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 third quarter ended March 31, 2012.
Highlights for the Fiscal Third
Quarter:
- Revenues were $4.45 million, an increase
of 13.0% versus the year-ago quarter
- Gross profit was $0.22 million, a decrease of 75.7% versus the year-ago quarter
- Operating loss was $1.24 million,
compared to an operating loss of $0.3 million in the year-ago
quarter
- Net loss attributable to Pansoft
shareholders was $1.0 million, compared to net income
attributable to Pansoft shareholders of $0.1 million in the
year-ago quarter
- Net loss per diluted share attributable to
Pansoft shareholders was $0.22, compared to a net loss
attributable to Pansoft shareholders of $0.04 per share in the
year-ago quarter
Highlights for the Fiscal First Nine Months of
2012:
- Revenues were $17.9 million, an increase
of 22.3% from $14.7 million in the year-ago period
- Gross profit was $3.8 million, a decrease
of 32.4% compared to $5.6 million in the year-ago period
- Operating loss was $0.34 million,
compared to an operating profit of $2.2 million in the year-ago
period
- Net loss attributable to Pansoft common
shareholders was approximately $71,000, compared to net income
of $2.4 million in the year-ago period
- Net loss per diluted share attributable to
Pansoft shareholders was $0.01, compared to net income of
$0.40 per share in the year-ago period
"During the fiscal third quarter, we achieved modest
year-over-year revenue growth, driven by strength at our HongAo and
Pansoft-Japan subsidiaries, which offset softer results from our
core Pansoft China business. In particular, higher HR costs
resulting from our expanded team put significant pressure on our
gross margins in the quarter," said Hugh Wang, Pansoft's Chairman
of the Board. "Nevertheless, we remain confident that our business
model is sound and we remain committed to serving the large ERP
software market in China. Our immediate priority is to improve
margins and restore profitability in the near term."
Financial Results Highlights for the
Fiscal Third Quarter of
2012
Revenues for the fiscal third quarter ended March 31, 2012 were
$4.45 million, as compared to $3.9 million in the year-ago quarter,
an increase of 13.0%, of which approximately 76.2% was contributed
by Pansoft-China and ITLamp and 23.8% by acquired and other
businesses. The year-over-year revenue growth was primarily due to:
1) Pansoft-China receiving additional revenues from new projects in
the power industry, 2) Pansoft-Japan receiving new orders and
higher revenue versus the year-ago quarter, when the subsidiary had
just been established and begun operation, and 3) HongAo
recognizing more revenue in the quarter, with certain projects
being inspected and accepted by customers.
Cost of sales was $4.2 million, an increase of 39.5% versus $3.0
million in the year-ago quarter. Cost of sales increased faster
than revenues, largely due to $1.2 million higher staffing cost at
Pansoft-China due to higher headcount and therefore, higher
compensation expense, and also due to higher bonus provisions for
the whole year. Costs at Pansoft-Japan, the outsourcing joint
venture for testing mobile phone software, were lower off a higher
base in the year-ago quarter due to one-time training expenses in
Japan.
Gross profit was $0.22 million, a decrease of 75.7% from $0.9
million from the year-ago quarter. Gross margin was 4.9%, as
compared to 23.0% in the year-ago quarter. The decline in the gross
margin was mainly due to the aforementioned reasons.
Operating expenses were $1.45 million, an increase of 19.3% from
$1.2 million in the year-ago quarter. The increase in operating
expenses was mainly due to higher selling expense, compensation
expense and professional service fees for the "going-private"
process.
Operating loss was $1.15 million, as compared to an operating
loss of $0.12 million in the year-ago quarter.
Net loss attributable to Pansoft shareholders was $1.0 million,
compared to net profit attributable to Pansoft shareholders of $0.1
million in the year-ago quarter, which was mainly due to start-up
losses at Pansoft-Japan and higher amortization expense related to
recent acquisitions.
Net loss per diluted share attributable to Pansoft shareholders
was $0.22, as compared to a net loss per diluted share attributable
to Pansoft shareholders of $0.04 in the year-ago quarter.
Financial Results Highlights for the First Nine
Months of Fiscal 2012
Revenues for the nine months ended March 31, 2012 were $17.9
million, compared to $14.7 million in the same period last year, an
increase of 22.3%. Cost of sales was $14.2 million, a 55.9%
increase from $9.1 million in the year-ago nine-month period. Gross
profit was $3.8 million, a decrease of 32.4% from $5.6 million in
the same period last year. Gross margin was 21.1%, compared to
38.1% in the year-ago nine-month period. Operating expenses were
$4.1 million, an increase of 22.9% from $3.3 million in the same
period last year. Operating loss was $0.3 million, compared to an
operating profit of $2.2 million in the year-ago nine-month period.
Net loss attributable to Pansoft shareholders was approximately
$71,000, compared to a net profit of $2.4 million in the
corresponding period in fiscal 2011. Net loss per diluted share
attributable to Pansoft shareholders was $0.01, as compared to a
net profit of $0.40 per share in the corresponding period in fiscal
2011.
Segment Performance
The Company reports its financial results in three segments: (1)
design, development, implementation and servicing of ERP systems
for the energy industry such as oil/gas and coal mining; (2)
provision of technology solutions and related services to thermal
power industry; and (3) outsourced mobile phone software testing
and development.
- Pansoft-China and ITLamp represent 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 76.2% of total revenue for the fiscal third quarter
ended March 31, 2012. In the quarter, revenues were $3.4 million,
and the net loss was $0.5 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 $0.3 million
(5.8% of quarterly revenue) and net income of approximately
$27,000.
- HongAo, in which Pansoft acquired a
55.01% stake in October 2010, serves the thermal power industry as
a technical service provider in Shandong province. Net revenues
were $0.5 million (11.4% of quarterly revenue) and the net loss was
$0.4 million.
- Pansoft-Japan was established in August
2010 to provide outsourcing functions for Japanese clients,
initially in the field 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 (11.9% of quarterly revenue) and the net loss was $0.17
million. The venture is still expected to break even towards the
end of the 2012 calendar year.
- Langji, which Pansoft acquired in October
2011, serves China's coal-mining industry as a leading HR solution
provider. Net revenues were approximately $24,000 (0.5% of
quarterly revenue) and the net loss was approximately
$128,000.
Pansoft Segment Income Statement
(in USD) Three Months Ended March 31, 2012
-------------------------------------------------------
Pansoft-CN +
ITLamp HongAo Pansoft-JP LangJi Total
------------ --------- ---------- --------- -----------
Revenues $3,390,869 $506,377 $528,955 $24,235 $4,450,436
Cost of revenues 3,080,555 528,755 580,946 40,400 4,230,656
------------ --------- ---------- --------- -----------
Gross profit 310,314 (22,378) (51,991) (16,165) 219,780
Total operating
expenses 823,037 396,635 115,993 112,213 1,456,878
------------ --------- ---------- --------- -----------
Income from
operations (521,723) (419,013) (167,984) (128,378) (1,237,098)
Pansoft Segment Income Statement
(in USD) Nine Months Ended March 31, 2012
--------------------------------------------------------
Pansoft-CN +
ITLamp HongAo Pansoft-JP LangJi Total
------------ ---------- ---------- --------- -----------
Revenues $11,854,975 $3,862,399 $1,585,258 $627,151 $17,929,783
Cost of revenues 8,541,078 3,106,406 2,113,823 393,871 14,155,178
------------ ---------- ---------- --------- -----------
Gross profit 3,313,897 755,993 (528,565) 233,280 3,774,605
Total operating
expenses 2,183,275 1,236,620 424,683 268,925 4,113,503
------------ ---------- ---------- --------- -----------
Income from
operations 1,130,622 (480,627) (953,248) (35,645) (338,898)
Financial Condition
As of March 31, 2012, Pansoft had $2.9 million in cash and
equivalents, as compared to $3.7 million as of June 30, 2011. Cash
and cash equivalents exclude $4.8 million in short-term
investments, versus $6.8 million as of June 30, 2011, and the
decrease was primarily due to slower-than-expected cash inflow in
the quarter, as our clients slowed their payment processes in the
current economic environment. Total current assets were $26.3
million, as of March 31, versus $24.1 million as of June 30, 2011,
including a $2.6 million increase in prepayments and deposits, a
$2.2 million increase in inventory, offset by a $2.0 million
decrease in short-term investments. Current liabilities were $9.9
million as of March 31, as compared to $6.8 million as of June 30,
2011. Total stockholders' equity was $23.5 million as of March 31,
2012, versus $23.5 million as of June 30, 2011.
Business Outlook
Pansoft will continue to expand its team for future business
growth. The Company will continue to focus on the coal mining,
thermal power and oilfield markets.
"While we continue to experience revenue growth in this fiscal
year, our margins remain under pressure from the higher costs and
expenses incurred from the realization of our business expansion
strategy. We expect to post a slight net profit this fiscal year,"
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.
- Financial Tables Follow -
Pansoft Company Limited
Consolidated Statements of Operations and Comprehensive Income
For the Three and Nine-Months Ended March 31, 2012 and 2011
(in U.S. Dollars)
For the Three Months For the Nine Months
Ended March 31, Ended March 31,
------------------------ --------------------------
2012 2011 2012 2011
----------- ----------- ------------ ------------
Sales $ 4,450,436 $ 3,938,921 $ 17,929,783 $ 14,662,989
Cost of sales 4,230,656 3,033,474 14,155,178 9,079,576
----------- ----------- ------------ ------------
Gross profit 219,780 905,447 3,774,605 5,583,413
Expenses
General and
administrative
expenses 656,551 549,757 2,054,055 1,554,569
Amortization
expenses of the
intangible assets 168,943 281,870 721,339 641,684
Selling expenses 303,041 273,518 729,743 681,376
Professional fees 295,913 60,430 486,168 248,957
Stock based
compensation 32,431 55,234 113,049 209,588
(Gain) on
disposition of
property and
equipment - - 9,148 (366)
----------- ----------- ------------ ------------
Total operating
expenses 1,456,787 1,220,809 4,113,501 3,345,808
----------- ----------- ------------ ------------
Income from
operations (1,237,098) (315,362) (338,896) 2,237,605
Fair value change on
liabilities (P&L) - - 53,832 -
Extinguishment of
liabilities - - (1,753) -
Other income
(expenses), net 76,166 37,615 295,052 33,903
Government Subsidy 2,273 104,609 136,377 303,364
Finance cost 2,041 (21,897) 5,140 (44,607)
Interest income 5,668 77,687 11,941 219,028
----------- ----------- ------------ ------------
Income before
provision from
income taxes (1,150,950) (117,348) 161,693 2,749,293
Provision for
current income
taxes 641 27,092 715,369 630,380
Provision for
deferred income
taxes 55,583 52,915 (312,046) (180)
----------- ----------- ------------ ------------
Net income (1,204,174) (197,355) (241,630) 2,119,083
-
Less: Net Income
attributable to
noncontrolling
interests 160,046 (306,947) 170,927 (254,368)
----------- ----------- ------------ ------------
Net Income
attributable to
Pansoft Common
Shareholders (1,047,127) 109,592 (70,702) 2,373,460
-
Other comprehensive
(loss) income (168,563) 216,523 322,679 605,731
----------- ----------- ------------ ------------
Comprehensive income $(1,215,691) $ 326,115 $ 251,976 $ 2,979,191
=========== =========== ============ ============
Basic net income per
share $ (0.22) $ (0.04) $ (0.01) $ 0.40
=========== =========== ============ ============
Diluted net income
per share $ (0.22) $ (0.04) $ (0.01) $ 0.40
=========== =========== ============ ============
Basic weighted
average number of
shares
outstanding 5,355,632 5,336,632 5,355,632 5,336,632
=========== =========== ============ ============
Diluted weighted
average number of
shares
outstanding 5,384,487 5,365,487 5,384,487 5,365,487
=========== =========== ============ ============
Pansoft Company Limited
Consolidated Balance Sheet
(in U.S. Dollars)
Mar 31, 2012 Jun 30, 2011
------------- -------------
Assets
Current assets
Cash and cash equivalents $ 2,901,678 $ 3,680,716
Account receivables, net 5,110,923 3,678,463
Unbilled revenues, net 5,605,310 7,025,926
Prepayment, deposits and other receivables 4,470,589 1,868,101
Deferred and prepaid expenses 175,191 -
Inventory 3,191,915 1,010,582
Short term investments - Available for sales 4,813,879 6,829,841
------------- -------------
Total current assets 26,269,485 24,093,629
Non-current assets
Property and equipment, net 2,192,182 2,312,590
Long term equity investment 29,218 28,418
Deferred software development cost 45,861 -
Intangible assets 2,431,781 2,706,197
Goodwill on acquisition 2,364,428 1,373,708
------------- -------------
Total assets 33,332,954 30,514,542
============= =============
Liabilities
Accounts payable 1,641,268 969,998
Accrual and other current liabilities 3,826,195 2,012,202
Acquisition payable 1,835,481 525,709
Deferred revenue 1,162,340 2,048,859
Income tax payable (356,763) 31,667
Deferred income taxes 607,295 570,711
Unearned government research revenue 1,166,445 683,286
------------- -------------
Total current liabilities 9,882,261 6,842,432
Non-current liabilities
Deferred income taxes - 181,611
------------- -------------
Total Liabilities 9,882,261 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
Treasure stocks, at cost (681,110) (503,602)
Additional paid-in capital 9,394,492 9,281,753
Retained earnings 8,414,787 9,782,874
Statutory reserves 1,899,668 1,429,858
Non-controlling interests 2,519,191 1,940,239
Accumulated other comprehensive income 1,871,585 1,527,297
------------- -------------
23,450,693 23,490,499
Total liabilities and shareholders' equity $ 33,332,954 $ 30,514,542
============= =============
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:
+86-10-8573-1012 E-mail: john.harmon@ccgir.com
www.ccgirasia.com
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