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Pansoft (PSOF) Posts Fiscal Q2 2012 Unaudited Financials

|Includes: Pansoft Company Limited (PSOF)

Pansoft Company Ltd., a leading ERP software service provider for the oil and gas industry in China, today announced unaudited financial results for the fiscal first-quarter of 2012 ended September 30, 2011.

The company reported first-quarter 2012 revenues of $4.2 million, a 20.9 percent increase over the $3.5 million reported in the prior fiscal year.

Gross profit was $1.0 million, a decrease of 44.5 percent compared to $1.7 million from the year-ago quarter. Gross margin was 22.4 percent, as compared to 48.9 percent in the prior fiscal year.

Operating expenses increased 89.4 percent to $1.2 million compared to $0.7 million reported in the year-ago quarter. The company attributes the significant increase in operating expense to: 1) higher general and administrative expense related to maintaining three additional subsidiary offices and their management teams; 2) amortization of intangible assets from the HongAo and ITLamp acquisitions; and 3) higher sales and marketing expense, particularly at HongAo and Pansoft-Japan.

Operating loss was $0.3 million, compared to operating profit of $1.1 million in the year-ago quarter.

Net loss attributable to Pansoft shareholders was $0.08 million, or $0.02 per diluted share, compared to a net profit attributable to Pansoft shareholders of $1.0 million, or $0.18 per diluted share, in the year-ago quarter. The company attributes the loss primarily to start-up losses at Pansoft-Japan and higher amortization charges related to recent acquisitions.

As of September 30, 2011, Pansoft had $2.5 million in cash and equivalents, as compared to $3.7 million as of June 30, 2011.

The company also expects fiscal second-quarter revenues to increase by about 10 percent from the year-ago quarter.

“We still expect Pansoft-Japan to break even towards the end of calendar 2012 alongside lower visibility of market conditions. We remain optimistic that this segment’s competitive advantage as a low-cost provider remains intact and we remain confident that, once this business passes the startup phase, it will achieve success,” Hugh Wang, Pansoft chairman stated in the press release.

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