U. S. SECURITIES AND EXCHANGE COMMISSION 

|   | þ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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|   |   | For the quarterly period ended September 30, 2009                                       |

|   |  ̈ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period from ___________ to ___________. |
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| British Virgin Islands(State or other jurisdiction ofincorporation or organization) | Not Applicable(I.R.S. employeridentification number) |
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| Large accelerated filer                                            o | Accelerated filer                                 o |
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| Non-accelerated filer                                            o   | Smaller reporting company     þ                                                                                                                                                            |

  

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| SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS                                                                                                                                                            |                                                                                        |   | 3      |   |
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| PART I.                                                                                                                                                                                                      | FINANCIAL INFORMATION                                                                       |   |   | 4      |   |
| Item 1.                                                                                                                                                                                                      | Financial Statements                                                                        |   |   | 4      |   |
| Item 2.                                                                                                                                                                                                      | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   |   | 20     |   |
| Item 3.                                                                                                                                                                                                      | Quantitative and Qualitative Disclosures About Market Risk                                  |   |   | 25     |   |
| Item 4T.                                                                                                                                                                                                     | Controls and Procedures                                                                     |   |   | 25     |   |
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| PART II.                                                                                                                                                                                                     | OTHER INFORMATION                                                                           |   |   | 26     |   |
| Item 2.                                                                                                                                                                                                      | Unregistered Sales of Equity Securities and Use of Proceeds                                 |   |   | 26     |   |
| Item 6.                                                                                                                                                                                                      | Exhibits                                                                                    |   |   | 26     |   |

2     SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThis document contains certain statements of a forward-looking nature. Such forward-looking statements, including but not limited to projected earnings and/or revenue growth, trends and strategies, future operating and financial results, financial expectations and current business indicators are based upon current information and expectationsand are subject to change based on factors beyond the control of the Pansoft Company Limited (the “Company”). Forward-looking statements typically are identified by the use of terms such as “look,” “may,” “will,” “should,” “might,” “believe,” “plan,” “expect,” “anticipate,” estimate” and similar words, although some forward-looking statements are expressed differently. The accuracy ofsuch statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including but not limited to the following:  ·its dependence on a limited number of larger customers;  ·political and economic factors in the People's Republic of China;  ·the Company's ability to expand and grow its lines of business;  ·unanticipated changes in general market conditions or other factors, which may result in cancellations or reductions in need for the Company's services;  ·a weakening of economic conditions which would reduce demand for services provided by the Company and could adversely affect profitability;  ·the acceptance in the marketplace of the Company's new lines of services;  ·foreign currency exchange rate fluctuations;  ·the Company's ability to identify and successfully execute cost control initiatives; or  ·other risks outlined above and in the Company's other filings made periodically by the Company.Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update this forward-looking information. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other methodof public disclosure without the need for specific reference to this report. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.3     PART I.                      FINANCIAL INFORMATION Item 1.          Financial Statements. Pansoft Company Limited Condensed Consolidated Balance Sheets    As of      September 30,2009    December31,2008      (Unaudited)    (Audited)  Assets                 Current assets                    Cash and cash equivalents  $11,838,583    $12,185,950            Accounts receivable, net of allowance for doubtful accounts $132,209 (2008: $152,070)    477,327      1,136,159            Unbilled revenue    4,018,440      2,221,142            Prepayments, deposits and other receivables    144,321      107,785            Inventory    170,673      68,348                    Total current assets    16,649,344      15,719,384                            Property and equipment, net    711,632      650,708          Deferred software development cost    18,311      73,287                    Total assets  $17,379,287    $16,443,379                    Liabilities                          Current liabilities                          Accounts payable and accrued liabilities  $216,700    $905,748            Deferred revenue    238,567      181,192            Income tax payable    1,992      192,470            Deferred income taxes    372,306      172,505                    Total current liabilities    829,565      1,451,915                              Deferred income taxes    19,661      18,531                    Total liabilities    849,226      1,470,446                    Stockholders' 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)    32,080      32,080          Additional paid-in capital    8,715,155      8,222,054          Retained earnings    6,782,389      5,711,114          Statutory reserves    363,063      363,063          Accumulated other comprehensive income    637,374      644,622  Total stockholders' equity    16,530,061      14,972,933                    Total liabilities and stockholders' equity  $17,379,287    $16,443,379  The accompanying notes are an integral part of these condensed consolidated financial statements.  4      Pansoft Company LimitedUnaudited Condensed Consolidated Statements of Income and Comprehensive Income    For the three months ended September 30,    For the nine months endedSeptember 30,      2009    2008    2009    2008                            Sales  $2,205,469    $2,171,038    $5,145,375      3,548,302  Cost of sales    1,028,347      695,003      2,743,265      1,725,420                                    Gross profit    1,177,122      1,476,035      2,402,110      1,822,882                                    Expenses                                   General and administrative expenses    116,968      130,828      366,210      211,091     Selling expenses    94,620      8,506      216,414      15,037     Professional fees     129,781      27,112      300,168      88,649     Stock based compensation     151,127      38,815      493,101      38,815     Gain on disposition of property and equipment      (9)      (154)      (741)    (1528)      492,487      205,107      1,375,152      352,064                                    Income from operations    684,635      1,270,928      1,026,958      1,470,818                                    Other income (expenses), net    (915)    -      (4,687)    537  Government grant    17      -      160,998      -  Finance cost    22      (455)    -     (873)Interest income    38,060      27,555      101,648      70,032                                    Income before provision for income taxes    721,819      1,298,028      1,284,917      1,540,514  Income taxes    33,764      236,159      213,642      236,159                                    Net income    688,055      1,061,869      1,071,275      1,304,355                                    Other comprehensive (loss) income    10,469      58,851      (7,248)    352,879                                    Total comprehensive income  $698,524    $1,120,720    $1,064,027      1,657,234                                    Basic and diluted net income per share  $0.13    $0.23    $0.20      0.30                                    Basic and diluted weighted average number of shares outstanding    5,438,232      4,525,189      5,438,232      4,334,582  The accompanying notes are an integral part of these condensed consolidated financial statements.    5      Pansoft Company LimitedUnaudited Condensed Consolidated Statements of Shareholders' Equity    Common Shares    Additional    Retained    Statutory    Accumulated Other      Number    Amount    Paid In Capital    Earnings    Reserves    Comprehensive Income    Total                                       Balance at December 31, 2008 (Audited)    5,438,232    $  32,080     $ 8,222,054    $  5,711,114    $  363,063    $  644,622    $  14,972,933  Foreign currency translation adjustment    -      -      -      -      -      (7,248)      (7,248)  Net income    -      -      -      1,071,275      -      -      1,071,275  Stock based compensation    -      -      493,101      -      -      -      493,101                                                            Balance atSeptember 30, 2009 (Unaudited)    5,438,232     $32,080     $8,715,155    $  6,782,389     $363,063     $637,374     $16,530,061  The accompanying notes are an integral part of these condensed consolidated financial statements.  6      Pansoft Company LimitedUnaudited Condensed Consolidated Statements of Cash Flows   For the nine months ended September 30,   2009  2008 Cash flows from operating activities      Net income $1,071,275  $ 1,304,355 Adjustments to reconcile net income to net cash           provided by operating activities:        Deferred income taxes  200,860   236,159 Amortization of government grants  -   (115,673)Amortization and depreciation  196,520   225,830 Stock-based compensation  493,101   38,815 Gain on disposition of property and equipment  (741)  (1,528)Changes in operating assets and liabilities:        Accounts receivable  657,603   (1,988,200)Unbilled revenues  (1,796,953)  - Prepayments, deposits and other receivables  (36,571)  37,408 Inventory  (102,273)  - Work in progress  -   (49,132)Accounts payable and accrued liabilities  (687,904)  (264,672)Government grants received, net  -   79,458 Deferred revenues  57,426   6,556 Income tax payable  (190,201)  -           Cash used in operating activities  (137,858)  (490,624)          Cash flows from investing activities        Purchase of property and equipment  (204,184)  (585,722)Proceeds from disposition of property and equipment  2,032   18,766           Cash used in investing activities  (202,152)  (566,956)          Cash flows from financing activities        Net proceeds from stock offering  -   7,648,549           Cash provided by financing activities  -   7,648,549           Effect of exchange rate changes on cash and cash equivalents    (7,357)  214,622           (Increase) decrease in cash and cash equivalents  (347,367)  6,805,591 Cash and cash equivalents, beginning of period   12,185,950   3,365,613           Cash and cash equivalents, end ofperiod $11,838,583  $ 10,171,204           Supplemental cash flow information        Interest received   $101,648  $ 56,987 Interest paid   $-  $874 Income tax paid $10,791  $ -  The accompanying notes are an integral part of these condensed consolidated financial statements.  7     Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial Statements1.        Nature of Operations and Basis of Presentation   Pansoft Company Limited ("the Company") was incorporated in June 2006 in the British Virgin Islands and acquired 100% of Pansoft Jinan Co. Ltd. ("Jinan") at the same time. Jinan was incorporated in Peoples' Republic of China ("PRC"). Upon acquisition by the Company, Jinan became a Foreign Investment Enterprise. Jinan is engaged in thedevelopment and marketing of accounting and enterprise resource planning (ERP) software primarily to resource and utility companies across the PRC. Prior to the incorporation of the Company, Jinan was 100% owned by employees who ultimately became the controlling shareholders of the Company. As such, the opening retained earnings presented on the consolidated balance sheet and statements of shareholders' equity are presented using the continuity of interest method of accounting. Underthis method, all activities of Jinan are included in the consolidated financial statements of the Company as if the Company had been the parent company for all periods presented. On September 8, 2008, the Company completed an initial public offering of 1,200,000 common shares at $7.00 per share. The Company shares started trading on NASDAQ Capital Market the next day. Prior to the completion of IPO, the Company completed a 169.5253-for-one stock split to be effected in the form of a stock dividend to holders ofordinary shares. In December 2008, the Company established its subsidiary, Pansoft (Hong Kong) Limited ("Hong Kong") to serve the overseas customers. The condensed consolidated financial statements do not include certain footnote disclosures and financial information normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and, therefore, should be read in conjunction withthe consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008.2.        Significant Accounting Policies     Basis of consolidation   The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Jinan and Hong Kong. All inter-company accounts and transactions have been eliminated upon consolidation.     Cash and cash equivalents      Cash is comprised of cash on hand and at banks.  Cash equivalents are short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of change in value.     Accounts receivableAccounts receivable are stated at original invoice amount less allowance made for doubtful receivables based on a review of all outstanding amounts at the period end.  An allowance for doubtful receivables is made when there is objective evidence that the Company will not be able to collect all amounts due according to the originalterms of the receivables.  Bad debts are written off when identified. Bad debt expense for the three months ended September 30, 2009 was $Nil (2008 - $51,019), for the nine months ended September 30, 2009 was $Nil (2008 - $51,019)Unbilled revenue Unbilled revenue represents the accumulated unbilled amount of revenue recognized, based on the Company's revenue recognition policy. Inventory Inventory comprises hardware equipment and software purchased for reselling and is recorded at lower of cost and net realizable value. Management periodically compares cost of inventory with market and records a reserve for obsolescence when necessary. The reserve for inventory obsolescence was $Nil at September 30, 2009 and December 31, 2008.       8     Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial StatementsWork in progressWork in progress is the deferred costs of revenue relate to contracts and such costs are stated at actual production costs incurred to date, which primarily includes labor which is directly related to the contract.  Work in progress is amortized to cost of revenues at the time revenue is recognized. Software development cost capitalizationThe costs for software system development under the projects for future sales to clients, which mainly consists of payroll cost, are capitalized once the technical feasibility is established after its designing stage is completed and the economic feasibility is established based on the customer ordering orientation. The cost capitalizedis amortized over one year period when the sales occurred once the sale contracts are signed.    Property and equipment Property and equipment are recorded at cost. Depreciation is provided over the expected useful lives of the property and equipment with 5% residual value using the following methods and annual rates:  Computer equipment            -   5   years straight lineVehicles-   5   years straight lineOffice furniture  -   5   years straight lineLeasehold improvement -   3   years straight lineComputer software-   3   years straight line Maintenance and repairs expenditures, which do not improve or extend an assets' productive life, are expensed as incurred.     Research and software development costs Research costs are charged to expense as incurred.  Software development costs incurred prior to the establishment of technological feasibility are expensed.  Software development costs incurred between the establishment of technological feasibility and product release are capitalized, if material, and amortized overthe estimated economic life of the product, which is generally three years. Research and development costs expensed for three months ended September 30, 2009 amounted to $18,299 (2008 - $18,282) and for nine months ended September 30, 2009 amounted to $54,886 (2008 - $53,708).The research and software development costs were included in cost of sales. These amounts are the amortization expense associated with capitalized software development cost. (Note 5)     Impairment of long-lived assets Long-lived assets held for use are periodically reviewed for impairment when events or changes in circumstances indicate that their carrying value may not be recoverable.  When the carrying value is not recoverable from future cash flows on an undiscounted basis and the carrying value exceeds the assets' fair value, an impairmentloss is recorded for the excess of carrying value over fair value.            Government grants Research grants received from PRC government agencies or private enterprises are recognized as deferred grants and offset against the corresponding research expenses as and when they are incurred for the research projects for which these grants are received.     Income taxes The Company uses the liability method of accounting for income taxes.  Under SFAS No. 109 "Accounting for Income Taxes" method, which was primarily codified into the Topic 740 “Income Taxes” in the ASC, income tax assets and liabilities are recognized for the future income tax consequences attributable to differencesbetween the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Income tax assets and liabilities are measured using enacted rates expected to apply to income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a change in tax rates on income tax assets and liabilities is reflected in operations in the period in which the change occurs.  Valuation allowances are establishedwhen necessary to reduce future tax assets to the amount expected to be realized.  9     Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial StatementsThe Company adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109, "("FIN 48"), which was primarily codified into the Topic 740 “Income Taxes” in the ASC.  The Company did not have anymaterial unrecognized tax benefits and there was no effect on its financial condition or results of operations as a result of implementing FIN 48.  The Company files income tax returns in the PRC jurisdictions.   The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.  As of the date of adoption of FIN 48, the Company did not have any accrued interest or penalties associated with any unrecognized tax benefits,nor was any interest expense recognized during the year. The Company's effective tax rate differs from the statutory rate primarily due to non-deductible expenses, temporary differences, and preferential tax treatment.     Value added taxes Jinan calculates, collects from customers, and remits to governmental authorities value added taxes assessed by governmental authorities in connection with revenue-producing transactions with its customers.  The Company reports these taxes on a net basis and does not include these tax amounts in revenue or cost of revenue. Jinan,as a consequence of being in the high-tech industry, sometimes receives special refunds of VAT remitted; this is included as a reduction of cost of sales.    Revenue recognition The Company enters into software development contracts that are fixed fee arrangements to render specific software consulting, development, modification, training, and implementation and maintenance services. The percentage of completion method is applied to these contracts that involve the provision of services relating to the developmentor implementation of complex software applications, because these services are essential to the functionality of other elements in the arrangement. Under this method, revenue is recognized using the percentage of completion basis and is calculated based on actual labor cost or labor hours incurred at specific milestones and compared to the estimated total labor cost or labor hours for the services under the arrangement, so long as persuasive evidence of an arrangement exists, certainmilestones have been achieved or delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured.  Management regularly reviews underlying estimates of total expected labor costs or hours.  If the Company does not have a sufficient basis to measure progress towards completion, revenue is recognized when final acceptance is received by the Company from the customer.  Amounts received in advance of revenue are reported as deferred revenue on the consolidatedbalance sheet.  When it is probable that total contract costs will exceed total contract revenue, the resultant loss is recognized in full immediately, without reference to the percentage of completion.  To date, the Company has not experienced material losses on contracts in process or completed contracts.  Revisions to contract revenue, contract costs and profit estimates, which can be significant, are reflected in the accounting period in which the relevant facts become known. For software development contracts, the Company sometimes provides its customers with a limited warranty of approximately one year following the customer's initial acceptance of the completed project. The last 5% of the contract price is considered the milestone for the warranty period on such contracts. For these contracts with warrantyclauses, 5% of the contract amount is not recognized as revenue or invoiced until the warranty period expires. From time to time, the Company enters into general IT service arrangements with their customers, where the Company is obligated to perform professional services, such as unspecific upgrades and technical support. This revenue is recognized based on the actual service hours and the hourly rate agreed by clients in advance. Occasionally,such services were rendered to cover a specified period of time. This revenue is recognized over the term of the contract on a straight-line basis. Some of these arrangements are entered into agreements with customers who have engaged the Company to develop software systems. However, the general IT services are always arranged after the software development contracts are completed or may not be directly related to the system the Company developed for these customers under the software development contracts. Thereis no warranty provided for general IT service arrangements. Advertising CostsThe advertising costs are charged to expenses when incurred and are included in selling expenses. The advertising costs for the three months ended September 30, 2009 was $16,685 (2008 - $Nil).The advertising costs for the nine months ended September 30, 2009 was $16,685 (2008 - $Nil). 10     Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial Statements    Foreign exchange The Company's functional currency is the Chinese RMB and its reporting currency is the U.S. dollar.  The financial statements of the Company's foreign subsidiaries have been translated into U.S. dollars in accordance with SFAS No. 52, "Foreign Currency Translation", which was primarily codified into the Topic 830 “ForeignCurrency Matters” in the ASC.  All asset and liability accounts have been translated using the exchange rate in effect at the balance sheet date.  Equity accounts have been translated at their historical exchange rates when the capital transaction occurred.  Statements of operations amounts have been translated using the average exchange rate for theperiod. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, "ReportingComprehensive Income”, which was primarily codified in the Topic 220 “Comprehensive Income” in the ASC.The following exchange rates were used:     September30, 2009    December 31, 2008    September 30, 2008  Period end RMB U.S. Dollar exchange rate    6.8263      6.8225      6.7899  Average period RMB U.S. Dollar exchange rate    6.8324      6.9477      6.8375   The foreign currency translation adjustment of $10,469 (2008 - $58,851) has been reported as other comprehensive income in the consolidated statements of income for three months ended September 30, 2009. For the nine months ended September 30, 2009, the foreign currency translation adjustment of $7,248 (2008 - $352,879) has been reportedas other comprehensive loss (2008 - income) in the consolidated statement of income. Although the Chinese government regulations now allow convertibility of RMB for current account transactions, significant restrictions still remain. Hence, such translations should not be construed as representations that RMB could be converted into U.S. dollars at that rate or any other rate. Substantially all the Company's revenue and expenses are denominated in RMB.  The Company's RMB cash inflows are sufficient to service its RMB expenditures.  For financial reporting purposes, the Company uses U.S. dollars.  The value of the RMB against U.S. dollars and other currencies may fluctuate and isaffected by, among other things, changes in China's political and economic conditions.  Any significant revaluation of RMB may materially affect the Company's financial condition in terms of U.S. dollar reporting.     Use of estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reportingperiod.  Actual results could differ from those estimates. Stock-based compensation The Company records stock-based compensation in accordance with SFAS 123(R), “Share-Based Payments”, which was primarily codified into the Topic 718 “Compensation-Stock Compensation”, that requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards madeto employees and directors, including stock options.     Comprehensive income Comprehensive income is the sum of net income and other comprehensive income reported in the consolidated statements of income and comprehensive income.  Other comprehensive income or loss includes accumulated foreign currency translation gains and losses.  The Company has reported the components of comprehensive incomeon its consolidated statements of shareholders' equity.     Earnings per shareIn accordance with SFAS No. 128 "Computation of Earnings per Share," which was primarily codified into the Topic 260 “Earnings Per Share”, basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earningsper share is calculated by dividing net income by the weighted average number of common shares and dilutive shares outstanding during the period using the treasury stock method.  11     Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial Statements    Fair value measurementsASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topicalso establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:Level 1 -  Quoted prices in active markets for identical assets or liabilities. Level 2 -  Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.Level 3  -  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.The carrying values of cash and cash equivalents, trade receivables and payables, and short-term debts approximate their fair values due to their short maturities. The financial assets and liabilities of the Company subject to fair value measurements and the necessary disclosures are as follows: Fair Value Measurements Using      Assets/Liabilities      Level 1    Level 2    Level 3    At Fair Value  Cash equivalents  $9,126,401      -      -    $9,126,401   Reclassifications Certain prior period balances have been reclassified to conform to the current period’s financial statement presentation. These reclassification had no impact on previously reported financial position, results of operations or cash flows.    3.        Recently Changes in Accounting StandardsRecent accounting pronouncement adoptedIn June 2009, the FASB established the FASB Accounting Standards CodificationTM (ASC) as the single source of authoritative U.S generally accepted accounting principles (GAAP) recognized by the FASB to be applied to nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) underauthority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The ASC superseded all previously existing non-SEC accounting and reporting standards, and any prior sources of U.S. GAAP not included in the ASC or grandfathered are not authoritative. New accounting standards issued subsequent to June 30, 2009 are communicated by the FASB through Accounting Standards Updates (ASUs). The ASC did no change current U.S. GAAP but changes the approach by referencing authoritative literatureby topic (each a “Topic”) rather than by type of standard. The ASC has been effective for the Company effective July 1, 2009. Adoption of the ASC did not have a material impact on the Company's Condensed Consolidated Financial Statements, but references in the Company's Notes to Consolidated Financial Statements to former FASB positions, statements, interpretations, opinions, bulletins or other pronouncements are now presented as references to the corresponding Topic in the ASC.Effective January 1, 2009, the first day of fiscal 2009, the Company adopted FASB ASC 350-30 and ASC 275-10-50 (formerly FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets”), which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful lifeof a recognized intangible asset under SFAS No. 142 ("SFAS 142"), “Goodwill and Other Intangible Assets.” The Company will apply ASC 350-30 and ASC 275-10-50 prospectively to intangible assets acquired subsequent to the adoption date.  The adoption of these revised provisions had no impact on the Company's Condensed Consolidated Financial Statements.Effective January 1, 2009, the Company adopted FASB ASC 815-10-65 (formerly SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities”), which amends and expands previously existing guidance on derivative instruments to require tabular disclosure of the fair value of derivative instruments and their gains andlosses., This ASC also requires disclosure regarding the credit-risk related contingent features in derivative agreements, counterparty credit risk, and strategies and objectives for using derivative instruments. The adoption of this ASC did not have a material impact on the Company's Condensed Consolidated Financial Statements.  During 2008, the Company adopted FASB ASC 820-10 (formerly FSP FAS 157-2, "Effective Date of FASB Statement 157"), which deferred the provisions of previously issued fair value guidance for nonfinancial assets and liabilities to the first fiscal period beginning after November 15, 2008. Deferred nonfinancial assets and liabilitiesinclude items such as goodwill and other nonamortizable intangibles. Effective January 1, 2009, the Company adopted the fair value guidance for nonfinancial assets and liabilities. The adoption of FASB ASC 820-10 did not have a material impact on the Company's Condensed Consolidated Financial Statements.  12    Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial StatementsEffective January 1, 2009, the Company adopted FASB ASC 810-10-65 (formerly SFAS 160, "Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51"), which amends previously issued guidance to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidationof a subsidiary. It clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as equity. Among other requirements, this Statement requires that the consolidated net income attributable to the parent and the noncontrolling interest be clearly identified and presented on the face of the consolidated income statement.  The adoption of the provisions in this ASC did not have amaterial impact on the Company's Condensed Consolidated Financial Statements.Effective January 1, 2009, the Company adopted FASB ASC 805-10, (formerly SFAS 141R, "Business Combinations"), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in an acquiree and thegoodwill acquired.  In addition, the provisions in this ASC require that any additional reversal of deferred tax asset valuation allowance established in connection with our fresh start reporting on January 7, 1998 be recorded as a component of income tax expense rather than as a reduction to the goodwill established in connection with the fresh start reporting. The Company will apply ASC 805-10 to any business combinations subsequent to adoption.Effective January 1, 2009, the Company adopted FASB ASC 805-20 (formerly FSP FAS 141R-1, "Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies"), which amends ASC 805-10 to require that an acquirer recognize at fair value, at the acquisition date, an asset acquired or a liabilityassumed in a business combination that arises from a contingency if the acquisition-date fair value of that asset or liability can be determined during the measurement period. If the acquisition-date fair value of such an asset acquired or liability assumed cannot be determined, the acquirer should apply the provisions of ASC Topic 450, Contingences, to determine whether the contingency should be recognized at the acquisition date or after such date. FSP The adoption of ASC805-20 did not have a material impact on the Company's Condensed Consolidated Financial Statements.Effective July 1, 2009, the Company adopted FASB ASC 825-10-65 (formerly FASB Staff Position (“FSP”) No. FAS 107-1 and Accounting Principles Board 28-1, "Interim Disclosures about Fair Value of Financial Instruments"), which amends previous guidance to require disclosures about fair value of financial instruments for interimreporting periods of publicly traded companies as well as in annual financial statements. The adoption of FASB ASC 825-10-65 did not have a material impact on the Company's Condensed Consolidated Financial Statements.Effective July 1, 2009, the Company adopted FASB ASC 320-10-65 (formerly FSP FAS 115-2 and FAS 124-2, "Recognition and Presentation of Other-Than-Temporary Impairments"). Under  ASC 320-10-65, an other-than-temporary impairment must be recognized if the Company has the intent to sell the debt security or the Company is more likelythan not will be required to sell the debt security before its anticipated recovery. In addition, ASC 320-10-65 requires impairments related to credit loss, which is the difference between the present value of the cash flows expected to be collected and the amortized cost basis for each security, to be recognized in earnings while impairments related to all other factors to be recognized in other comprehensive income. The adoption of ASC 320-10-65 did not have a material impact on the Company's Condensed ConsolidatedFinancial Statements.Effective July 1, 2009, the Company adopted FASB ASC 820-10-65 (formerly FSP FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly"), which provides guidance on how to determine the fair value of assets and liabilitieswhen the volume and level of activity for the asset or liability has significantly decreased when compared with normal market activity for the asset or liability as well as guidance on identifying circumstances that indicate a transaction is not orderly. The adoption of ASC 820-10-65 did not have a material impact on the Company's Condensed Consolidated Financial Statements. Effective July 1, 2009, the Company adopted FASB ASC 855-10 (formerly SFAS 165, “Subsequent Events”), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before financial statements are issued or are available to be issued. Adoption of ASC 855-10 did nothave a material impact on the Company's Condensed Consolidated Financial Statements.New accounting pronouncement to be adoptedIn December 2008, the FASB issued ASC 715, Compensation – Retirement Benefits (formerly FASB FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets”), which expands the disclosure requirements about plan assets for defined benefit pension plans and postretirement plans. The Company isrequired to adopt these disclosure requirements  in the fourth quarter of 2009. It is expected the adoption of these disclosure requirements will have no material effect on the Company's Consolidated Financial Statements. 13     Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial StatementsIn June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140,” (not yet reflected in FASB ASC). SFAS No. 166 limits the circumstances in which a financial asset should be derecognized when the transferor has not transferred the entirefinancial asset by taking into consideration the transferor’s continuing involvement. Thestandard requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. The concept of a qualifying special-purpose entity is removed from SFAS No. 140,“Accounting for Transfers and Servicing of Financial Assets and Extinguishmentsof Liabilities,” along with the exception from applying FIN 46(R), “Consolidation of Variable Interest Entities.” The standard is effective for the first annual reporting period that begins after November 15, 2009 (i.e. the Company's fiscal year beginning January 1, 2010), for interim periods within the first annualreporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. It is expected the adoption of this Statement will have no material effect on the Company's Consolidated Financial Statements.In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),” (not yet reflected in FASB ASC). The standard amends FIN No. 46(R) to require a company to analyze whether its interest in a variable interest entity (“VIE”) gives it a controlling financial interest. A companymust assess whether it has an implicit financial responsibility to ensure that the VIE operates as designed when determining whether it has the power to direct the activities of the VIE that significantly impact its economic performance. Ongoing reassessments of whether a company is the primary beneficiary are also required by the standard. SFAS No. 167 amends the criteria to qualify as a primary beneficiary as well as how to determine the existence of a VIE. The standard also eliminates certain exceptionsthat were available under FIN No. 46(R). This Statement will be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009  (i.e. the Company's fiscal year beginning January 1, 2010), for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. Comparative disclosures will be required for periods after the effective date. As such,the Company will adopt this Statement for interim and annual periods ending after January 1, 2010.  It is expected the adoption of this Statement will have no material effect on the Company's Consolidated Financial Statements.In August, 2009, the FASB issued ASC Update No. 2009-05 (“Update 2009-05”) to provide guidance on measuring the fair value of liabilities under FASB ASC 820 (formerly SFAS 157, "Fair Value  Measurements").  The Company is required to adopt Update 2009-05 in the fourth quarter of 2009.  It is expectedthe adoption of this Update will have no material effect on the Company's Consolidated Financial Statements.In October 2009, the FASB concurrently issued the following ASC Updates:ASU No. 2009-14 - Software (Topic 985): Certain Revenue Arrangements That Include Software Elements (formerly EITF Issue No. 09-3) . This standard removes tangible products from the scope of software revenue recognition guidance and also provides guidance on determining whether software deliverables in an arrangement that includes a tangibleproduct, such as embedded software, are within the scope of the software revenue guidance.ASU No. 2009-13 - Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (formerly EITF Issue No. 08-1).  This standard modifies the revenue recognition guidance for arrangements that involve the delivery of multiple elements, such as product, software, services or support, to a customer at different timesas part of a single revenue generating transaction.  This standard provides principles and application guidance to determine whether multiple deliverables exist, how the individual deliverables should be separated and how to allocate the revenue in the arrangement among those separate deliverables. The standard also expands the disclosure requirements for multiple deliverable revenue arrangements.These Accounting Standards Updates should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted.  Alternatively, an entity can elect to adopt these standards on a retrospective basis, but both thesestandards must be adopted in the same period using the same transition method.  The Company expects to apply this standard on a prospective basis for revenue arrangements entered into or materially modified beginning January 1, 2011.  The Company is currently evaluating the potential impact these standards may have on its financial position and results of operations.Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's Condensed Consolidated Financial Statements upon adoption. 14      Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial Statements4.        Property and Equipment September 30, 2009      Cost    Accumulated Depreciation    Net Book Value        (Unaudited)      (Unaudited)      (Unaudited)                            Computer equipment  $1,051,847    $446,298    $605,549  Vehicles    192,708      144,017      48,691  Office furniture    11,490      8,665      2,825  Leasehold improvement    35,570      2,816      32,754  Computer software    28,676     $6,863    $21,813  Total  $1,320,291     $608,659    $711,632   December 31, 2008      Cost    Accumulated Depreciation    Net Book Value        (Audited)      (Audited)      (Audited)                            Computer equipment  $957,625     $322,514     $635,111  Vehicles    171,852      159,640      12,212  Office furniture    8,738      8,395      343  Leasehold improvement    -      -      -  Computer software    5,520     $2,478     $3,042  Total  $1,143,735     $493,027     $650,708   Total depreciation expense for the three months ended September 30, 2009 was $50,831 (2008 - $67,304) with $38,795 (2008 - $59,038) included in cost of sales, $11,802 (2008 - $8,266) in general and administrative expenses, and $234 (2008 - $Nil) in selling expenses.Total depreciation expense for the nine months ended September 30, 2009 was $141,634 (2008 - $172,122) with $111,722 (2008 - $140,833) included in cost of sales, $29,288 (2008 - $31,289) in general and administrative expenses, and $624 (2008 - $Nil) in selling expenses.5.       Software Development Cost      September 30, 2009  December 31, 2008      (Unaudited)    (Audited)              Software development cost  $219,737  $219,861Less: accumulated amortization    201,426    146,574    $18,311  $73,287 Amortization expense for the three months ended September 30, 2009 was $18,299 (2008 - $18,282) and for nine months ended September 30, 2009 was $54,886 (2008 - $53,708). The amortization expense was included in cost of sales.  6.        Statutory Reserves In accordance with the laws and regulations of the PRC, all wholly-owned foreign invested enterprises have to set aside a portion of their net income each year as statutory reserves.  The proportion of allocation for reserve funds is no less than 10 percent of the profit after tax until the accumulated amount of allocation forstatutory surplus reserve funds reaches 50 percent of the registered capital. Statutory reserves represent restricted retained earnings. Statutory reserves are to be utilized to offset prior years' losses, or to increase its share capital. When a limited liability company converts its statutory reserves to capital in accordance with a shareholders' resolution, the Company will either distribute new shares in proportion to the number of shares held by each shareholder, or increase the par value of each share.Except for the reduction of losses incurred, any other usage should not result in this reserve balance falling below 25% of the registered capital. The funds accumulated by Jinan as of September 30, 2009 and December 31, 2008 were $363,063, no additional reserves have been taken during the first three quarters of fiscal 2009.  15    Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial Statements7.        Income TaxesThe Company files income tax returns in the PRC. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months.In 2007, Pansoft's operating subsidiary Jinan was subject to the enterprise income tax at the reduced applicable rate of 7.5%, as Jinan was classified as a "software enterprise" and "high-technology enterprise" business. The Company was able to enjoy a further reduction to 0% due to being a foreign investment enterprise ("FIE").On March 16, 2007, The National People's Congress of China passed "The Law of the People's Republic of China on Enterprise Income Tax" (the "Enterprise Income Tax Law").  The Enterprise Income Tax Law became effective on January 1, 2008.  This new law eliminated the existing preferential tax treatment that is availableto the FIEs but provides grandfathering of the preferential tax treatment currently enjoyed by the FIE's.  Under the new law, both domestic companies and FIE's are subject to a unified income tax rate of 25%. Jinan's two-year tax holiday ended in December 2007 and is currently eligible for the 50% exemption from tax for the years ending December 31, 2008 through December 31, 2010 under the grandfathering provisions in the Enterprise Income Tax Law.  A reconciliation of consolidated corporate income taxes at the statutory rate of 12.5% (2008: 12.5%) and the Company's effective income tax expense for the nine months ended September 30, 2009 and 2008 are shown as follows:    For the nine months endedSeptember 30,    2009  2008    (Unaudited)  (Audited)    Income before provision for income taxes $1,284,917  $1,540,514    Income tax at statutory rate  160,614   192,564              Temporary difference and other  53,028   237,815    Valuation allowance  -   (194,220)   Income tax provision $213,642  $236,159              Current income taxes $12,782  $-    Deferred income taxes  200,860   236,159    Total income tax provisions $213,642  $236,159   The significant components of deferred tax assets (liabilities) are as follows:    September 30, 2009 (Unaudited)    Current  Non-current  Total Timing difference on revenue recognition $(470,365) $-  $(470,365)Write off of accounts receivable  16,526   -   16,526 Plant, equipment and capitalized software cost  -   (19,661)  (19,661)Other temporary differences  81,533   -   81,533 Net deferred income tax liabilities $(372,306) $(19,661) $(391,967)    December 31, 2008 (Audited)    Current  Non-current  Total Timing difference on revenue recognition $(286,063) $-  $(286,063)Write off of accounts receivable  28,859   -   28,859 Plant, equipment and capitalized software cost  -   (18,532)   (18,532)Other temporary differences  84,700   -   84,700 Net deferred income tax liabilities $(172,505) $(18,532) $(191,036)  16    Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial Statements8.       Shareholders' Equity Common stockOn July 21, 2008, The Company's Board of Directors approved a 169.529280-for-1 stock split of the Company's common stock, whereby each share held by holders of record as of July 21, 2008 was subdivided into 169.529280 shares. The effects of this common stock split have been retroactively applied to the accompanying consolidated financialstatement and notes thereto. On September 8, 2008, the Company completed an initial public offering ("IPO") on NASDAQ. Warrants The following table shows the number of warrants with other information as of September 30, 2009: Outstanding WarrantsExercisable WarrantsWeighted Average Exercise PriceNumberWeighted Average Remaining Contractual LifeWeighted Average Exercise PriceExercise Number$ 8.460,0002.95 years$ 8.4- Transactions involving the Company's warrant issuance are summarized as follows:     Numberof Shares    Weighted AveragePricePer Share                    Outstanding at December 31, 2008    120,000      $8.4  Granted    -      -  Exercised    -      -  Canceled    (60,000)      $8.4  Outstanding at September 30, 2009    60,000      $8.4    Pursuant to the IPO, the Company issued 1,200,000 shares of common stock for gross proceeds of $8,400,000 and issued 120,000 underwriter warrants. Each warrant entitles the holder to purchase one common share for a price of $ 8.40 per share for a period of four years following the closing of the IPO. The unit price for each Underwriterwarrant is $ 0.001. The Company received proceeds of $ 120 from the issuance of underwriter warrants which is included in additional paid-in capital. The costs of the offering totaled to $876,987 and are included in additional paid-in capital.On August 31, 2009 the underwriter had returned 60,000 warrants to the Company and relinquished any ownership rights to the 60,000 warrants.Stock optionsThe Company has authorized the establishment of a pool for stock options effective on August 12, 2008 for its directors and employees (the "Pool"). The Pool contains 604,248 options to purchase common shares. It provides additional compensation incentives for high levels of performance and productivity by management, other key employees ofthe Company and directors. The following table shows the number of stock options with other information as of September 30, 2009:  Outstanding Stock Options Exercisable OptionsWeighted Average Exercise Price Number Weighted Average Remaining Contractual Life Weighted Average Exercise Price Exercise Number$ 7.00 314,000 4 years $ 7.00 -$ 2.74 39,000 2.86 years $ 2.74 -$ 5.20 14,000 2.64 years $ 5.20 -$ 6.48 367,000 3.83 years $ 6.48 -  17    Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial StatementsThe Company estimates the fair value of stock options using the Black-Scholes valuation model, consistent with the provisions of SFAS No. 123(R), "Share-Based Payment" (SFAS No. 123(R)) and SAB No. 107, which was primarily codified to the Topic 718 “Compensation – Stock Compensation”. Key inputs and assumptions used to estimatethe fair value of stock options include the grant price of the award, the expected option term, volatility of the Company's stock and the risk-free rate. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the Company. The fair value of each stock option grant was estimated at the date of grant using a Black-Scholes option pricing model. The following table summarized the options granted in 2008 and 2009. The assumptions used in the stock option valuation are as follow: Grant DateSeptember 8, 2008December 13, 2008December 13, 2008May 22, 2009Number of option321,00031,00015,00014,000Exercise Price$7.00$2.74$2.74$5.20Expected Life5353Volatility75%75%75%14%Risk free rate2.98%1.05%1.55%2.98%Dividend yield0%0%0%0%Option value$4.39$1.39$1.72$0.73 Transactions involving stock options issued to non employees are summarized as follows:     Numberof Shares    WeightedAveragePrice Per Share                    Outstanding at December 31, 2008:    367,000      $6.47  Granted    14,000      $5.2  Exercised    -      -  Expired    (14,000)      $4.87  Outstanding at September 30, 2009:    367,000      $6.48   In September 2008, the Company granted 321,000 options to its directors, management and key employees at an exercise price of $7.00, vesting at a rate of 20% per year for five years. The fair value of these stock options was determined to be $4.39 per stock option. In December 2008, the Company granted 46,000 options to its directors, financialadvisor and Interim CFO at an exercise price of $2.74. The vesting rate is 33% per year for two years and 34% for one year for the options granted to the directors and advisor and at the rate of 20% per year for five years for the options granted to Interim CFO. The fair value of these stock options was determined to be $1.39 and 1.72 per stock option, respectively. In August 19, 2009, the Company granted 140,000 options to its new appointed director. The grant date of the stock options granted was stated asMay 22, 2009, and at an exercise price of $5.20. The vesting rate is 33% per year for two years and 34% for one year. The fair value of these stock options was determined to be $0.73 per stock option. The stock option granted had been approved during the Annual Meeting of Shareholders held on July 20, 2009.In May 22 2009, one of the directors resigned form the board. The resigned director owned 7,000 stock options that granted on September 2008 with the exercise price of $7.00, vesting at a rate of 20% per year for five years and 7,000 stock options with the exercise price of $2.74, vesting at a rate 33% per year for two years and 34% for oneyear. The director shall have a period of three months commencing with the date of resignation, during which to exercise this option. The resigned director did not exercise any stock options before the end of the Expiration Date August 21, 2009. The stock option would be expired and no longer be exercisable at any time after the Expiration Date.A total of $151,127 and $38,815 was included in the stock option expense for the 3 months ended September 30, 2009 and 2008, respectively. As of September 30, 2009 and December 31, 2008, there was approximately $842,206 and $1,276,028, respectively of unrecognized compensation costs related to the non-vested share-based arrangements grantedunder the Company's stock option plan. Those costs are expected to be recognized over a weighted-average period of approximately 3.83 years and 4.61 years as of September 30, 2009 and December 31, 2008, respectively.  18    
 Pansoft Company Limited and SubsidiariesNotes to Condensed Consolidated Financial Statements  9.        CommitmentsThe Company was obligated under operating leases requiring minimum rentals as of September 30, 2009 as follows:     (Unaudited)Payable within:      - Remainder of 2009  $11,403 - 2010    21,696  - 2011    5,424  Total minimum lease payments  $38,523   10.      Financial Instruments     Concentrations of credit risk Accounts receivable potentially subject the Company to concentrations of credit risk.  Management is of the opinion that any risk of accounting loss is significantly reduced due to the financial strength of the Company's major customers.  The Company performs ongoing credit evaluations of its customers' financial conditionand evaluates management performance based on proceeds collected from projects.  Consequently, exposure to credit risk is limited accordingly.The credit risk on the cash equivalents is limited because the counterparties are banks with high credit ratings.
    Currency risk

one segment: the design, development, implementation and servicingof ERP systems. Factors used to identify the Company's single operating segment include the organizational structure of the Company and the financial information available for evaluation by the chief operating decision-maker in making decisions about how to allocate resources and assess performance.  The Company operates predominantly in one geographical area, the PRC. 

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|          |   |  (Unaudited)                       |      |   |  (Unaudited)                           |   |
|---------------|--------|-----------------------------------------|-----------|--------|---------------------------------------------|--------|
| In USD   |   | For The Three Months Ended September 30 |      |   | For The Nine Months Ended September 30 |   |
|          |   | 2009                                    |      |   | 2008                                        |   |   | Change |   |   | % |   |   | 2009 |   |   | 2008 |   |   | Change |   |   | % |   |
| Sales         |   | $                                       | 2,205,469 |   |                                        | $      | 2,171,038 |   |   | $ | 34,431 |   |   |   | 1.6 | % |   | $ | 5,145,375 |   |   | $ | 3,548,302 |   |   | $ | 1,597,073 |   |   |   | 45.0 | % |
| Cost of Sales |   | $                                       | 1,028,347 |   |                                        | $      | 695,003 |   |   | $ | 333,344 |   |   |   | 48.0 | % |   | $ | 2,743,265 |   |   | $ | 1,725,420 |   |   | $ | 1,017,845 |   |   |   | 59.0 | % |
| Gross Profit  |   | $                                       | 1,177,122 |   |                                        | $      | 1,476,035 |   |   | $ | -298,913 |   |   |   | -20.3 | % |   | $ | 2,402,110 |   |   | $ | 1,822,882 |   |   | $ | 579,228 |   |   |   | 31.8 | % |
| Gross Margin  |   |                                    | 53.4      | %      |                                        |   | 68.0 | % |   |   | -14.6 | % |   |   |   |   |   |   | 46.7 | % |   |   | 51.4 | % |   |   | -4.7 | %  |   |   |   |   |

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|                                          |   | (Unaudited)                                |    |    | (Unaudited)                                    |   |
|-----------------------------------------------|--------|--------------------------------------------|---------|---------|------------------------------------------------|--------|
| In USD                                   |   | For The Three Months Ended at September 30 |    |    | For The Nine Months Ended at September 30 |   |
| Expenses                                      |   | 2009                                       |    |    | 2008                                           |   |   | Change $ |   |   | % |   |   | 2009 |   |   | 2008 |   |   | Change $ |   |   | % |   |
| General and administrative expenses           |   |                                       | 116,968 |    |                                           |   | 130,828 |   |   |   | (13,860 | )  |   |   | -10.6 | % |   |   | 366,210 |   |   |   | 211,091 |   |   |   | 155,119 |   |   |   | 73.5 | % |
| Selling expenses                              |   |                                       | 94,620  |    |                                           |   | 8,506 |   |   |   | 86,114 |   |   |   | 1012.4 | % |   |   | 216,414 |   |   |   | 15,037 |   |   |   | 201,377 |   |   |   | 1339.2 | % |
| Professional fees                             |   |                                       | 129,781 |    |                                           |   | 27,112 |   |   |   | 102,669 |   |   |   | 378.7 | % |   |   | 300,168 |   |   |   | 88,649 |   |   |   | 211,519 |   |   |   | 238.6 | % |
| Stock based compensation                      |   |                                       | 151,127 |    |                                           |   | 38,815 |   |   |   | 112,312 |   |   |   | 289.4 | %  |   |   | 493,101 |   |   |   | 38,815 |   |   |   | 454,286 |   |   |   | 1170.4 | %  |
| Gain on disposition of property and equipment |   |                                       | (9      | )  |                                           |   | (154 | )  |   |   | 145 |   |   |   | -94.2 | %  |   |   | (741 | ) |   |   | (1,528 | ) |   |   | 787 |   |   |   | -51 | % |
|                                          |   |                                       | 492,487 |    |                                           |   | 205,107 |   |   |   | 287,380 |   |   |   | 140.1 | % |   |   | 1,375,152 |   |   |   | 352,064 |   |   |   | 1,023,088 |   |   |   | 290.6 | % |

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|                                      |   | (Unaudited)            |    |   | (Unaudited)           |   |
|-------------------------------------------|--------|------------------------|---------|--------|-----------------------|--------|
|                                      |   | For Three Months Ended |    |   | For nine Months Ended |   |
|                                      |   | September 30,          |    |   | September 30,         |   |
|                                      |   | 2009                   |    |   | 2008                  |   |   | Change |   |   | % |   |   | 2009 |   |   | 2008 |   |   | Change |   |   | % |   |
| Income from operations                    |   |                   | 684,635 |   |                  |   | 1,270,928 |   |   |   | (586,293 | ) |   |   | -46.1 | % |   |   | 1,026,958 |   |   |   | 1,470,818 |   |   |   | (443,860 | ) |   |   | -30.2 | % |
| Other income (expenses), net              |   |                   | (915    | )      |                  |   | 0 |   |   |   | (915 | ) |   |   |   |   |   |   | (4,687 | ) |   |   | 537 |   |   |   | (5,224 | ) |   |   | -972.8 | % |
| Government grant                          |   |                   | 17      |   |                  |   | 0 |   |   |   | 17 |   |   |   |   |   |   |   | 160,998 |   |   |   |   |   |   |   | 160,998 |   |   |   |   |   |
| Finance cost                              |   |                   | 22      |   |                  |   | (455 | ) |   |   | 477 |   |   |   | -104.8 | % |   |   |   |   |   |   | (873 | ) |   |   | 873 |   |   |   | -100.0 | % |
| Interest income                           |   |                   | 38,060  |   |                  |   | 27,555 |   |   |   | 10,505 |   |   |   | 38.1 | % |   |   | 101,648 |   |   |   | 70,032 |   |   |   | 31,616 |   |   |   | 45.1 | % |
| Income before provision from income taxes |   |                   | 721,819 |   |                  |   | 1,298,028 |   |   |   | (576,209 | ) |   |   | -44.4 | % |   |   | 1,284,917 |   |   |   | 1,540,514 |   |   |   | (255,597 | ) |   |   | -16.6 | % |
| Provision for current income taxes        |   |                   | 397     |   |                  |   | 0 |   |   |   | 397 |   |   |   |   |   |   |   | 12,782 |   |   |   |   |   |   |   | 12,782 |   |   |   |   |   |
| Provision for deferred income taxes       |   |                   | 33,367  |   |                  |   | 236,159 |   |   |   | (202,792 | ) |   |   | -85.9 | % |   |   | 200,860 |   |   |   | 236,159 |   |   |   | (35,299 | ) |   |   | -14.9 | % |
| Net income                                |   |                   | 688,055 |   |                  |   | 1,061,869 |   |   |   | (373,814 | ) |   |   | -35.2 | % |   |   | 1,071,275 |   |   |   | 1,304,355 |   |   |   | (233,080 | ) |   |   | -17.9 | % |
| Other comprehensive (loss) income         |   |                   | 10,469  |   |                  |   | 58,851 |   |   |   | (48,382 | ) |   |   | -82.2 | % |   |   | (7,248 | ) |   |   | 352,879 |   |   |   | (360,127 | ) |   |   | -102.1 | % |
| Comprehensive income                      |   |                   | 698,524 |   |                  |   | 1,120,720 |   |   |   | (422,196 | ) |   |   | -37.7 | % |   |   | 1,064,027 |   |   |   | 1,657,234 |   |   |   | (593,207 | ) |   |   | -35.8 | % |

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|  | $657,603 decrease in accounts receivable                        |
|--------------------------|-----------------------------------------------------------------|
|  | $1,796,953 increase in unbilled revenues                        |
|                     |                                                            |
|  | $36,571 increase in prepayments, deposits and other receivables |
|  | $102,273 increase in inventories                                |

|  | $687,904 decrease in accounts payable and accrued liabilities |
|--------------------------|---------------------------------------------------------------|
|  | $57,426  increase in deferred revenue               |

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PART II.                      OTHER INFORMATION 

| ***         | FOR       | % VOTED FOR | WITHHELD | % VOTED WITHHELD |
|-------------|-----------|-------------|----------|------------------|
| PAUL GILLIS | 4,849,125 | 99.20%      | 39,314   | 0.80%            |

| ***                | FOR       | AGAINST | ABSTAIN | BROKER NON-VOTES |
|--------------------|-----------|---------|---------|------------------|
| TOTAL SHARES VOTED | 3,898,726 | 28,327  | 1,300   | 960,087          |

| ***                | FOR       | AGAINST | ABSTAIN | BROKER NON-VOTES |
|--------------------|-----------|---------|---------|------------------|
| TOTAL SHARES VOTED | 4,887,440 | 1,000   | 0       | 0                |

| Number |   | Exhibit                                                                                                                                                                             |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                |
| 31.1   |   | Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|   |   |                                                                                                                                                                                |
| 31.2   |   | Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|   |   |                                                                                                                                                                                |
| 32.1   |   | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                            |
|   |   |                                                                                                                                                                                |
| 32.2   |   | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                            |

26      

SIGNATURES 

|              | PANSOFT COMPANY LIMITED |
|-------------------|-------------------------|
|              |                    |
| November 13, 2009 | By:                     | /s/ Allen Zhang |
|              |                    | Allen Zhang |
|              |                    | Interim Chief Financial Officer |
|              |                    | (Principal Financial and Accounting Officer) |

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