6-K 1 psof6k03242011.txt PSOF6K03242011 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of March 2011 Commission File Number: 001-34168 PANSOFT COMPANY LIMITED (Translation of registrant's name into English) 3/F Qilu Software Park Building Jinan Hi-Tech Zone Jinan, Shandong, People's Republic of China 250101 86-531-88871166 (Address of principal executive office) Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F [X] Form 40-F [ ] Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ___________ Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders. Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ___________ Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR. Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [ ] No [X] If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ___________. EXHIBIT INDEX Number Description of Exhibit ______ ________________________________________________________________________ 99.1 Press release, dated March 24, 2011, titled "PANSOFT ANNOUNCES UNAUDITED FISCAL SECOND-QUARTER 2011 FINANCIAL RESULTS" -------------------------------------------------------------------------------- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PANSOFT COMPANY LIMITED Date: March 24, 2011 By: /s/ Allen Zhang _______________________________ Allen Zhang Chief Financial Officer EX 99.1 PANSOFT ANNOUNCES UNAUDITED FISCAL SECOND-QUARTER 2011 FINANCIAL RESULTS REVENUES INCREASE 47.0% YEAR-OVER-YEAR JINAN, CHINA, Mar 24, 2011 -- 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 ended December 31, 2010. Highlights for the Fiscal Second Quarter of 2011: -- Revenues were $7.2 million, an increase of 47.0% compared to $4.9 million for the three months ended December 31, 2010 -- Gross profit was $3.1 million, an increase of 19.1% compared to $2.6 million in the year-ago period -- Gross margin was 42.9%, compared to 53.0% in the year-ago period -- Operating profit was $1.6 million, compared to $2.1 million in the year-ago period -- Net income was $1.4 million, compared to $1.9 million in the year-ago period -- Diluted earnings per share were $0.25, compared to $0.36 in the prior year period Highlights for the Fiscal First Half of 2011: -- Revenues were $10.7 million, an increase of 50.7% compared to $7.1 million for the six months ended December 31, 2010 -- Gross profit was $4.8 million, an increase of 27.3% compared to $3.8 million in the year-ago period -- Gross margin was 44.9%, compared to 53.1% in the year-ago period -- Operating profit was $2.7 million, compared to $2.8 million in the year-ago period -- Net income was $2.4 million, compared to $2.6 million in the year-ago period -- Diluted earnings per share were $0.45, compared to $0.48 in the year-ago period Financial Results Highlights for the Three Months Ended December 31, 2010 Revenues for the three months ended December 31, 2010 were $7.2 million, compared to $4.9 million in the same period last year, an increase of 47.0%. The increase was due to the contribution from newly acquired businesses. Cost of sales was $4.1 million, an increase of 78.5% from $2.3 million in the three months ended December 31, 2009. Cost of sales increased at a faster pace than revenues, largely due to: 1) higher headcount (approximately 600 employees at the end of calendar 2010 versus 200 at the end of calendar 2009) and therefore, higher compensation expense and; 2) start-up costs at Pansoft-Japan, the new outsourcing joint venture in Japan. Gross profit was $3.1 million, an increase of 19.1% from $2.6 million in the three months ended December 31, 2009. Gross margin was 42.9%, compared to 53.0% in the three months ended December 31, 2009. The drop in the gross margin was mainly attributable to higher expenses, as stated above. Additionally, some newly acquired businesses' gross margins are lower than those of Pansoft's core business, in particular due to startup costs at Pansoft-Japan and lower-margin hardware sales at HongAo and ITLamp. Operating expenses were $1.5 million, an increase of 181.8% from $0.5 million in the three months ended December 31, 2009. The increase in operating expense was mainly due to: 1) higher general and administrative expense related to maintaining three additional subsidiary offices and their management teams; and 2) the amortization of intangible assets from the HongAo and ITLamp acquisitions. Operating profit was $1.6 million, compared to $2.1 million in the three months ended December 31, 2009. The operating margin was 22.7% compared to 42.5% in the three months ended December 31, 2009. Net income was $1.4 million, compared to $1.9 million in the corresponding period in 2009, and was lower than the prior period mainly because of higher tax expense, start-up losses of approximately $538,000 at Pansoft-Japan, and higher amortization charges related to recent acquisitions. Diluted earnings per share were $0.25, compared to $0.36 in the corresponding period in 2009. -1- Financial Results Highlights for the Six Months Ended December 31, 2010 Revenues for the six months ended December 31, 2010 were $10.7 million, compared to $7.1 million in the same period last year, an increase of 50.7%. The increase was due to the contribution from newly acquired businesses. Cost of sales was $5.9 million, an increase of 77.2% from $3.3 million in the six months ended December 31, 2009. Cost of sales increased at a faster pace than revenues, largely due to higher compensation expense resulting from higher headcount and start-up costs at Pansoft-Japan. Gross profit was $4.8 million, an increase of 27.3% from $3.8 million in the six months ended December 31, 2009. Gross margin was 44.9%, compared to 53.1% in the six months ended December 31, 2009. The decline in the gross margin was mainly attributable to higher expenses, and lower margins at some subsidiaries. Operating expenses were $2.1 million, an increase of 108.9% from $1.0 million in the six months ended December 31, 2009. The increase in operating expense was mainly due to higher general and administrative expense and amortization of intangible assets resulting from acquisitions. Operating profit was $2.7 million, compared to $2.8 million in the six months ended December 31, 2009. The operating margin was 25.2% compared to 38.9% in the six months ended December 31, 2009. Net income was $2.4 million, compared to $2.6 million in the corresponding period in 2009 and was lower than the prior period mainly because of higher tax expense, start-up losses at Pansoft-Japan and higher amortization charges related to recent acquisitions. Diluted earnings per share were $0.45, compared to $0.48 in the corresponding period in 2009. Update on Pansoft's Subsidiaries Following the formation of the Pansoft-Japan joint venture, the Company is organized as follows. Pansoft-BVI has two subsidiaries: Pansoft-China (which includes the HongAo and ITLamp acquisitions) and Pansoft-Japan. -- Pansoft-China represents the core business of the Company and contributed 63% of total revenue in the three months ended December 31, 2010. For three months ended December 31, 2010, Pansoft-China's revenues declined by 3%, compared to the same period in 2009, due to a slower pace of revenue recognition, owing to a slower pace of revenue recognized in the traditional peak season. This represents an improvement in Pansoft's seasonality pattern, in which the majority of revenue is typically realized in the fiscal second quarter of the year. HongAo, of which Pansoft acquired a 55.01% stake in October 2010, serves the thermal power industry as a technical service provider in Shandong province, and contributed 24% of total revenue in the three months ended December 31, 2010. ITLamp, which was acquired in June 2010, operates as an oilfield software development and service provider, mainly serving the Tarim Oilfield in Xinjiang province. For the three-month period ended December 31, 2011, ITLamp contributed 9% of total revenues. -- Pansoft-Japan is a joint venture 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. Osaka is more than 600 km from the nuclear power plant damaged by the recent earthquake and was unaffected by this disaster. Our team members, including trainees dispatched from China, are all safe and are conducting business as usual. We do not foresee any immediate impact on our business in Japan from the earthquake and nuclear-plant catastrophe, however the longer-term impact cannot be presently determined. To date, there has also been no disruption of the order flow from the venture's key customer, though the impact on future orders cannot be determined. During the three-month period ended at December 31, 2011, Pansoft-Japan incurred start-up losses in line with budget expectations. This business is expected to break even in the fiscal fourth quarter of 2011 and to begin to generate a profit starting in the fiscal first quarter of 2012. -2- Financial Condition As of December 31, 2010, Pansoft had $12.0 million in cash and equivalents, compared to $2.7 million as of June 30, 2010, increased mainly by strong cash flow from operations, as well as from the maturation of certain short-term investments. Cash and cash equivalents exclude $3.5 million in short-term investments, versus $7.4 million as of June 30, 2010. Total current assets were $25.8 million, as of December 31, 2010, versus $18.8 million as of June 30, 2010, owing to higher cash and equivalents and higher receivables, offset by $3 million in lower unbilled revenues. Current liabilities were $6.9 million as of December 31, 2010, up from $3.8 million, owing to a $1.5 million acquisition payable for the fair value of the shares expected to be issued as part of the ITLamp acquisition and a $0.75 million short-term bank loan for temporary cash needs, in addition to higher deferred revenues. Total stockholders' equity was $25.5 million as of December 31, 2010 versus $19.6 million as of June 30, 2010. Recent Development On March 1, 2011, Pansoft's Board of Directors extended the stock repurchase program announced in October 2010 for an additional indefinite period. Business Outlook In future quarters and the next fiscal year, Pansoft expects to maintain sustainable organic growth, driven by strong demand for its services and solutions from its existing customer base, mainly PetroChina and Sinopec, which accounted for 73% of revenues during fiscal 2010. To expand its business, the Company will focus on more than 450 oil and gas subsidiaries, which are large-scale businesses that operate oilfields, refineries, oil and gas pipelines and retail gas stations. In last fiscal year, the Company generated revenue from just four subsidiaries, with over RMB 1 million per contract size. Therefore, the subsidiaries represent a large market opportunity for Pansoft to expand its client base, leveraging its branding and experience in developing software systems which are already operating at most of these subsidiaries. The Company is also entering into the coal mining industry to expand its client base. The Company also expects to supplement its organic growth through acquisitions of targeted developer or service providers with rich experience operating in the oil/gas and coal mining industries to help achieve the objectives. Additionally, with its rich industrial experience, and technical platforms and software packages accumulated in the past, Pansoft is developing a broader portfolio of solutions and, initially, expanding its solutions into the production arena. These solutions will be offered to existing and new customers, especially in focused industries. For the fiscal year ending June 30, 2011, Pansoft expects to remain on track with steady growth and reaffirms its guidance of achieving 60% revenue growth, which excludes the impact from any future mergers or acquisitions. However, Pansoft expects its net income to grow at a slower pace, with a growth rate of less than 20%, versus 20% growth expected previously. The relatively slower pace of expected net-income growth is primarily due to the non-cash charge for intangible asset amortization from acquisitions in 2010, which we expect to reduce net income by approximately $1 million. "We expect Pansoft-Japan to break even in the fiscal fourth quarter of 2011 and to begin to generate a profit starting in the fiscal first quarter of 2012," said Hugh Wang, Pansoft's Chairman of the Board. "We continue to look for potential acquisition targets on an opportunistic basis to accelerate our expansion throughout the rest of the fiscal year as a part of our total strategy to expand our business and market diversification. Our aim is to become the provider of choice for a variety of software solutions and services to a broad range of industries and clients, both domestic and international, in different technologies and markets. With more profit contributions from diversified business avenues in the future, we are expecting our total profits to increase at a faster pace while our net margins may not be as high as in the past because of a change in the mix of business," continued Mr. Wang. -3- Conference Call Information The Company will host a conference call at 8:00 a.m. ET on Thursday, March 24, 2011 (8:00 p.m. Beijing Time) to discuss its fiscal second-quarter 2011 financial results and answer investors' questions. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (866) 759-2078. International callers should dial +1 (706) 643-0585. The conference ID for the call is 53628003. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Thursday, March 24, 2010 at 9:00 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 53628003. 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 - -4- Pansoft Company Limited Consolidated Statements of Operations and Comprehensive Income For the three-month periods ended December 31, 2010 and 2009 (in U.S. Dollars) For the three months ended December 31, 2010 2009 ------------------- --------------------- Sales $7,217,736 $4,910,177 Cost of sales 4,119,349 2,308,226 Gross profit 3,098,387 2,601,951 ------------------- --------------------- Expenses General and administrative expense 616,681 119,431 Amortization expense 330,533 Selling expense 328,078 160,297 Professional fees 123,229 87,656 Stock based compensation 59,505 151,127 (Gain) on disposition of property and equipment 366 (955) ------------------- --------------------- Total Operating Expenses 1,458,393 517,556 ------------------- --------------------- Income from operations 1,639,994 2,084,395 Other income (expenses), net (1,777) 17,950 Government grant 157,655 30 Finance costs (15,922) (1,952) Interest income 68,508 48,502 ------------------- --------------------- Income before provision from income taxes 1,848,458 2,148,925 Provision for current income taxes 603,288 74,759 Provision for deferred income taxes (192,910) 139,356 Net income 1,438,080 1,934,810 Less: Net Income attributable to non-controlling interests 52,579 -- Net Income attributable to Pansoft common shareholders 1,385,501 -- ------------------- --------------------- Other comprehensive (loss) income 188,640 (720) ------------------- --------------------- Other comprehensive income 1,574,140 1,934,090 ------------------- --------------------- Basic net income per share 0.25 0.36 ------------------- --------------------- Diluted net income per share 0.25 0.36 ------------------- --------------------- Basic weighted average number of shares outstanding 5,438,232 5,438,232 =================== ===================== Diluted weighted average number of shares outstanding 5,467,087 5,434,852 =================== =====================
-5- Pansoft Company Limited Consolidated Statements of Operations and Comprehensive Income For the six-month periods ended December 31, 2010 and 2009 (in U.S. Dollars) For the six months ended December 31, 2010 2009 -------------------- ------------------- Sales $10,724,068 $7,115,646 Cost of sales 5,912,196 3,336,573 -------------------- ------------------- Gross profit 4,811,872 3,779,073 Expenses General and administrative expense 1,002,880 236,399 Amortization expense 359,814 -- Selling expense 403,549 254,917 Professional fees 188,527 217,437 Stock based compensation 154,354 302,254 (Gain) on disposition of property and equipment 366 (964) -------------------- ------------------- Total Operating Expenses 2,109,490 1,010,043 Income from operations 2,702,382 2,769,030 Other income (expenses), net (3,712) 17,035 Government Subsidy 201,755 47 Finance costs (22,710) (1,930) Interest income 141,341 86,562 -------------------- ------------------- Income before provision from income taxes 3,019,056 2,870,744 Provision for current income taxes 603,288 74,759 Provision for deferred income taxes (15,409) 173,120 Net income 2,431,177 2,622,865 Less: Net Income attributable to non-controlling interests 52,579 Net Income attributable to Pansoft Common Shareholders 2,378,598 2,622,865 Other comprehensive (loss) income 389,533 9,749 -------------------- ------------------- Other comprehensive income 2,768,131 2,632,614 Basic net income per share 0.45 0.48 ==================== =================== DILUTED NET INCOME PER SHARE 0.45 0.48 ==================== =================== Basic weighted average number of shares outstanding 5,438,232 5,438,232 ==================== =================== Diluted weighted average number of shares outstanding 5,434,852 5,434,852 ==================== ===================
-6- Pansoft Company Limited Consolidated Balance Sheets (in U.S. Dollars) Dec. 31, June 30, 2010 2010 --------------------- -------------------------- ASSETS Current assets Cash and cash equivalents $ 12,002,219 $ 2,705,957 Accounts receivable, net 5,128,387 1,391,960 Unbilled revenues, net 3,875,936 6,887,471 Prepayment, deposits and other receivables 697,856 386,420 Deferred and prepaid expenses 118,901 Inventory 442,870 61,984 Short term investments - Available for sale 3,510,653 7,399,608 --------------------- -------------------------- Total current assets 2,776,822 18,833,400 Non-current assets Property and equipment, net 1,932,620 760,258 Deposit for acquisitions 29,273 1,340,029 Deferred software development cost 693,856 Intangible assets 2,798,185 1,729,553 Goodwill 1,156,552 719,617 --------------------- -------------------------- Total assets $ 32,387,308 $ 23,382,857 ===================== ========================== LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 802,675 $ 224,041 Accruals and other current liabilities 1,245,392 2,542,929 Acquisition payable 1,463,522 -- Short-term borrowing 754,979 -- Deferred revenue 1,563,105 244,110 Income tax payable 562,382 325,079 Deferred income taxes 464,059 486,925 --------------------- -------------------------- Total current liabilities 6,856,114 3,823,054 ------------------------------------------------------ Total liabilities 6,856,114 3,823,054 ====================================================== 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 stock, at cost (218,280) Additional paid-in capital 9,165,514 9,011,160 Retained earnings 10,616,513 8,895,307 Statutory reserves 2,122,460 897,040 Non-controlling interests 2,699,159 Accumulated other comprehensive income 1,113,747 724,216 --------------------- -------------------------- Total stockholder's equity 25,531,193 19,559,803 --------------------- -------------------------- TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 32,387,308 $ 23,382,857 ===================== ==========================
-7- ------------------ COMPANY CONTACT: Pansoft Company Limited Allen Zhang Chief Financial Officer Phone: +86-531-8887-1159 E-Mail: Allen.Zhang@pansoft.com ------------------ INVESTOR CONTACT: CCG Investor Relations Mr. John Harmon Sr. Account Manager Phone: +86-10-6561-6886 EXT. 807 (Beijing) E-Mail: John.Harmon@ccgir.com www.ccgirasia.com ------------------ SOURCE: Pansoft Company Limited ### -8-