systems from our existing client base. The growth in revenue demonstrates strong market demand and clear technological competitive advantages for Pansoft. Our newly established departments also contributed to improvement in our operational efficiency and supporting structure. We continue to expand our business organically and through acquisitions in order to expand our product portfolio and customer base. We believe the Company will benefit from these initiatives in the long run.”
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“We have delivered a solid performance in the third quarter, usually a slower quarter due to the high seasonality of our business. The strong financial performance in this quarter included strong growth in revenue and profits as well as improvement in our gross margin” added Allen Zhang, Pansoft’s Chief Financial Officer. “We are on target to deliver profitable organic growth and expect to exceed our expectations with the recent acquisitions.”
Financial Results Highlights for the Three Months Ended March 31, 2009
Total revenue for the three months ended March 31, 2010 was $2.3 million, a 62% increase from $1.4 million in the three months ended March 31, 2009. The increase in revenue was mostly due to the increased number and value of contracts for Pansoft’s core services and solutions business.
Cost of sales was $0.9 million, an increase of 13% from $0.8 million in the three months ended March 31, 2009. Cost of sales increased at a slower pace than revenue as a result of continued cost control measures designed to contain expenses.
Gross profit in the quarter was $1.43 million, an increase of 120% from $0.65 million in three months ended March 31, 2009. Gross margin was 62%, compared to 46% in three months ended March 31, 2009.
Operating expenses were $0.64 million, an increase of 34% from $0.48 million in the three months ended March 31, 2009.
Operating profit was $0.8 million, an increase of 352% from $0.2 million in the three months ended March 31, 2009. Operating margin was 35% compared to 12% in three months ended March 31, 2009.
Net income was $0.7 million, an increase of 145% from $0.3 million in the corresponding period in 2009. The significant increase in our operating and net profit was due to a substantial increase in revenues from our major contracts and reduction of operating expenses.
Diluted earnings per share were $0.13, an increase of 117% from $0.06 in the corresponding period in 2009. Adjusted Diluted EPS excluding share-based compensation expenses was $0.14, an increase of 59% compared to $0.09 for three months ended March 31, 2009.
Financial Results Highlights for the Nine Months ended March 31, 2010
Total revenue for the nine months ended March 31, 2010 was $9.4 million, an increase of 36% from $6.9 million in the nine months ended March 31, 2009. The increase in revenue was mainly due to the strong market demand for Pansoft’s technology and solutions. This is consistent with the Company’s strategy to establish Pansoft as the premier ERP system provider and differentiate itself through its competitive advantages.
Cost of sales was $4.2 million, an increase of 35% from $3.1 million in the nine months ended in 2009, and in line with revenue growth.
Gross profit was $5.2 million, an increase of 36% from $3.8 million in the nine months ended in 2009. Gross margin was 55%, unchanged from the nine months ended March 31, 2009.
Operating expenses were $1.6 million, an increase of 29% from $1.3 million in nine months ended in 2009. Operating expenses consist primarily of general and administrative expenses, selling expenses, professional fees and stock option expenses. The increase in operating expenses was mainly due to the increase in stock based compensation and public listing expenses, which accounted for 24% and 20% of total operating expenses, respectively. The significant increase in selling expenses was another factor that contributed to the increase in operating expenses, primarily due to more human resource costs allocated to Sales and Marketing department established the first quarter of 2009 and with an enlarged team in this reporting period.
Operating profit was $3.5 million, an increase of 40% from $2.5 million in nine months ended March 31, 2009. Operating margin was 38%, compared to 36% in nine months ended March 31, 2009.
Net income was $3.3 million, an increase of 38% from $2.4 million in the corresponding period in 2009. Adjusted net income, excluding stock-based compensation totaled $3.8 million, an increase of 38% compared to $2.7 million in the nine months ended March 31, 2009. Diluted earnings per share were $0.60, an increase of 48% from $0.48 in the corresponding period in 2009. Adjusted diluted EPS excluding share-based compensation expenses was $0.69, an increase of 24% from $0.56 for the nine months ended March 31, 2009.
As of March 31, 2009, Pansoft’s cash and cash equivalents is $13.5 million, an increase of 19% compared to $11.3 million in June 30, 2009. The increase in cash and cash equivalents was primarily a result of increased collection of accounts receivable in the previous quarter.
Recent Development
In April 2010, Pansoft has signed a term sheet to acquire 55% equity of Shandong Hongao Power Technology Co., Ltd, for approximately $2.6 million. Hongao Power is a leading IT based energy-saving and pollution-reducing solution and service provider for thermal power works.
In March 2010, Pansoft announced that it has co-founded and will serve as the Vice Chairman of the China Overseas Listed Corporations Association, which was established on March 7, 2010.
In March 2010, Pansoft presented at the Rodman & Renshaw Annual China Investment Conference in Beijing, China.
Pansoft expects to achieve a sustainable organic growth in the quarters ahead driven by strong demand for its services and solutions from its existing customer base. The Company also expects to supplement its organic growth and through acquisitions that can expand its customer base, geographic reach as well as portfolio of solutions and capabilities.
Through its recent and prospective acquisitions, Pansoft expects to be able to target a larger customer base and offer a great service and solution selection to both existing and new customers.
For the fiscal year ending in June 30, 2010, Pansoft expects to be on track with steady growth and affirms the guidance of achieving a fiscal year-over-year growth rate of 40% in revenue, excluding revenue contributions from mergers and acquisitions.
“We continue to look for potential acquisition targets on an opportunistic basis to accelerate our expansion for the rest of the fiscal year. We aim to become the provider of choice with variety of software solutions and services to a wider range of industries and client base aiming both domestic and international clientele and different technologies and markets.” said Hugh Wang, Chairman of Board.
Adjusted Financial Measures
This release contains adjusted financial measures. These adjusted financial measures, which are used as measures of the Company’s performance, should be considered in addition to, not as a substitute for, measures of the Company’s financial performance prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”). The Company’s adjusted financial measures may be defined differently than similar terms used by other companies. Accordingly, care should be exercised in understanding how the Company defines its adjusted financial measures.
Reconciliations of the Company’s adjusted measures to the nearest GAAP measures are set forth in the section below titled “Reconciliation of adjusted to GAAP Results.” These adjusted measures include adjusted gross profit, adjusted operating expenses, adjusted income from operations, non-GAAP net income, adjusted diluted net income per share and adjusted gross margin.
The Company’s management uses adjusted financial measures to gain an understanding of the Company’s comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects. The Company’s adjusted financial measures exclude certain special items, including stock-based compensation charge from its internal financial statements for purposes of its internal budgets. Adjusted financial measures are used by the Company’s management in their financial and operating decision-making, because management believes they reflect the Company’s ongoing business in a manner that allows meaningful period-to-period comparisons. The Company’s management believes that these adjusted financial measures provide useful information to investors and others in the following ways: 1) in understanding and evaluating the Company’s current operating performance and future prospects in the same manner as management does, if they so choose, and 2) in comparing in a consistent manner the Company’s current financial results with the Company’s past financial results.
The Company’s management believes excluding stock-based compensation from its adjusted financial measures is useful for itself and investors, as such expense will not result in future cash payment and is not an indicator used by management to measure the Company’s core operating results and business outlook.
The adjusted financial measures have limitations. They do not include all items of income and expense that affect the Company’s operations. Specifically, these adjusted financial measures are not prepared in accordance with GAAP, may not be comparable to adjusted financial measures used by other companies and, with respect to the adjusted financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to the Company. Management compensates for these limitations by also considering the Company’s financial results as determined in accordance with GAAP.
Conference Call Information
The Company will host a conference call at 8:00 a.m. ET on May 13, 2010 (8:00 p.m. Beijing Time) to review the Company's financial results and answer questions.
To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (877) 369-6556. International callers should dial +1 (706) 758-6238. The conference ID for the call is 74501404.
If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Friday, May 14, 2010 at 10:00 a.m. ET. To access the replay, dial +1 (800) 642-1687. International callers should dial +1 (706) 645-9291 and enter the conference ID 74501404.
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.
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 Ltd.
Unaudited Consolidated Statements of Income and Comprehensive Income
For the three and nine month periods ended March 31, 2010 and 2009
(In US Dollars)
| | | (Unaudited) | | | (Unaudited) | |
| | | For Three Months Ended March 31 | | | For Nine Months Ended March 31 | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | | | | | | | | | | | |
| Sales | | | 2,306,442 | | | | 1,422,086 | | | | 9,422,088 | | | | 6,936,532 | |
| Cost of sales | | | 868,730 | | | | 768,042 | | | | 4,232,634 | | | | 3,133,320 | |
| | | | | | | | | | | | | | | | | |
| Gross profit | | | 1,437,712 | | | | 654,044 | | | | 5,189,454 | | | | 3,803,212 | |
| Expenses | | | | | | | | | | | | | | | | |
| General and administrative expenses | | | 392,419 | | | | 160,037 | | | | 628,818 | | | | 646,491 | |
| Selling expenses | | | 35,175 | | | | 62,097 | | | | 290,092 | | | | 91,612 | |
| Professional fees | | | 108,173 | | | | 83,561 | | | | 325,610 | | | | 162,096 | |
| Stock based compensation | | | 98,963 | | | | 171,921 | | | | 401,217 | | | | 374,933 | |
| Gain on disposition of property& equipment | | | 2,668 | | | | (732 | ) | | | 1,704 | | | | (916 | ) |
| | | | 637,398 | | | | 476,884 | | | | 1,647,441 | | | | 1,274,216 | |
| | | | | | | | | | | | | | | | | |
| Income from operations | | | 800,314 | | | | 177,160 | | | | 3,542,013 | | | | 2,528,996 | |
| | | | | | | | | | | | | | | | | |
| Other income (expenses), net | | | | | | | | | | | 17,035 | | | | 13,995 | |
| Government grant | | | 18,894 | | | | 146,325 | | | | 18,941 | | | | 146,325 | |
| Finance cost | | | 6,323 | | | | (389 | ) | | | 4,393 | | | | (4,169 | ) |
| Interest income | | | 67,805 | | | | 39,526 | | | | 154,367 | | | | 123,343 | |
| | | | | | | | | | | | | | | | | |
| Income before provision from income taxes | | | 893,336 | | | | 362,622 | | | | 3,736,749 | | | | 2,808,490 | |
| Provision for current income taxes | | | 142,999 | | | | - | | | | 213,645 | | | | 197,563 | |
| Provision for deferred income taxes | | | 31,093 | | | | 69,496 | | | | 271,020 | | | | 260,129 | |
| | | | | | | | | | | | | | | | | |
| Net income | | | 719,244 | | | | 293,126 | | | | 3,252,084 | | | | 2,350,798 | |
| | | | | | | | | | | | | | | | | |
| Other comprehensive (loss) income | | | 3,014 | | | | (29,060 | ) | | | 12,749 | | | | 5,433 | |
| | | | | | | | | | | | | | | | | |
| Comprehensive income | | | 722,258 | | | | 264,066 | | | | 3,239,335 | | | | 2,356,231 | |
| | | | | | | | | | | | | | | | | |
| Basic and diluted net income per share | | | 0.13 | | | | 0.06 | | | | 0.60 | | | | 0.48 | |
| | | | | | | | | | | | | | | | | |
| Basic and diluted weighted average number of share outstanding | | | 5,438,232 | | | | 4,910,363 | | | | 5,438,232 | | | | 4,910,363 | |
Pansoft Company Ltd.
Consolidated Balance Sheet
(In US Dollars)
| | | | | | March 31, | | | June 30, | |
| | | | | | 2010 | | | 2009 | |
| | | | | | (Unaudited) | | | (Audited) | |
| Assets | | | | | | | | | |
| Current assets | | | | | | | | | |
| Cash and cash equivalents | | | | | $ | 13,502,977 | | | | 11,330,991 | |
| Account receivables, net | | | | | | 1,598,307 | | | | 801,364 | |
| Unbilled revenues | | | | | | 5,214,566 | | | | 3,058,275 | |
| Prepayment, deposits and other receivables | | | | | | 160,543 | | | | 193,132 | |
| Inventory | | | | | | 97,831 | | | | 145,978 | |
| Income tax receivable | | | | | | - | | | | - | |
| Total current assets | | | | | | 20,574,224 | | | | 15,529,740 | |
| | | | | | | | | | | | |
| Non-current assets | | | | | | | | | | | |
| Property and equipment, net | | | | | | 748,035 | | | | 719,838 | |
| Deferred software development cost | | | | | | - | | | | 36,600 | |
| | | | | | | | | | | | |
| Total assets | | | | | $ | 21,322,259 | | | | 16,286,178 | |
| | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | |
| Current liabilities | | | | | | | | | | | |
| Accounts payable and accrued liabilities | | | | | $ | 488,237 | | | | 139,214 | |
| Deferred revenue | | | | | | 691,971 | | | | 79,275 | |
| Income tax payable | | | | | | 143,033 | | | | 6,108 | |
| Deferred income taxes | | | | | | | 562,519 | | | | 291,132 | |
| Total current liabilities | | | | | | | 1,885,760 | | | | 515,729 | |
| Long term liabilities | | | | | | | | | | | | |
| Deferred income taxes | | | | | | | - | | | | - | |
| Total liabilities | | | | | | | 1,885,760 | | | | 515,729 | |
| 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 September 30, 2009) | | | | | | | | | | | | |
| Share capital | | | | | | | 32,080 | | | | 32,080 | |
| Additional paid-in capital | | | | | | | 8,965,245 | | | | 8,564,028 | |
| Retained earnings | | | | | | | 8,990,066 | | | | 6,184,359 | |
| Statutory reserves | | | | | | | 809,440 | | | | 363,063 | |
| Accumulated other comprehensive income | | | | | | | 639,668 | | | | 626,919 | |
| Total stockholders' equity | | | | | | | 19,436,499 | | | | 15,770,449 | |
| Total liabilities and stockholders’ equity | | | | | | | 21,322,259 | | | | 16,286,178 | |
Pansoft Company Ltd.
RECONCILIATION OF ADJUSTED FINANCIALS TO GAAP RESULTS
(In US Dollars)
| | | For Three Months Ended March,31 | |
| | | Actual Results | | | Adjustment | | | Adjusted Results | | | Actual Results | | | Adjustment | | | Adjusted Results | |
| | | 2010 | | | | | | 2010 | | | 2009 | | | | | | 2009 | |
| Sales | | | 2,306,442 | | | | | | | 2,306,442 | | | | 1,422,086 | | | | | | | 1,422,086 | |
| Cost of sales | | | 868,730 | | | | | | | 868,730 | | | | 768,042 | | | | | | | 768,042 | |
| Gross profit | | | 1,437,712 | | | | | | | 1,437,712 | | | | 654,044 | | | | | | | 654,044 | |
| Expenses | | | | | | | | | | | | | | | | | | | | |
| General and administrative expenses | | | 392,419 | | | | | | | 392,419 | | | | 160,037 | | | | | | | 160,037 | |
| Selling expenses | | | 35,175 | | | | | | | 35,175 | | | | 62,097 | | | | | | | 62,097 | |
| Professional fees | | | 108,173 | | | | | | | 108,173 | | | | 83,561 | | | | | | | 83,561 | |
| Stock based compensation | | | 98,963 | | | (98,963) | | | | | | | | 171,921 | | | (171,921) | | | | - | |
| Gain on disposition of property and equipment | | | 2,668 | | | (a) | | | | 2,668 | | | | (732 | ) | | (a) | | | | (732 | ) |
| Total Expenses | | | 637,398 | | | | | | | 538,435 | | | | 476,884 | | | | | | | 304,963 | |
| | | | | | | | | | | | | | | | | | | | | |
| Income from operations | | | 800,314 | | | | | | | 899,277 | | | | 177,160 | | | | | | | 349,081 | |
| Other income (expenses), net | | | - | | | | | | | - | | | | | | | | | | | |
| Government grant | | | 18,894 | | | | | | | 18,894 | | | | 146,325 | | | | | | | 146,325 | |
| Finance cost | | | 6,323 | | | | | | | 6,323 | | | | (389 | ) | | | | | | (389 | ) |
| Interest income | | | 67,805 | | | | | | | 67,805 | | | | 39,526 | | | | | | | 39,526 | |
| Income before provision from income taxes | | | 893,336 | | | | | | | 992,299 | | | | 362,622 | | | | | | | 534,543 | |
| Provision for current income taxes | | | 142,999 | | | | | | | 142,999 | | | | | | | | | | | |
| Provision for deferred income taxes | | | 31,093 | | | | | | | 70,800 | | | | 69,496 | | | | | | | 69,496 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income | | | 719,244 | | | | | | | 778,500 | | | | 293,126 | | | | | | | 465,047 | |
| | | | | | | | | | | | | | | | | | | | | |
| Other comprehensive (loss) income | | | 3,014 | | | | | | | 3,092 | | | | (29,060 | ) | | | | | | (29,060 | ) |
| Comprehensive income | | | 722,258 | | | | | | | 781,592 | | | | 264,066 | | | | | | | 435,987 | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic and diluted net income per share | | | 0.13 | | | | | | | 0.14 | | | | 0.06 | | | | | | | 0.09 | |
| Basic and diluted weighted average number of shares outstanding | | | 5,438,232 | | | | | | | 5,438,232 | | | | 4,910,363 | | | | | | | 4,910,363 | |
| (a) | To adjust stock-based compensation charges |
Pansoft Company Ltd.
RECONCILIATION OF ADJUSTED FINANCIALS TO GAAP RESULTS
(In US Dollars)
| | | For Nine Months Ended March,31 | |
| | | Actual Results | | | Adjustment | | | Adjusted Results | | | Actual Results | | | Adjustment | | | Adjusted Results | |
| | | 2010 | | | | | | 2010 | | | 2009 | | | | | | 2009 | |
| Sales | | | 9,422,088 | | | | | | | 9,422,088 | | | | 6,936,532 | | | | | | | 6,936,532 | |
| Cost of sales | | | 4,232,634 | | | | | | | 4,232,634 | | | | 3,133,320 | | | | | | | 3,133,320 | |
| Gross profit | | | 5,189,454 | | | | | | | 5,189,454 | | | | 3,803,212 | | | | | | | 3,803,212 | |
| Expenses | | | | | | | | | | | | | | | | | | | | | | |
| General and administrative expenses | | | 628,818 | | | | | | | 628,818 | | | | 646,491 | | | | | | | 646,491 | |
| Selling expenses | | | 290,092 | | | | | | | 290,092 | | | | 91,612 | | | | | | | 91,612 | |
| Professional fees | | | 325,610 | | | | | | | 325,610 | | | | 162,096 | | | | | | | 162,096 | |
| Stock based compensation | | | 401,217 | | | (401,217) | | | | | | | | 374,933 | | | (374,933) | | | | - | |
| Gain on disposition of property and equipment | | | 1,704 | | | (b) | | | | 1,704 | | | | (916 | ) | | (b) | | | | (916 | ) |
| Total Expenses | | | 1,647,441 | | | | | | | | 1,246,224 | | | | 1,274,216 | | | | | | | | 899,283 | |
| Income from operations | | | 3,542,013 | | | | | | | | 3,943,230 | | | | 2,528,996 | | | | | | | | 2,903,929 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other income (expenses), net | | | 17,035 | | | | | | | | 17,035 | | | | 13,995 | | | | | | | | 13,995 | |
| Government grant | | | 18,941 | | | | | | | | 18,941 | | | | 146,325 | | | | | | | | 146,325 | |
| Finance cost | | | 4,393 | | | | | | | | 4,393 | | | | (4,169 | ) | | | | | | | (4,169 | ) |
| Interest income | | | 154,367 | | | | | | | | 154,367 | | | | 123,343 | | | | | | | | 123,343 | |
| Income before provision from income taxes | | | 3,736,749 | | | | | | | | 4,137,966 | | | | 2,808,490 | | | | | | | | 3,183,423 | |
| Provision for current income taxes | | | 213,645 | | | | | | | | 70,646 | | | | 197,563 | | | | | | | | 197,563 | |
| Provision for deferred income taxes | | | 271,020 | | | | | | | | 310,727 | | | | 260,129 | | | | | | | | 260,129 | |
| Net income | | | 3,252,084 | | | | | | | | 3,756,593 | | | | 2,350,798 | | | | | | | | 2,725,731 | |
| Other comprehensive (loss) income | | | 12,749 | | | | | | | | 12,827 | | | | 5,433 | | | | | | | | 5,433 | |
| Comprehensive income | | | 3,239,335 | | | | | | | | 3,743,766 | | | | 2,356,231 | | | | | | | | 2,731,164 | |
| Basic and diluted net income per share | | | 0.60 | | | | | | | | 0.69 | | | | 0.48 | | | | | | | | 0.56 | |
| Basic and diluted weighted average number of shares outstanding | | | 5,438,232 | | | | | | | | 5,438,232 | | | | 4,910,363 | | | | | | | | 4,910,363 | |
| (b) | To adjust stock-based compensation charges |
