Bonso Electronics International Inc – ‘424B2’ on 12/2/99

On:  Thursday, 12/2/99   ·   Accession #:  1021890-99-240   ·   File #:  333-09002

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Prospectus   —   Rule 424(b)(2)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B2       Bonso Electronics International Inc. Prospectus       96    406K 

Document Table of Contents

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                                             As filed pursuant to Rule 424(b)(2)
                                         Registration Nos. 33-84872 and 333-9002

BONSO ELECTRONICS INTERNATIONAL INC.

2,504,403 Shares of Common Stock
Issuable on Exercise of Common Stock Purchase Warrants
 Including
330,000 Shares Offered by Selling Shareholders

     Bonso Electronics  International  Inc.  ("Bonso") is offering the following
shares of common stock:                                                         

     o    2,174,403  shares  issuable  on  exercise  of  certain   publicly-held
warrants;                                                   

     o    110,000 shares issuable on exercise of certain  warrants issued to the
          representatives  of the underwriters of a public  securities  offering
conducted by Bonso in 1994; and                             

     o    220,000  shares  issuable on exercise of warrants  which  underlie the
warrants issued to the representatives of the underwriters. 

     The 330,000  shares of common  stock which  underlie  the  representatives'
warrants may be offered and sold from time to time by selling shareholders.     

     Prior to this  offering,  the  common  stock  has  traded  on the  National
Association of Securities  Dealers  Automated  Quotation System ("NASDAQ") under
the symbol  "BNSO." As of November 19, 1999 (one  business day prior to the date
of this  prospectus),  the reported  closing  sales price of the common stock on
NASDAQ-National Market System was $8.875.                                       

     An investment in these securities involves a high degree of risk. See "Risk
Factors"  beginning at page 9 of this  prospectus  for a  discussion  of certain
factors that you should consider before investing in these securities.          

     Neither the  Securities and Exchange  Commission  nor any state  securities
commission  has approved or  disapproved  of the  securities  or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.                                                               
          Underwriting
               Price to       Discounts and        Proceeds to
                 Public(1)(2)   Commissions          Company(2)(3)
                -----------    -------------        ------------

Per Share(4)         $         7.35     $     0.147(5)     $        7.203       
Per Share(6)         $       9.1875     $      0.00        $       9.1875       
               -------------      ----------         -------------
Total Offering       $18,609,487.05     $319,637.24        $18,289,849.81       

The date of this prospectus is November 22, 1999

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(1)  The  2,504,403  shares of common  stock  underlying  the warrants are being
     offered  by Bonso  to the  holders  of the  warrants.  There is no  minimum
     purchase amount.  The shares of common stock are offered for cash only. The
     exercise  prices of the warrants were  arbitrarily  determined  and bear no
     relationship  to the  value  of Bonso or its  assets,  nor do the  exercise
     prices  represent  that the common  stock has a value or could be resold at
     those prices. The shares of common stock are being sold on a "best efforts"
     basis by Bonso; consequently, no minimum number of shares is required to be
sold.                                                                 
(2)  The 330,000 shares offered by the selling shareholders,  which underlie the
     representatives'  warrants and the warrants  issuable  upon exercise of the
     representatives' warrants, are being registered for the benefit of, and may
     be sold from time to time by, the selling shareholders.  Bonso will receive
no proceeds from the sale of these shares by the selling shareholders.
(3)  Before  deducting other expenses of the offering payable by Bonso estimated
     at  $125,000,  including,  among  others,  registration  and  filing  fees,
     professional  fees  and  printing  expenses.  All  proceeds  received  upon
     exercise of the warrants will be applied directly to Bonso's benefit. There
     is no escrow  of funds  and no  assurance  that all or any  portion  of the
warrants will be exercised.                                           
(4)  Shares underlying the publicly-held  warrants and the warrants contained in
units underlying the representatives' warrants.                       
(5)  Applies only to exercises of publicly-held  warrants which are solicited by
a member of the National Association of Securities Dealers, Inc.      
(6)  Shares contained in units underlying representatives' warrants.            

     You may exercise your warrants only if you live in a state where the common
stock has been qualified for issuance  under  applicable  state laws,  including
registration  if required  under your state's  law. As a result,  you may not be
permitted to exercise  your  warrants but may have to sell your  warrants or let
them expire unexercised.                                                        

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 TABLE OF CONTENTS

                                                                            Page

Questions and Answers About Exercising Your Warrants ........................  1
Prospectus Summary ..........................................................  2
Risk Factors ................................................................  7
Forward-Looking Statements .................................................. 13
Enforceability of Certain Civil Liabilities and Certain                         
    Foreign Issuer Considerations ........................................... 14
Financial Statements and Currency Presentation .............................. 15
The Company ................................................................. 15
Use of Proceeds ............................................................. 17
Taxation and Dividend Policy ................................................ 17
Price Range of Common Shares ................................................ 18
Capitalization .............................................................. 19
Selected Consolidated Financial Data ........................................ 20
Management's Discussion and Analysis of Financial                               
    Condition and Results of Operations ..................................... 23
Business .................................................................... 31
Management .................................................................. 44
Principal Shareholders ...................................................... 49
Selling Shareholders ........................................................ 50
Description of Securities ................................................... 53
Shares Eligible for Future Sale ............................................. 56
Plan of Distribution ........................................................ 57
Legal Matters ............................................................... 59
Experts ..................................................................... 59
Additional Information ...................................................... 59
Incorporation of Certain Documents by Reference ............................. 60

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 QUESTIONS AND ANSWERS
ABOUT EXERCISING YOUR WARRANTS

Q:   How do I exercise my warrants?                                             

A:   For you to exercise  warrants in this offering,  you must send your warrant
     subscription form with the required payment of the per share price to Bonso
     or the participating  NASD member  broker/dealer firm and they must receive
     both your warrant  subscription  form and the required payment prior to the
expiration of the warrants.                                           

Q:   What will  happen to my  warrants  if I don't  exercise  or don't  exercise
properly?                                                             

A:   If  your  warrant   subscription  form  is  not  received  by  Bonso  or  a
     participating  NASD member  broker/dealer firm by the expiration date or if
     it is executed defectively or received without full payment,  your warrants
may expire unexercised.                                               

Q:   Can I amend or rescind my warrant exercise once it is sent?                

A:   Once Bonso has received your executed  warrant  subscription  form, you may
     modify, amend or rescind it only with Bonso's consent and only prior to the
end of the warrant exercise period.                                   

Q:   What if I am entitled to a fraction of a share of stock?                   

A:   No  fractional  shares will be issued upon  exercise of the  warrants.  Any
     fractional  shares will be paid in cash at the  current  market  price,  as
     defined  in the  warrant  agreement,  of the  common  stock  on the date of
exercise.                                                             

Q:   Can Bonso change the exercise provisions of the warrants?                  

A:   Bonso reserves the right to extend the warrant exercise  period,  to reduce
     the exercise price or to waive or seek  correction of defectively  executed
forms but does not represent that it will do so.                      

Q:   When and how will I get my stock certificates if I exercise my warrants?   

A:   Bonso's  transfer  agent,  U. S.  Stock  Transfer  Corporation,  will  mail
     certificates  representing the shares of common stock issued to the persons
     entitled to them at the address of those  persons  appearing on the warrant
     subscription  form. The transfer agent will issue  certificates  as soon as
     possible,  on a weekly basis,  after it has received your properly executed
     warrant   subscription  form,  together  with  surrender  of  your  warrant
     certificate  and payment for the shares of common  stock  purchased.  Bonso
     will hold any  certificates  returned  as  undeliverable  until the  person
     legally  entitled  to the  certificates  claims  them  or  until  they  are
     otherwise  disposed of in accordance  with  applicable  law. You may not be
     able to sell the shares which you have  purchased  until you have  received
certificates for the shares.                                          

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Q:   What will happen to the money I pay upon exercise of my warrants?          

A:   Payments  for shares of common  stock  will be  deposited  in an  operating
     account of Bonso.  No interest will be paid to warrant  holders  exercising
their right to subscribe for shares of common stock.                  

Q:   If my exercise is solicited by a broker, will he be paid a commission?     

A:   Bonso has entered into an exclusive  agency  agreement  with EBI Securities
     Corporation, which was formerly Cohig & Associates, Inc. EBI is referred to
     as the "selling agent." Under the agency agreement,  the selling agent will
     advise,  direct, solicit and coordinate the solicitation of the exercise of
     the publicly-held  warrants.  The agreement  includes an agreement to pay a
     fee equal to 2% of the gross U. S.  dollars  paid for the  exercise  of the
     publicly-held  warrants.  The  selling  agent  may  enter  into  sub-agency
     agreements  with other NASD member  broker/dealer  firms under which it may
 re-allow up to the full amount of its fee to those broker/dealer firms.

Q:   Who can help answer my questions about exercising my warrants?             

A:   If you have any more questions about  exercising your warrants,  you should
contact                                                               

EBI Securities Corporation
6300 South Syracuse Way, Suite 645
 Englewood, Colorado 80111
(303) 694-0295

PROSPECTUS SUMMARY

     This summary  highlights  important  information about Bonso's business and
about  this  offering.  Because  it's a  summary,  it  doesn't  contain  all the
information  you should consider  before  exercising  your warrants.  Therefore,
please read the entire prospectus.                                              

     As used in this  prospectus,  "China"  refers to all parts of the  People's
Republic of China other than the Special Administrative Region of Hong Kong. The
term "Bonso"  refers to Bonso  Electronics  International  Inc.  and,  where the
context  requires  or  suggests,  its  direct  and  indirect  subsidiaries.  All
outstanding  share data excludes  1,130,000  shares of common stock reserved for
issuance  upon exercise of certain  outstanding  stock options and 30,000 shares
reserved for issuance upon exercise of stock options which may be granted in the
future  under  Bonso's 1996  Non-Employee  Directors'  Stock  Option  Plan.  See
"Management--Stock Option Plans" and "Principal Shareholders."                  

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Background                                                                      

     Bonso  presently  has  outstanding  2,174,403  publicly-held  common  stock
purchase  warrants  which were issued in December  1994 in a public  offering of
units.  Each warrant entitles the holder to purchase one share of Bonso's $0.003
par value common stock at $7.35 per share and is  exercisable  any time prior to
2:00 p.m.  (Pacific Time) on January 31, 2000,  unless  extended by the board of
directors.  The  publicly-held  warrants are  redeemable by Bonso at any time at
$0.05 per warrant  upon 30 to 45 days notice if the closing  price of the common
stock for 20  consecutive  trading days within the 30-day period before the date
the notice is given is at least $8.575 per share.                               

     In addition,  Bonso has outstanding  110,000  warrants which were issued to
the  representatives  of the  underwriters  of its 1994  public  offering.  Each
representatives' warrant entitles the holder to purchase one unit, consisting of
one share of common  stock and two  warrants,  at  $9.1875  per unit at any time
prior to 5:00 p.m.  (Pacific  Time) on December 14, 1999.  The  representatives'
warrants are not  redeemable.  The 220,000  warrants  contained in the units are
exercisable  on the same  terms and  conditions  as the  publicly-held  warrants
described above.                                                                

     The registration statement of which this prospectus is a part registers the
shares  of  common  stock   underlying  the   publicly-held   warrants  and  the
representatives'  warrants.  The warrants and the representatives'  warrants are
collectively referred to in this prospectus as the "warrants."                  

     The exercise prices of the warrants as described above are wholly arbitrary
and there is no assurance  that the price of the common stock will, at any time,
equal or  exceed  the  exercise  prices of the  warrants.  The  warrants  can be
exercised  only if a  current  prospectus  is in  effect.  See  "Description  of
Securities--Warrants."                                                          

The Company                                                                     

     Bonso designs,  develops,  manufactures  and sells a comprehensive  line of
electronic  scales and weighing  instruments and electronic  consumer and health
care products.  Bonso's  electronic  scales include bathroom,  kitchen,  office,
jewelry, laboratory,  pocket, hanging, postal, industrial and parcel scales that
are used in consumer, commercial and industrial applications. Bonso's electronic
consumer and health care products include pedometers,  chronographs,  electronic
thermometers and blood pressure meters.                                         

     Bonso  also  plans to enter  the  digital  telecommunications  market,  and
anticipates that its first  telecommunications  product will be a two-way radio.
Bonso  has  engaged  a senior  manager  with  experience  in  telecommunications
manufacturing.  There can be no  assurance,  however,  that  development  of any
telecommunications  products  will be  successfully  completed,  that Bonso will
obtain  customers  for any of  these  products  or that  sales  of any of  these
products will be profitable.                                                    

     Bonso's  wholly-owned  Hong Kong  subsidiary  - Bonso  Electronics  Limited
("Bonso Electronics") - is responsible for the design, development,  manufacture
and sale of  Bonso's  products.  Bonso  Electronics  has one  active  Hong  Kong
subsidiary - Bonso  Investment  Limited ("BIL") - which has been used to acquire

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and hold  Bonso's  real  estate  investments  in Hong  Kong and  China,  and one
inactive subsidiary - Bonso Advance Technology Limited.                         

     Bonso has  manufactured all of its products in China since 1989 in order to
take  advantage of lower overhead costs and  competitive  labor rates  available
there.  In January 1997,  Bonso  completed a new  manufacturing  facility in the
DaYang Synthetical Development District in Shenzhen,  China, which approximately
tripled  Bonso's  production  capacity.  The leasehold,  facilities,  machinery,
furniture  and  equipment  at that  facility  are  owned and  operated  by Bonso
Electronics (Shenzhen) Co. Ltd. ("Shenzhen Bonso"), a 100% Company-owned Chinese
limited liability company which was formed in June 1994. The location of Bonso's
factory in Shenzhen, only about 50 miles from Hong Kong, permits Bonso to manage
easily manufacturing  operations from Hong Kong, and facilitates  transportation
of Bonso's products out of China through the port of Hong Kong.                 

     For the fiscal year ended March 31, 1999,  Bonso had sales of US$13,046,265
and net income of US$13,754.  For the six months ended September 30, 1999, Bonso
had sales of US$7,854,730 and net income of US$621,536.                         

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                                                        [Enlarge/Download Table]


The Offering                                                                                

                                                                                            
Securities offered ........................... 2,504,403 shares of common stock,  $0.003 par
                                               value, issuable upon exercise of warrants    

                                               330,000  shares  of common  stock,  $.003 par
                                               value,  which  are  included  in  the  shares
                                               issuable upon exercise of the warrants, to be
                                               offered   from   time  to  time  by   selling
                                               shareholders                                 

Exercise price per share ..................... $7.35  per share - warrants held by public   
  of common stock or unit                      $9.1875 per unit - representatives' warrants 

Terms of the offering ........................ This  offering is being made by Bonso  solely
                                               to  the   holders  of   Bonso's   outstanding
                                               warrants.  Shares not issued in this offering
                                               will not be  offered  or sold to the  public.
                                               However,  shares  issued upon exercise of the
                                               warrants may be resold under this  prospectus
                                               from time to time.                           

Common stock outstanding ..................... 2,919,159 shares                             
  prior to offering                                                                         

Common stock outstanding ..................... 5,423,562 shares                             
  after offering if all warrants exercised                                                  

Estimated net proceeds to Bonso if ........... $18,164,850                                  
  all warrants exercised                                                                    

Use of proceeds .............................. Management  intends  to use the net  proceeds
                                               from this offering for working  capital.  See
                                               "Use of Proceeds."                           

Risk factors ................................. Acquisition of shares of common stock through
                                               the exercise of outstanding  warrants entails
                                               a  high   degree   of  risk   and   immediate
                                               substantial dilution. See "Risk Factors."    

Nasdaq symbols ............................... Common Shares.....  BNSO                     
                                               Warrants..........  BNSOW                    

Summarized Consolidated Financial Data                                          

     The following summary of financial  information is derived from the audited
consolidated financial statements of Bonso as of March 31, 1998 and 1999 and for
each of the three fiscal years in the period ended March 31, 1999, together with
the notes to those  financial  statements,  included  in other  sections of this
prospectus.  The financial information at and for the six months ended September
30, 1998 and 1999 is  unaudited.  This summary  information  is qualified in its

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entirety  by  reference  to,  and  should  be  read  in  conjunction  with,  the
consolidated  financial statements,  together with the notes to the consolidated
financial  statements,  and  "Management's  Discussion and Analysis of Financial
Condition  and  Results  of  Operations"  included  in  other  sections  of this
prospectus.                                                                     

         The consolidated  financial  statements are prepared in accordance with
generally accepted accounted  principles in the United States of America and are
stated in U.S.  dollars.  The "as adjusted" column,  below,  gives effect to the
sale of 2,504,403  shares of common  stock  consisting  of  2,394,403  shares of
common stock to be issued upon  exercise of all of the  publicly-held  warrants,
including the warrants  included in the units  underlying  the  representatives'
warrants,  at $7.35 per share and  110,000  shares of common  stock to be issued
upon exercise of all of the representatives' warrants at $9.1875 per share, with
estimated net proceeds to Bonso of $18,164,850.                                 

                                                        [Enlarge/Download Table]


                                      SUMMARIZED CONSOLIDATED FINANCIAL DATA                                        
                               (In thousands of U.S. dollars, except per share data)                                

                                                                                                Six Months Ended    
                                                   Year Ended March 31,                           September 30,     
                                           -----------------------------------                -------------------   
Income Statement Data                      1997            1998           1999                1998           1999   
---------------------                      ----            ----           ----                ----           ----   
                                        (Audited)       (Audited)      (Audited)          (Unaudited)    (Unaudited)
                                                                                                                    
Sales                                   $  16,989      $  23,716       $  13,046           $   6,946       $   7,855

Gross margin                            $   4,893      $   6,645       $   4,234           $   1,879       $   2,581

Income from operations                  $     916      $   2,354       $     244           $     262       $     730

Net income                              $     547      $   2,275       $      14           $     110       $     622

Earnings per share -  Basic             $    0.19      $    0.80            0.45 cents     $   0.036       $    0.20
                   -  Diluted           $    0.19      $    0.73            0.37 cents     $   0.032       $    0.17

Weighted average shares outstanding     2,825,949      2,829,448       3,079,219           3,034,439       3,115,880
Incremental shares from assumed                                                                                     
  exercise of:                                                                                                      
    Warrants                                 --           25,562         166,024             177,727           --   
    Stock options                          20,095        279,362         429,060             218,960         539,950
                                        ---------      ---------       ---------           ---------       ---------
Dilutive potential common shares           20,095        304,924         595,084             396,687         539,950
Adjusted weighted average shares        2,846,044      3,134,372       3,674,303           3,431,126       3,655,830



                                                   As of March 31,                   As of September 30,            
                                                ---------------------              -------------------------        
Balance Sheet Data                              1998             1999              1999          As Adjusted        
------------------                              ----             ----              ----          -----------        
                                              (Audited)        (Audited)        (Unaudited)      (Unaudited)        

                                                                                                                    
Total Current Assets                          $ 9,109           $ 7,308          $ 6,624           $24,789          

Total Assets                                  $20,647           $18,660          $19,544           $37,709          

Current Liabilities                           $ 5,925           $ 3,992          $ 3,972           $ 3,972          

Debt                                          $ 3,507           $ 1,945          $ 3,399           $ 3,399          

Total Liabilities                             $ 6,168           $ 4,034          $ 4,299           $ 4,299          

Shareholders' Equity                          $14,479           $14,626          $15,245           $33,410          

Net Working Capital                           $ 3,184           $ 3,316          $ 2,652           $20,817          

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RISK FACTORS

Investment in the securities  offered  through this  prospectus  involves a high
degree of risk. Please carefully consider the following risk factors, along with
the other information  contained in this prospectus,  before deciding whether to
exercise your warrants.                                                         

Political,  Legal,  Economic and Other  Uncertainties of Operations in China and
Hong Kong                                                                       

     China's  Sovereignty  over  Hong  Kong  Could  Cause  Instability.  Bonso's
principal  executive and corporate offices are located in Hong Kong,  formerly a
British Crown Colony.  Sovereignty over Hong Kong was transferred effective July
1, 1997 to China, and Hong Kong became a Special Administrative Region of China.
The  National  People's  Congress of China  enacted the Basic Law in 1990 as the
constitution of Hong Kong under China's  sovereignty.  While management does not
believe that the transfer of sovereignty over Hong Kong to China has had or will
have a material adverse effect on Bonso's business, there can be no assurance as
to the continued  stability of political,  economic or commercial  conditions in
Hong Kong, and any instability could have an adverse impact on Bonso's business.

     The Hong Kong  dollar  and the  United  States  dollar  have been  fixed at
approximately 7.80 Hong Kong dollars to $1.00 since 1983. The Chinese government
expressed  its  intention in the Basic Law to maintain the stability of the Hong
Kong currency after the sovereignty of Hong Kong was transferred to China. There
can be no  assurance  that this will  continue  and Bonso  could face  increased
currency risks if the current exchange rate mechanism is changed.               

     Manufacturing in China Involves Risks Caused by Internal Political Factors.
Bonso's  manufacturing  facility  is  located  in China.  As a  result,  Bonso's
operations and assets are subject to significant political,  economic, legal and
other uncertainties.  Changes in policies by the Chinese government resulting in
changes in laws,  regulations  or the  interpretation  of laws and  regulations,
confiscatory  taxation,  restrictions  on imports and sources of supply,  import
duties,  corruption,  currency  revaluation  or  the  expropriation  of  private
enterprise could  materially and adversely  affect Bonso.  Over the past several
years, the Chinese government has pursued economic reform policies including the
encouragement    of   private    economic    activity   and   greater   economic
decentralization.  There can be no assurance  that the Chinese  government  will
continue to pursue these  policies,  that these  policies  will be successful if
pursued, that these policies will not be significantly altered from time to time
or that  business  operations  in China would not become  subject to the risk of
nationalization,  which  could  result in the total loss of  investment  in that
country.  Economic  development  may be  limited  as well by the  imposition  of
austerity measures intended to reduce inflation,  the inadequate  development of
infrastructure  and the  potential  unavailability  of adequate  power and water
supplies,  transportation  and  communications.  If for any  reason  Bonso  were
required  to  move  its   manufacturing   operations   outside  of  China,   its
profitability  would be substantially  impaired,  its competitiveness and market
position would be materially  jeopardized  and there can be no assurance that it
could continue its operations.                                                  

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     If China Were to Lose Most Favored Nation Status,  Bonso Could be Adversely
Affected. China currently enjoys most favored nation ("MFN") trade status, which
provides  China  with the  trading  privileges  generally  available  to trading
partners  of the United  States.  The United  States  annually  reconsiders  the
renewal of China's MFN status. Various interest groups continue to urge that the
United  States  not  renew  MFN  for  China  and  there  can no  assurance  that
controversies  will not arise  that  threaten  the status  quo  involving  trade
between the United States and China or that the United States will not revoke or
refuse to renew  China's  MFN  status.  In any of these  eventualities,  Bonso's
business could be adversely  affected,  by among other things,  causing  Bonso's
products in the United States to become more expensive,  which could result in a
reduction in the demand for Bonso's  products by customers in the United States.
Trade  friction  between the United  States and China,  whether or not  actually
affecting  Bonso's  business,  could also adversely affect the prevailing market
price of Bonso's common stock and warrants.                                     

     The Chinese Legal System and Application of Chinese Laws Are Uncertain. The
legal  system  of  China  relating  to  foreign  investments  is  both  new  and
continually  evolving,  and  currently  there  can  be no  certainty  as to  the
application of its laws and regulations in particular instances.  China does not
have a comprehensive system of laws.  Enforcement of existing laws or agreements
may be sporadic and implementation and interpretation of laws inconsistent.  The
Chinese judiciary is relatively  inexperienced in enforcing the laws that exist,
leading to a higher than usual  degree of  uncertainty  as to the outcome of any
litigation.  Even where adequate law exists in China,  it may not be possible to
obtain swift and equitable enforcement of that law.                             

     China's  Economic  Policies Could Change.  As part of its economic  reform,
China  has   designated   certain  areas,   including   Shenzhen  where  Bonso's
manufacturing complex is located, as Special Economic Zones. Foreign enterprises
in these areas  benefit from greater  economic  autonomy and more  favorable tax
treatment than  enterprises in other parts of China.  Changes in the policies or
laws governing  Special  Economic Zones could have a material  adverse effect on
Bonso. Moreover,  economic reforms and growth in China have been more successful
in certain  provinces  than others,  and the  continuation  or increase of these
disparities could affect the political or social stability of China.            

     Bonso Is  Dependent  on a  Single  Factory.  All of  Bonso's  products  are
currently manufactured at its manufacturing facility located in Shenzhen, China.
Bonso does not own the land underlying its factory complex. It occupies the site
under an  agreement  with the local  Chinese  government  under  which  Bonso is
entitled  to use the land upon which its factory  complex is situated  until May
2044.  This  agreement  and the  operations  of  Bonso's  Shenzhen  factory  are
dependent on Bonso's relationship with the local government.  Bonso's operations
and prospects  would be materially and adversely  affected by the failure of the
local government to honor the agreement. In the event of a dispute,  enforcement
of the agreement could be difficult in China.                                   

     Moreover,  fire fighting and disaster relief or assistance in China may not
be as developed as in Western  countries.  Bonso  currently  maintains  property
damage insurance  aggregating  approximately  $13,900,000  covering its stock in
trade, goods and merchandise,  furniture and equipment and buildings. Bonso does
not maintain  business  interruption  insurance.  Investors are  cautioned  that
material damage to, or the loss of, Bonso's factory due to fire, severe weather,

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flood or other  act of God or  cause,  even if  insured  against,  could  have a
material adverse effect on Bonso's financial  condition,  results of operations,
business and prospects.                                                         

     Asia Has Recently  Experienced  Significant  Economic  Problems.  Recently,
several  countries in Southeast Asia have experienced a significant  devaluation
of their  currencies  and  decline  in the value of their  capital  markets.  In
addition, several Asian countries have experienced a number of bank failures and
consolidations.  Management  believes that most Asian  countries  have recovered
from these  declines and it does not believe that the declines in Southeast Asia
will affect the demand for Bonso's  products,  because  virtually all of Bonso's
products are sold into  developed  countries not  experiencing  these  declines.
Moreover,  because  most of  Bonso's  products  are  paid  for in U.S.  dollars,
management  believes  that  Bonso  is  less  susceptible  to  the  effects  of a
devaluation  in the Hong Kong dollar or Chinese  renminbi if either or both were
to occur despite assurances to the contrary by the Chinese government.  However,
the decline in the currencies of other  Southeast  Asian  countries could render
Bonso's products less competitive if competitors  located in these countries are
able to manufacture  competitive  products at a lower effective cost.  Investors
are  cautioned  that the decline in Southeast  Asia may have a material  adverse
effect on Bonso's business, financial condition, results of operations or market
price of its securities.                                                        

Risk Factors Relating to the Business of Bonso                                  

     The Loss of Any of  Bonso's  Major  Customers  Could  Significantly  Affect
Profitability.  Four major customers  accounted for approximately 62% of Bonso's
sales in the fiscal year ended  March 31,  1998 and 51% of its sales  during the
fiscal year ended March 31, 1999. The loss of any of these major customers could
have a material  negative impact on Bonso's business.  See  "Business--Customers
and  Marketing--Major  Customers" and  "Management's  Discussion and Analysis of
Financial Condition--Overview."                                                 

     Bonso Is Dependent on Its Key Personnel.  Bonso's future  performance  will
depend to a significant extent upon the efforts and abilities of certain members
of senior management as well as upon Bonso's ability to attract and retain other
qualified  personnel.  In  particular,  Bonso  is  largely  dependent  upon  the
continued  efforts of Mr.  Anthony So, its president,  secretary,  treasurer and
chairman  of its board of  directors,  and Mr. Kim Wah Chung,  its  director  of
engineering and research and development. To the extent that the services of Mr.
So or Mr. Chung would be unavailable to Bonso, Bonso would be required to obtain
other personnel to perform the duties that they otherwise  would perform.  There
can be no assurance that Bonso would be able to employ another  qualified person
or persons, with the appropriate background and expertise,  to replace Mr. So or
Mr. Chung on terms suitable to it. See "Management."                            

     Bonso Faces Strong Competition.  Bonso's business is in an industry that is
highly competitive,  and many of its competitors,  both local and international,
have  substantially  greater technical,  financial and marketing  resources than
Bonso. See "Business--Competition."                                             

     Bonso  Needs  Qualified  Employees.  Bonso's  success is  dependent  on its
ability to attract and retain  qualified  technical,  marketing  and  production
personnel.  Bonso will have to compete with other larger companies for this type

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of personnel,  and there can be no assurance  that Bonso will be able to attract
or retain qualified personnel of this nature.                                   

     Bonso's Founder Controls the Company.  At the present time, Mr. Anthony So,
Bonso's  founder and president,  beneficially  owns  approximately  37.5% of the
outstanding shares of common stock. Due to his stock ownership, Mr. So may be in
a position to elect the board of directors and,  therefore,  to control  Bonso's
business and affairs  including  certain  significant  corporate actions such as
acquisitions,  the sale or  purchase  of  assets  and the  issuance  and sale of
Bonso's securities. See "Principal Shareholders."                               

     Bonso's  Operating  Results  Are  Subject  to  Wide  Fluctuations.  Bonso's
quarterly and annual operating results are affected by a wide variety of factors
that  could  materially  and  adversely  affect  net  sales,  gross  profit  and
profitability.  This could result from any one or a combination of factors, many
of which are beyond Bonso's control.  Results of operations in any period should
not be considered indicative of results to be expected in any future period, and
fluctuations in operating  results may also result in fluctuations in the market
price of Bonso's common stock.                                                  

Certain Legal Consequences of Foreign Incorporation and Operations              

     Judgments  Against Bonso and Its  Management  May Be Difficult to Obtain or
Enforce.  Bonso is a holding corporation organized as an International  Business
Company  under  the  laws  of the  British  Virgin  Islands.  Bonso's  principal
operating  subsidiary  is organized  under the laws of Hong Kong,  where Bonso's
principal executive offices are also located.  Outside the United States, it may
be difficult for investors to enforce  judgments  against Bonso  obtained in the
United States in actions brought  against Bonso,  including  actions  predicated
upon civil liability provisions of federal securities laws. In addition, most of
Bonso's  officers and directors  reside outside the United States and the assets
of these  persons and of Bonso are located  outside of the United  States.  As a
result, it may not be possible for investors to effect service of process within
the United  States  upon these  persons,  or to enforce  against  Bonso or these
persons judgments  predicated upon the liability  provisions of U.S.  securities
laws.  Bonso has been  advised by its Hong Kong  counsel and its British  Virgin
Islands counsel that there is substantial doubt as to the enforceability against
Bonso or any of its directors or officers  located  outside the United States in
original  actions or in actions for  enforcement of judgments of U.S.  courts of
liabilities  predicated  solely on the civil  liability  provisions  of  federal
securities laws. See  "Enforceability  of Certain Civil  Liabilities and Certain
Foreign Issuer Considerations."                                                 

     Because  Bonso  Is  Incorporated   in  the  British  Virgin  Islands,   Its
Shareholders  May  Not  Have  the  Same  Protections  as  Shareholders  of  U.S.
Corporations.  Bonso is organized  under the laws of the British Virgin Islands.
Principles  of law  relating to matters  affecting  the  validity  of  corporate
procedures,   the  fiduciary  duties  of  Bonso's   management,   directors  and
controlling shareholders and the rights of Bonso's shareholders differ from, and
may not be as  protective  of  shareholders  as, those that would apply if Bonso
were incorporated in a jurisdiction within the United States. Directors of Bonso
have the power to take certain actions without shareholder  approval,  including
an  amendment  of Bonso's  Memorandum  or  Articles of  Association  and certain
fundamental corporate transactions,  including reorganizations,  certain mergers
or  consolidations  and the sale or transfer of assets.  In  addition,  there is
doubt that the courts of the British  Virgin  Islands would enforce  liabilities
predicated upon U.S. securities laws.                                           

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     Bonso's  Shareholders  Do Not  Have  the Same  Protections  or  Information
Generally Available to Shareholders of U.S.  Corporations  Because of Exemptions
for  Foreign  Private  Issuers.  Bonso is a foreign  private  issuer  within the
meaning of rules  promulgated  under the  Securities  Exchange Act of 1934. As a
result,  and though its common stock is  registered  under  Section 12(g) of the
Exchange  Act,  it is  exempt  from  certain  provisions  of  the  Exchange  Act
applicable  to United  States public  companies  including:  the rules under the
Exchange Act requiring the filing with the Securities and Exchange Commission of
quarterly  reports on Form 10-Q or current  reports on Form 8-K, the sections of
the  Exchange  Act  regulating  the   solicitation   of  proxies,   consents  or
authorizations  in respect to a security  registered  under the Exchange Act and
the sections of the Exchange Act  requiring  insiders to file public  reports of
their stock ownership and trading activities and establishing  insider liability
for  profits  realized  from any  "short-swing"  trading  transaction  (i.e.,  a
purchase  and sale,  or sale and  purchase,  of the issuer's  equity  securities
within six months or less).  Because of the  exemptions  under the  Exchange Act
applicable to foreign  private  issuers,  shareholders of Bonso are not afforded
the same protections or information  generally  available to investors in public
companies organized in the United States.                                       

Risks Relating to this Offering                                                 

     You May Not be Able to Sell Your  Shares of Common  Stock for What You Paid
for  Them.   The  exercise   prices  of  the  publicly  held  warrants  and  the
representatives'  warrants have been arbitrarily determined through negotiations
between Bonso and the representatives of the underwriters of Bonso's 1994 public
offering.  The  exercise  prices of the  warrants  do not  necessarily  bear any
relationship  to the  assets,  operating  results,  book value or  shareholders'
equity of Bonso or any other statistical criterion of value. The exercise prices
of the warrants should not under any  circumstances be regarded as an indication
of any future market price of Bonso's common stock.                             

     Bonso May Not  Receive  Enough  Money From  Warrant  Exercises  to Fund Its
Planned  Operations.  In 1998, Bonso solicited the exercise of the publicly held
warrants.  Management  intended  to utilize a portion of the  proceeds  from the
exercises of these  warrants to fund  expansion  of  operations,  including  the
development and production of Bonso's proposed cordless telephone. However, only
25,597  warrants  were  exercised.  There is no  assurance  that any more of the
warrants  will be exercised.  Accordingly,  funding for the expansion of Bonso's
operations  will be dependent on its ability to generate  significant  operating
revenue  or  procure  additional  financing.  There  can  be no  assurance  that
sufficient  operating revenue can be generated or that any additional  financing
can be arranged on favorable  terms and in the amounts  required to fund Bonso's
operations.                                                                     

     You  May Not Be  Able  to  Exercise  Your  Warrants.  Exercise  of  Bonso's
outstanding  warrants is subject to its either  maintaining the effectiveness of
its registration  statement,  or filing an effective registration statement with
the Securities and Exchange  Commission and complying with the appropriate state
securities  laws.  No assurance  can be given that at the time a warrant  holder

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seeks to  exercise  the right to  purchase  Bonso's  common  stock an  effective
registration  statement  will in fact be in  effect  or  that  Bonso  will  have
complied with all appropriate state securities laws.                            

     Future Sales of Restricted  Shares Into the Public Market Could Depress the
Market Price of the Common Stock. As of the date of this  prospectus,  1,168,421
outstanding shares of Bonso common stock are restricted  securities as that term
is defined in Rule 144 under the Securities Act of 1933. Although the Securities
Act  and  Rule  144  place  certain  prohibitions  on  the  sale  of  restricted
securities,  they may be sold into the public market under  certain  conditions.
Further,  Bonso has issued options to purchase  1,130,000 shares of common stock
and has reserved an additional 30,000 shares for issuance upon exercise of stock
options  which may be granted  in the future  under its  existing  stock  option
plans,  in addition to the  2,504,403  shares  which could be issued  under this
prospectus. It is possible that, when permitted, the sale to the public of these
shares, or shares acquired upon exercise of the options, could have a depressing
effect on the price of the common stock.  Further,  future sales of these shares
and the exercise of these  options could  adversely  affect  Bonso's  ability to
raise capital in the future.                                                    

     The Market  Price of Bonso's  Common  Stock  Fluctuates  . The  markets for
equity  securities  have been volatile and the price of Bonso's common stock has
been and could  continue  to be  subject to wide  fluctuations  in  response  to
quarter to quarter variations in operating results, news announcements,  trading
volume, sales of common stock by officers, directors and principal shareholders,
general market trends and other factors.                                        

     Shareholders  Who Do Not Exercise  Their  Warrants  Would Be Diluted By the
Exercise of Other Warrants. Current shareholders of Bonso who also hold warrants
will have their  percentage  of ownership in Bonso diluted if they choose to let
their  warrants  expire  and other  warrant  holders  choose to  exercise  their
warrants.                                                                       

     Bonso Might Decide to Redeem the  Warrants.  The publicly held warrants are
redeemable  by Bonso at any time at $0.05 per warrant  upon 30 to 45 days notice
if the closing price of the common stock for 20 consecutive  trading days within
the 30-day  period  before  the date the notice is given is at least  $8.575 per
share. If Bonso calls the publicly held warrants for redemption,  the holders of
the publicly  held  warrants must either (i) exercise the publicly held warrants
and pay the  exercise  price at a time  when it may be  disadvantageous  for the
holders to do so; (ii) sell the public warrants at the then current market price
when they might  otherwise  wish to hold the publicly  held  warrants;  or (iii)
accept the nominal  redemption price,  which is likely to be substantially  less
than the market value of the publicly held  warrants.  No assurance can be given
that at the time of redemption an effective  registration  statement  will be in
effect or that Bonso will have complied with all  appropriate  state  securities
laws so that a publicly held warrant  holder will be able to exercise his public
warrants rather than accepting the $0.05 per warrant redemption price.          

     The Market Price of the Common Stock Could Drop Because the Selling  Agents
May Not Be Allowed to Make a Market For the Stock Until After This Solicitation.
The  selling  agents have  advised  Bonso that they may make a market in Bonso's
securities.  Regulation M under the Securities Exchange Act of 1934 may prohibit
the selling agents from engaging in any market making  activities with regard to
Bonso's  securities  for a specified  period  prior to any  solicitation  by the
selling  agents of the  exercise of the public  warrants  until the later of the
termination  of any  solicitation  activity  or the  termination  (by  waiver or

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otherwise)  of any right that the  selling  agents may have to receive a fee for
the exercise of the public warrants  following a solicitation.  As a result, the
selling agents may be unable to provide a market for Bonso's  securities  during
certain  periods  while the  public  warrants  are  exercisable.  Any  temporary
cessation of these market making  activities  could have an adverse  effect upon
the market price of Bonso's securities.                                         

FORWARD-LOOKING STATEMENTS

     Some  statements  contained in this  prospectus  that are not statements of
historical  facts are  "forward-looking  statements"  within the  meaning of the
Private  Securities   Litigation  Reform  Act  of  1995.  These  forward-looking
statements include,  among others,  statements regarding Bonso's future economic
performance  and financial  position and plans and  objectives of management for
future operations including plans and objectives relating to the development and
sale of telecommunications  products.  Forward-looking statements are subject to
factors  that could cause the actual  results to differ  materially  from future
results expressed or implied by  forward-looking  statements.  They are based on
assumptions, including the following:                                           

     o    that  political,  economic and commercial  conditions in Hong Kong and
China will not change materially or adversely               

     o    that competitive conditions affecting Bonso will not change materially
or adversely                                                

o    that demand for Bonso's products will be strong                  

o    that Bonso will retain existing key management personnel         

o    that Bonso's forecasts will accurately anticipate market demand  

     o    that there will be no material adverse change in Bonso's operations or
business                                                    

     Assumptions  relating to these factors  involve  judgments with respect to,
among other things,  future  economic,  competitive  and market  conditions  and
future business  decisions,  all of which are difficult or impossible to predict
accurately and many of which are beyond  Bonso's  control.  Although  management
believes that the  assumptions  underlying  the  forward-looking  statements are
reasonable,  any of the assumptions could prove inaccurate and, therefore, there
can be no assurance that the results contemplated in forward-looking information
will  be  realized.  Management  intends  that  the  forward-looking  statements
contained in this  prospectus be subject to the safe harbors  created by Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934.                                                                        

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 ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES AND
 CERTAIN FOREIGN ISSUER CONSIDERATIONS

     Bonso is a British Virgin Islands holding corporation.  Bonso has appointed
Henry F. Schlueter,  1050 Seventeenth Street, Suite 1700, Denver, Colorado 80265
as its agent upon whom  process may be served in any action  brought  against it
under the  securities  laws of the United  States.  However,  outside the United
States,  it may be difficult  for investors to enforce  judgments  against Bonso
obtained  in the  United  States  in any of  these  actions,  including  actions
predicated upon civil liability provisions of the United States securities laws.
In addition,  most of Bonso's  officers and directors  reside outside the United
States and the assets of these  persons and of Bonso are located  outside of the
United  States.  As a result,  it may not be possible  for  investors  to effect
service of process  within the United States upon these  persons,  or to enforce
against  Bonso or these  persons  judgments  obtained  in United  States  courts
predicated upon the liability  provisions of the United States  securities laws.
Bonso has been  advised by Harney,  Westwood and Riegels  ("HW&R"),  its British
Virgin Islands  counsel,  and by Norman M.K. Yeung & Co.,  Solicitors  ("Yeung &
Co."),  its  Hong  Kong  counsel,  that  there  is  substantial  doubt as to the
enforceability  against  Bonso  or any of its  directors  and  officers  located
outside the United States in original  actions or in actions for  enforcement of
judgments of United States courts of liabilities  predicated solely on the civil
liability provisions of the United States securities laws.                      

     Bonso  has been  advised  by Yeung & Co.  and HW&R  that no  treaty  exists
between Hong Kong or the British Virgin Islands and the United States  providing
for the reciprocal enforcement of foreign judgments. However, the courts of Hong
Kong and the British Virgin  Islands are generally  prepared to accept a foreign
judgment as evidence of a debt due. An action may then be commenced in Hong Kong
or the British  Virgin Islands for recovery of this debt. A Hong Kong or British
Virgin  Islands court will only accept a foreign  judgment as evidence of a debt
due if:                                                                         

(1)  the judgment is for a liquidated amount in a civil matter;       

     (2)  the  judgment  is final  and  conclusive  and has not been  stayed  or
satisfied in full;                                          

     (3)  the judgment is not directly or indirectly  for the payment of foreign
          taxes, penalties, fines or charges of a like nature (in this regard, a
          Hong Kong or British  Virgin  Islands  court is  unlikely  to accept a
          judgment  for an amount  obtained by  doubling,  trebling or otherwise
          multiplying  a sum  assessed  as  compensation  for the loss or damage
   sustained by the person in whose favor the judgment was given);

     (4)  the  judgment  was not  obtained  by actual or  constructive  fraud or
duress;                                                     

     (5)  the  foreign  court  has  taken   jurisdiction  on  grounds  that  are
          recognized by the common law rules as to conflict of laws in Hong Kong
or the British Virgin Islands;                              

     (6)  the  proceedings  in which the judgment was obtained were not contrary
to natural justice;                                         

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     (7)  the  proceedings  in which the  judgment  was  obtained,  the judgment
          itself and the  enforcement  of the  judgment  are not contrary to the
public policy of Hong Kong or the British Virgin Islands;   

     (8)  the  person  against  whom the  judgment  is given is  subject  to the
          jurisdiction of the Hong Kong or the British Virgin Islands court; and

     (9)  the judgment is not on a claim for  contribution in respect of damages
       awarded by a judgment that does not satisfy the above requirements.

     Enforcement  of a  foreign  judgment  in Hong  Kong or the  British  Virgin
Islands may also be limited or affected by  applicable  bankruptcy,  insolvency,
liquidation,  arrangement,  moratorium  or similar laws relating to or affecting
creditors'  rights  generally  and will be subject to a statutory  limitation of
time within which proceedings may be brought.                                   

     Under United States law,  majority and controlling  shareholders  generally
have  certain  "fiduciary"   responsibilities  to  the  minority   shareholders.
Shareholder  action  must be taken in good  faith  and  actions  by  controlling
shareholders that are obviously  unreasonable may be declared null and void. The
British Virgin Islands law protecting the interests of the minority shareholders
may not be as protective in all  circumstances  as the law  protecting  minority
shareholders  in United States  jurisdictions.  While British Virgin Islands law
does  permit a  shareholder  of a  British  Virgin  Islands  company  to sue its
directors  derivatively,  i.e. in the name of and for the benefit of the company
and to sue the  company  and its  directors  for his  benefit and the benefit of
others similarly  situated,  the circumstances in which any of these actions may
be brought and the  procedures  and defenses that may be available in respect of
any of these  actions  may  result in the  rights of  shareholders  of a British
Virgin Islands company being more limited than those rights of shareholders in a
United States company.                                                          

FINANCIAL STATEMENTS AND CURRENCY PRESENTATION

     Bonso prepares its  consolidated  financial  statements in accordance  with
generally accepted accounting  principles in the United States of America.  (See
note 1 to the consolidated  financial statements.) Bonso publishes its financial
statements  in United  States  dollar for the  following  reasons:  (1) Bonso is
incorporated  in the British  Virgin  Islands  where the  currency is the United
States dollar; (2) Bonso conducts substantially all of its sales transactions in
United  States  dollars;  and (3) the exchange rate between the Hong Kong dollar
and the United  States  dollar has been fixed at 7.80 Hong Kong dollars to $1.00
since 1983. All dollar amounts ("$") set forth in this  prospectus are in United
States dollars.                                                                 

 THE COMPANY

     Bonso Electronics  International Inc. was incorporated on August 8, 1988 as
a limited liability International Business Company under the laws of the British
Virgin Islands to serve as a holding company for Bonso's  operating  subsidiary,
which  was  formed  in 1980.  As an  International  Business  Company,  Bonso is
prohibited  from doing  business  with  persons  resident in the British  Virgin

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Islands, owning real estate in the British Virgin Islands or acting as a bank or
insurance  company.  Bonso  was  incorporated  in  the  British  Virgin  Islands
principally to facilitate trading in its securities. The government of Hong Kong
imposes a stamp duty on the transfer of securities of Hong Kong corporations. No
duty of this kind is imposed by the British  Virgin  Islands,  and Bonso is also
exempt  from  income  tax in  the  British  Virgin  Islands.  Bonso's  corporate
administrative  matters are conducted through its registered agent, HWR Services
Limited,  P.O.  Box 71, Road Town,  Tortola,  British  Virgin  Islands.  Bonso's
principal  executive  offices  are  located at Flat A-D,  8th  Floor,  Universal
Industrial Centre, 23-25 Shan Mei Street, Fo Tan, Shatin, New Territories,  Hong
Kong.  Its  telephone   number  is   852-2605-5822,   its  facsimile  number  is
852-2691-1724 and its E-mail address is info@bonso.com.                         

     Bonso Electronics Limited ("Bonso Electronics"),  Bonso's wholly owned Hong
Kong subsidiary, is mainly responsible for the design, development,  manufacture
and sale of a comprehensive line of electronic scales,  weighing instruments and
electronic  consumer and health care products.  Bonso Electronics has one active
Hong Kong subsidiary - Bonso Investment Limited ("BIL"),  which has been used to
acquire and hold Bonso's real estate investments in Hong Kong and China.        

     Since January 1997,  Bonso's  products  have been  manufactured  at Bonso's
manufacturing  facility  in  the  DaYang  Synthetical  Development  District  in
Shenzhen, China. The leasehold,  facilities,  machinery, furniture and equipment
at that facility are owned and operated by Bonso Electronics (Shenzhen) Co. Ltd.
("Shenzhen Bonso"), a 100% company-owned Chinese limited liability company which
was formed in June 1994. See "Business--Properties--China."                     

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 USE OF PROCEEDS

     If all of the 2,504,403  warrants are  exercised,  of which there can be no
assurance,  the maximum  estimated  net proceeds to Bonso will be  approximately
$18,164,850 after deduction of fees and the expenses of this offering.          

     Bonso intends to use the net proceeds for working capital.  Working capital
may be used for further expansion of Bonso's  operations,  on-going  operations,
general  and  administrative  expenses  or any  other  use  which  the  board of
directors deems appropriate.                                                    

     Pending  utilization,  management intends to make temporary  investments of
the  proceeds  in bank  certificates  of deposit,  interest-bearing  savings and
checking  accounts,  prime  commercial  paper  or  government  obligations.   An
investment in  interest-bearing  assets, if continued for an extensive period of
time within the  definitions of the Investment  Company Act of 1940, as amended,
could subject  Bonso to  classification  as an  "investment  company"  under the
Investment  Company Act of 1940 and to registration  and reporting  requirements
thereunder, although Bonso does not intend this to be a result.                 

TAXATION AND DIVIDEND POLICY

Dividend Policy                                                                 

     Bonso  has  never  paid any  dividends  on its  common  stock  and does not
anticipate  paying any  dividends in the future.  The board of directors has not
adopted a policy with respect to the payment of dividends.  The  declaration  of
cash  dividends may be  considered  by the board of directors  from time to time
based  on  Bonso's  results  of  operations.  Bonso's  dividend  policy  will be
dependent on its net income,  financial position and capital  requirements along
with economic and market conditions,  industry  standards and other factors.  In
addition,  dividend  distribution  and  repatriation  of  profits  or funds from
Bonso's  operations in China are regulated by Chinese laws and  regulations.  No
profits are generated from China because Bonso's Chinese operations involve only
the manufacture and assembly of its products which are then shipped to Hong Kong
for sale and distribution.  However, these laws could be interpreted differently
in the future, in which case Bonso's ability to pay dividends could be adversely
affected.  In light of the above,  no assurance can be given as to the amount or
timing   of   future   dividend   payments,   if  any.   See   "Description   of
Securities--Exchange Controls and Other Limitations Affecting Shareholders."    

Taxation                                                                        

     Under current  British  Virgin  Islands law, Bonso is not subject to tax on
its income. Most of Bonso's subsidiaries' profits accrue in Hong Kong, where the
corporate  tax rate is  currently  16%.  There is no tax payable in Hong Kong on
offshore  profit  or on  dividends  paid to  Bonso  Electronics  Limited  by its
subsidiaries or by Bonso Electronics  Limited to Bonso.  Therefore,  the overall
effective  tax  rate of Bonso  may be  lower  than  that of most  United  States
corporations;  however,  this could be  materially  and  adversely  affected  by
changes in the tax laws of the British Virgin Islands, Hong Kong or China.      

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     No reciprocal tax treaty  regarding  withholding  exists between the United
States and the British Virgin Islands. Under current British Virgin Islands law,
dividends, interest or royalties paid by Bonso to individuals are not subject to
tax as long as the recipient is not a resident of the British Virgin Islands. If
Bonso were to pay a dividend, Bonso would not be liable to withhold any tax, but
shareholders  would  receive  gross  dividends,  if any,  irrespective  of their
residential or national status.                                                 

     Dividends,   if  any,  paid  to  any  United  States  resident  or  citizen
shareholder would be treated as dividend income for United States federal income
tax   purposes.   These   dividends   would   not  be   eligible   for  the  70%
dividends-received  deduction allowed to United States corporations on dividends
from a domestic  corporation  under  Section 243 of the United  States  Internal
Revenue Code of 1986.  Various Internal  Revenue Code provisions  impose special
taxes in certain  circumstances  on  non-United  States  corporations  and their
shareholders. Shareholders of Bonso are urged to consult their tax advisors with
regard to these possibilities and their own tax situation.                      

     In addition to United States federal income  taxation,  shareholders may be
subject to state and local taxes upon their receipt of dividends.               

PRICE RANGE OF COMMON SHARES

     Bonso's  common  stock and  publicly  held  warrants are traded only in the
United  States  over-the-counter  market.  The  common  stock is  quoted  on the
National  Association of Securities  Dealers,  Inc.  Automated  Quotation System
("Nasdaq")  National  Market under the trading  symbol BNSO;  the publicly  held
warrants are quoted under the trading symbol BNSOW on Nasdaq.                   

     The table set forth below presents the range, on a quarterly basis, of high
and low closing  sales prices per share of common  stock and per  publicly  held
warrant as  reported  by Nasdaq for the last two fiscal  years and for the first
quarter of the fiscal year  ending  March 31,  2000.  The  quotations  represent
prices between dealers and do not include retail markup, markdown or commissions
and may not necessarily represent actual transactions.                          

Common Stock                                                                    

 Quarter Ended                             High              Low
 -------------                             ----              ---

Fiscal 1998                                                           
-----------                                                           

 June 30, 1997 ............................   $    2.25        $  1.6875
 September 30, 1997 .......................   $    6.50        $  2.0625
 December 31, 1997 ........................   $   8.375        $   5.375
 March 31, 1998 ...........................   $  10.125        $   5.875

Fiscal 1999                                                           
-----------                                                           
 June 30, 1998 ............................   $  11.375        $  9.0625
 September 30, 1998 .......................   $  11.125        $   5.125

 December 31, 1998 ........................   $   6.125        $   3.125
 March 31, 1999 ...........................   $    7.50        $   5.375

Fiscal 2000                                                           
----------                                                            

 June 30, 1999 ............................   $   7.625        $    5.75
 September 30, 1999 .......................   $    7.50        $   6.281

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Public Warrants                                                                 

     Quarter Ended                                 High              Low
     -------------                                 ----              ---

Fiscal 1998                                                           
-----------                                                           
  June 30, 1997 ............................     $  0.40625     $   0.3125
  September 30, 1997 .......................     $     1.50     $  0.40625
  December 31, 1997 ........................     $    2.375     $  0.78125
  March 31, 1998 ...........................     $   2.5625     $    1.125

Fiscal 1999                                                           
-----------                                                           

  June 30, 1998 ............................     $    3.375     $    2.125
  September 30, 1998 .......................     $    3.453     $    0.063
  December 31, 1998 ........................     $    0.656     $    0.156
  March 31, 1999 ...........................     $    0.875     $    0.313

Fiscal 2000                                                           
-----------                                                           
  June 30, 1999 ............................     $    0.688     $    0.188
  September 30, 1999 .......................     $    0.469     $    0.188

     As of  September  30,  1999,  Bonso had  2,919,159  shares of common  stock
outstanding.  These  shares  were held by  approximately  297  holders of record
worldwide, including 293 holders of record in the United States. On November 19,
1999 (one business day prior to the date of this  prospectus),  the closing sale
price of the common stock as reported on the Nasdaq National Market was $8.875. 

CAPITALIZATION

     The following table sets forth the capitalization of Bonso at September 30,
1999 and as  adjusted to reflect  the sale by Bonso of (i)  2,174,403  shares of
common stock  underlying  the public  warrants at an exercise price of $7.35 per
share;  (ii) 110,000  shares of common  stock  underlying  the  representatives'
warrants at an exercise  price of $9.1875 per unit;  and (iii) 220,000 shares of
common  stock  underlying  the  public  warrants  contained  in the  units at an
exercise price of $7.35 per share.  The table should be read in conjunction with
the unaudited  consolidated  financial statements appearing in other sections of
this prospectus. Figures in the "as adjusted" column assume the exercise of 100%
of the publicly held warrants and 100% of the representatives'  warrants. Dollar
amounts are in thousands.                                                       

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                                                        [Enlarge/Download Table]

                                                                 September 30, 1999     
                                                               Actual       As Adjusted 
                                                               ------       ----------- 
                                                             (Unaudited)     (Unaudited)
                                                                                        
Long-term debt and capital lease obligations,                                           
    net of current maturities ..............................   $   327        $   327   
Shareholders equity:                                                                    
  Common stock, $0.003 par value per share:                                             
     23,333,334 shares authorized; 2,919,159 shares                                     
     issued and outstanding as of September 30, 1999 ; and                              
      5,423,562 shares to be issued and outstanding as                                  
      adjusted .............................................   $     9        $    16   
  Additional paid in capital ...............................   $ 8,856        $27,014   
  Retained earnings ........................................   $ 6,147        $ 6,147   
  Accumulated other comprehensive income ...................   $   234        $   234   

Total long-term liabilities and shareholders' equity .......   $15,573        $33,738   

SELECTED CONSOLIDATED FINANCIAL DATA

     The selected  consolidated  financial  data set forth below as of March 31,
1998 and 1999 and for each of the three  fiscal  years in the period ended March
31, 1999 are derived  from the audited  consolidated  financial  statements  and
notes to the consolidated financial statements, which are prepared in accordance
with generally accepted accounting principles in the United States of America in
United States dollars,  and which appear in another section of this  prospectus.
The selected  consolidated  financial data set forth below as of March 31, 1995,
1996 and 1997 and for each of the two fiscal years in the period ended March 31,
1996 have been derived from Bonso's audited  consolidated  financial  statements
which do not appear in this  prospectus.  The financial  data set forth below at
and for the six months  ended  September  30,  1998 and 1999 are  unaudited  and
include,  in the opinion of  management,  all  adjustments,  consisting  only of
normal  recurring  accruals,  considered  necessary for a fair  presentation  of
financial  position  and results of  operations.  Operating  results for the six
months ended  September 30, 1999 are not  necessarily  indicative of the results
that  may be  expected  for  the  year  ending  March  31,  2000.  The  selected
consolidated financial data are qualified in their entirety by reference to, and
should be read in conjunction  with, the consolidated  financial  statements and
related notes and "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations" included in another section of this prospectus.      

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                                                        [Enlarge/Download Table]

                                                                                   Year ended March 31,                        
Income Statement Data                                     1995               1996              1997          1998       1999   
                                                          ----               ----              ----          ----       ----   
                                                               (In thousands of United States dollars, except per share data)  

                                                                                                                               
Net sales ..........................................    $13,266            $14,248           $ 16,989    $ 23,716    $ 13,046  
Cost of sales ......................................     (8,936)            (9,412)           (12,096)    (17,071)      8,812  
                                                       --------           --------           --------    --------    --------  
Gross margin .......................................      4,330              4,836              4,893       6,645       4,234  
Selling expenses ...................................       (265)              (325)              (433)       (420)       (197) 
Salaries and related costs .........................     (1,561)            (1,960)            (1,973)     (1,897)     (1,626) 
Research and development expenses ..................       (108)              (173               (122)       (159)       (566) 
Administration and general expenses ................         98             (1,234)            (1,609)     (1,815)     (1,601) 
Provision for permanent diminution in value                                                                                    
  of investment in a joint venture company .........       --                 (153)              --          --          --    
Net gain on liquidation of a joint venture                                                                                     
  company ..........................................       --                 --                  160        --          --    
                                                       --------           --------           --------    --------    --------  
Income from operations .............................      2,494                991                916       2,354         244  
Interest income ....................................         75                127                 64          73          63  
Interest expenses ..................................       (560)              (607)              (532)       (503)       (445) 
Less: Interest capitalized .........................       --                   58                 61          46          25  
                                                       --------           --------           --------    --------    --------  
                                                           (560)              (549)              (471)       (457)       (420) 
Foreign exchange (losses)/gains ....................       (146)              (124)              (136)         35          38  
Other income .......................................       --                   76                102         243          53  
                                                       --------           --------           --------    --------    --------  
Income/(loss) before income taxes ..................      1,863                521                475       2,248         (22) 
Income tax (expense)/benefit .......................        (67)                96                 72          27          36  
                                                       --------           --------           --------    --------    --------  
Income before minority interests ...................      1,796                617                547       2,275          14  
Minority interests .................................         47                (10)              --          --          --    
                                                       --------           --------           --------    --------    --------  
Net income .........................................   $  1,843           $    607           $    547    $  2,275    $     14  
                                                       --------           --------           --------    --------    --------  
Earnings per share   - Basic .......................   $   0.95           $   0.21           $   0.19    $   0.80    0.45 cents
                     - Diluted .....................   $   0.95           $   0.21           $   0.19    $   0.73    0.37 cents


Balance Sheet Data                                        1995               1996              1997          1998       1999   
                                                          ----               ----              ----          ----       ----   

                                                                                                                               
Working capital ....................................   $  4,719           $  3,801           $  1,663    $  3,184    $  3,316  
Total assets .......................................     18,278             20,700             20,516      20,647      18,660  
Long-term debt and capital lease obligations,                                                                                  
  net of current maturities ........................         68                744                787         243          42  
Deferred income taxes(liabilities)/assets ..........       (103)               (49)                16          74         112  
Shareholders' equity ...............................     10,764             11,433             12,142      14,479      14,626  

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                                                  Six months ended September 30,                                               
                                                          1998        1999                                                     
                                                          ----        ----                                                     
                              (In thousands of United States dollars, except per share data)                                   
                                                                                                                               
Net sales ..........................................   $  6,946    $  7,855                                                    
Cost of sales ......................................     (5,067)     (5,274)                                                   
                                                       --------    --------                                                    
Gross margin .......................................      1,879       2,581                                                    
Selling expenses ...................................        (84)        (90)                                                   
Salaries and related costs .........................       (816)       (875)                                                   
Research and development expenses ..................        (12)        (98)                                                   
Administration and general expenses ................       (705)       (788)                                                   
Provision for permanent diminution in value                                                                                    
  of investment in a joint venture company .........       --          --                                                      
Net gain on liquidation of a joint venture                                                                                     
  company ..........................................       --          --                                                      
                                                       --------    --------                                                    
Income from operations .............................        262         730                                                    
Interest income ....................................         20          29                                                    
Interest expenses ..................................       (249)       (125)                                                   
Less: Interest capitalized .........................       --          --                                                      
                                                       --------    --------                                                    
                                                           (249)       (125)                                                   

Foreign exchange (losses)/gains ....................         37          (6)                                                   
Other income .......................................         40          81                                                    
                                                       --------    --------                                                    
Income/(loss) before income taxes ..................        110         709                                                    
Income tax (expense)/benefit .......................       --           (87)                                                   
                                                       --------    --------                                                    
Income before minority interests ...................        110         622                                                    
Minority interests .................................       --          --                                                      
                                                       --------    --------                                                    
Net income .........................................   $    110    $    622                                                    
                                                       --------    --------                                                    
Earnings per share   - Basuc .......................   $  0.036    $   0.20                                                    
                     - Diluted .....................   $  0.032    $   0.17                                                    


                                                         As of September 30,                                                   
Balance Sheet Data                                        1998        1999                                                     
                                                          -----       ----                                                     

                                                                                                                               
Working capital ....................................    $  3452    $  2,652                                                    
Total assets .......................................     19,176      19,544                                                    
Long-term debt and capital lease obligations,                                                                                  
  net of current maturities ........................        178         327                                                    
Deferred income taxes(liabilities)/assets ..........       --           112                                                    
Shareholders' equity ...............................     14,703      15,245                                                    

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 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview                                                                        

         Bonso  derives its  revenues  principally  from the sale of  electronic
scales and electronic  consumer and health care products  manufactured  by it in
China.  For the  fiscal  year  ended  March  31,  1998,  Bonso  had net sales of
$23,715,576  and net income of  $2,274,645.  However,  in the fiscal  year ended
March 31, 1999, net sales decreased to $13,046,265  and net income  decreased to
$13,754.  For thesix  months ended  September  30, 1999,  Bonso had net sales of
$7,854,730 and net income of $621,536.                                          

     Bonso was  operating at full capacity in its prior  manufacturing  facility
and, in January  1997, it moved its  manufacturing  operations to a new facility
which has  approximately  tripled  Bonso's  manufacturing  capacity.  Management
believes  that Bonso will be able to  increase  sales to take  advantage  of its
increased  manufacturing capacity and improve margins and financial performance.
Increased  revenue  and net  income in future  periods  will  depend on  Bonso's
ability to                                                                      

     o    strengthen  its  customer  base  by  enhancing  and  diversifying  its
products                                                    

o    increase the number of its customers                             

o    expand into additional markets                                   

o    maintain or increase sales of its products to existing customers 

o    increase production                                              

o    control all of its costs.                                        

     Although labor costs are increasing in China,  Bonso's labor costs continue
to  represent a  relatively  small  percentage  of its total  production  costs.
Management  believes  that  increased  labor  costs  in  China  will  not have a
significant  effect on its total production costs or results of operations,  and
that  Bonso will be able to  continue  to  increase  its  production  at its new
facility  without  substantially  increasing  its  non-production  salaries  and
related costs. In addition,  Bonso has not experienced significant  difficulties
in obtaining raw materials for its products,  and management does not anticipate
any such difficulties in the foreseeable future.                                

Results of Operations                                                           

     The following  table sets forth selected income data as a percentage of net
sales for the periods indicated.                                                

                                                        [Enlarge/Download Table]

                                                                                      Six months ended   
                                                           Year ended March 31,         September 30,    
Income Statement Data                                   1997      1998      1999    1998            1999 
                                                        ----      ----      ----    ----            ---- 
                                                                                                         
Net sales ............................................ 100.0%    100.0%    100.0%    100%           100% 
Cost of sales ........................................ (71.2)    (72.0)    (67.5)  (72.9)         (67.1)%
                                                       -----      -----    -----   -----          -----  
Gross margin .........................................  28.8      28.0      32.5    27.1           32.9  
Selling expenses .....................................  (2.5)     (1.8)     (1.5)   (1.2)          (1.1) 
Salaries and related costs ........................... (11.6)     (8.0)    (12.5)  (11.8)         (11.2) 
Research and development expenses ....................  (0.7)     (0.7)     (4.3)   (0.2)          (1.3) 
Administration and general expenses ..................  (9.5)     (7.6)    (12.3)  (10.2)         (10.0) 
Net gain on liquidation of a joint venture company ...   0.9       --        --      --             --   
                                                       -----     -----     -----   -----          -----  
Income from operations ...............................   5.4       9.9       1.9     3.7            9.3  
Interest income ......................................   0.4       0.3       0.4     0.3            0.4  
Interest expense .....................................  (3.1)     (2.1)     (3.4)   (3.6)          (1.6) 
                                                       -----     -----     -----   -----          -----  
Less: Interest capitalized ...........................   0.3       0.2       0.2     --             --   
                                                       -----     -----     -----   -----          -----  
                                                       (2.8)     (1.9)      (3.2)   (3.6)          (1.6) 

Foreign exchange (losses)/gains ......................  (0.8)      0.2       0.3     0.6           (0.1) 
Other income .........................................   0.6       1.0       0.4     0.6            1.0  
                                                       -----     -----     -----   -----          -----  
Income before income taxes ...........................   2.8       9.5      (0.2)    1.6            9.0  
Income tax benefit/(cost) ............................   0.4       0.1       0.3     --            (1.1) 
Net income ...........................................   3.2%      9.6%      0.1%    1.6%           7.9% 
                                                       =====     =====     =====   =====          =====  

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Six months ended  September 30, 1999 compared to six months ended  September 30,
1998                                                                            

     Net Sales. Bonso's sales increased 13.1% from $6,945,587 for the six months
ended  September 30, 1998, to $7,854,730 for the six months ended  September 30,
1999, primarily as a result of increased orders from new and existing customers.

     Gross Margin.  Gross margin  increased  from 27.1% for the six months ended
September  30,  1998 to 32.9%  for the six  months  ended  September  30,  1999,
primarily due to the  introduction of new, higher profit margin pocket and glass
scales.                                                                         

     Selling Expenses.  Selling expenses  increased by 6.6% from $84,450 for the
six  months  ended  September  30,  1998 to  $90,050  for the six  months  ended
September  30,  1999.  This  increase  was  attributable  primarily to increased
transportation expenses as a result of increased sales.                         

     Salaries and Related  Costs.  Salaries and related costs  increased by 7.2%
from  $816,247 for the six months ended  September  30, 1998 to $874,806 for the
six months ended  September  30, 1999.  This  increase was  primarily  due to an
increase in the number of employees.                                            

     Research and Development.  Research and development expenses increased 733%
from $11,802  during the six months ended  September 30, 1998 to $98,314 for the
six  months  ended  September  30,  1999,  primarily  as a result of  increasing
emphasis on new product development, such as new industrial and kitchen scales. 

     Administration  and General Expenses.  Administration  and general expenses
increased by 11.7% from $705,228 for the six months ended September 30, 1998, to
$787,787  for the six  months  ended  September  30,  1999.  This  increase  was
attributable  primarily  to  increased  advertising  for product  promotion  and
overseas travel to visit customers.                                             

     Income from  Operations.  Income from  operations  increased by 178.8% from
$261,930  for the six months  ended  September  30, 1998 to $730,151 for the six
months ended September 30, 1999,  primarily as a result of the factors described
above.                                                                          

     Other  Income.  Other  income  increased  by 83.3% from $40,910 for the six
months ended  September  30, 1998 to $81,065 for the six months ended  September
30, 1999,  primarily as a result of the write off of a long outstanding  payable
in the amount of $31,208.                                                       

     Foreign  Exchange  Losses/Gains.  Foreign exchange rates produced a gain of
$36,946 for the six months ended September 30, 1998 and a loss of $6,446 for the
six months ended September 30, 1999. This difference was primarily  attributable
to the difference  between the pegged  exchange rate and the actual  transaction
rate.                                                                           

     Interest  Expenses.  Interest expenses  decreased by 49.7% from $248,897 in
the six months  ended  September  30, 1998 to  $125,121 in the six months  ended
September 30, 1999, as a result of reduced bank borrowings.                     

     Net Income. Net income increased by 465.1% from $109,989 for the six months
ended  September  30, 1998 to $621,536  for the six months ended  September  30,
1999, primarily as a result of increased sales and an improved gross margin.    

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Fiscal year ended March 31, 1999 compared to fiscal year ended March 31, 1998   

     Net Sales.  Bonso's sales decreased  45.0% from  $23,715,576 for the fiscal
year ended March 31, 1998,  to  $13,046,265  for the fiscal year ended March 31,
1999,  primarily as a result of decreased  orders from two major  customers  and
from various smaller customers.                                                 

     Gross Margin.  Gross margin  increased from 28.0% to 32.5% primarily due to
the fact that Bonso was able to utilize  existing  inventory  by modifying it to
fill orders and the fact that Bonso  manufactured  over 80% of the strain gauges
which it used in its  products.  Implementation  of a  "just-in-time"  inventory
system,  which  resulted in a reduction in inventory,  also  contributed to this
increase.                                                                       

     Selling Expenses. Selling expenses decreased by 53.1% from $419,755 for the
fiscal year ended March 31, 1998 to $196,974 for the fiscal year ended March 31,
1999. This decrease was attributable primarily to the decrease in sales.        

     Salaries and Related Costs.  Salaries and related costs  decreased by 14.3%
from  $1,897,412  for the fiscal year ended March 31, 1998 to $1,625,731 for the
fiscal year ended March 31, 1999.  This  decrease was  primarily  due to Bonso's
efforts to control the number of employees  in light of the  reduction in orders
from two  major  customers  as well as a  temporary  reduction  in  management's
salaries.                                                                       

     Research and  Development.  Research  and  development  expenses  increased
256.7% from $158,706 during the fiscal year ended March 31, 1998 to $566,030 for
the fiscal year ended March 31, 1999, primarily as a result of Bonso's increased
emphasis  on  developing  new  products  to  diversify  its  customer  base  and
particularly  the  expenditure of $392,454 on  development  of Bonso's  proposed
cordless telephone.                                                             

     Administration  and General Expenses.  Administration  and general expenses
decreased by 11.8% from  $1,814,535 for the fiscal year ended March 31, 1998, to
$1,601,186  for the  fiscal  year  ended  March  31,  1999.  This  decrease  was
attributable  primarily to various cost saving programs such as negotiating with
the owner of the Universal  Industrial Centre property for a reduction of rental
expenses. Bonso subsequently purchased its office space in an attempt to control
this expense in the long run.                                                   

     Income from  Operations.  Income from  operations  decreased  by 89.6% from
$2,354,079  for the fiscal year ended March 31, 1998 to $244,171  for the fiscal
year  ended  March  31,  1999,  primarily  as a result  of  reduced  sales and a
resulting increase in research and development efforts.                         

     Other Income.  Other income decreased by 78.3% from $242,669 for the fiscal
year ended March 31,  1998 to $52,662 for the fiscal year ended March 31,  1999,
primarily as a result of reduced orders for scrap and increased efficiency which
resulted in a reduction of scrap for resale.                                    

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     Foreign  Exchange  Losses/Gains.  Foreign exchange rates produced a gain of
$35,187  for the fiscal  year ended March 31, 1998 and a gain of $37,882 for the
fiscal year ended March 31, 1999. This difference was primarily  attributable to
the difference between the pegged exchange rate and the actual transaction rate.

     Interest Expenses. Interest expenses decreased by 8.1% from $457,838 in the
fiscal  year ended March 31, 1998 to $420,536 in the fiscal year ended March 31,
1999, as a result of reduced bank borrowings.                                   

     Income Taxes. Bonso received an income tax credit of $27,117 for the fiscal
year ended March 31, 1998 and $36,087 for the fiscal year ended March 31,  1999.
The increase in tax credit is basically due to approved tax losses of certain of
Bonso's subsidiaries during the year.                                           

     Net Income.  Net income  decreased by 99.4% from  $2,274,645 for the fiscal
year ended March 31,  1998 to $13,754 for the fiscal year ended March 31,  1999,
primarily as a result of  decreased  turnover  and the other  factors  described
above.                                                                          

Fiscal year ended March 31, 1998 compared to fiscal year ended March 31, 1997   

     Net Sales.  Bonso's sales increased  39.6% from  $16,989,019 for the fiscal
year ended March 31, 1997,  to  $23,715,576  for the fiscal year ended March 31,
1998,  primarily  as a result  of  increased  orders  received  from  two  major
customers.  Increased  shipments to Bonso's two largest customers  accounted for
32.6%  of  the  net  increase  in  sales.  The  addition  of new  products  also
contributed  to the increase in net sales.  A new model built-in scale and glass
body scale accounted for approximately 2.4% of the net increase, and the balance
of 4.6% is the result of increased orders from various existing customers.      

     Gross Margin.  Gross margin  decreased from 28.8% to 28.0% primarily due to
increased production costs and decreased selling prices for certain products.   

     Selling Expenses.  Selling expenses decreased by 3.0% from $432,518 for the
fiscal year ended March 31, 1997 to $419,755 for the fiscal year ended March 31,
1998.  This decrease was  attributable  primarily to better control over freight
costs by shipping out larger lots of goods.                                     

     Salaries and Related  Costs.  Salaries and related costs  decreased by 3.9%
from  $1,973,021  for the fiscal year ended March 31, 1997 to $1,897,412 for the
fiscal year ended March 31, 1998.  This  decrease was  primarily  due to Bonso's
efforts to control the number of employees.                                     

     Research and Development. Research and development expenses increased 29.8%
from  $122,263  during the fiscal year ended March 31, 1997 to $158,706  for the
fiscal year ended March 31,  1998,  primarily as a result of the increase in new
product development,  such as a series of low profile body scales, a generic LCD
scale and a new pocket scale.                                                   

     Administration  and General Expenses.  Administration  and general expenses
increased by 12.8% from  $1,609,217 for the fiscal year ended March 31, 1997, to
$1,814,535  for the  fiscal  year  ended  March  31,  1998.  This  increase  was
attributable  primarily  to a write-off of deposits on property in the amount of

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$78,436  and an  increase  in  depreciation  expense of  $134,401 as a result of
placing additional depreciable assets into service.                             

     Income from  Operations.  Income from  operations  increased by 157.1% from
$915,569 for the fiscal year ended March 31, 1997 to  $2,354,079  for the fiscal
year ended March 31, 1998, primarily as a result of the factors described above.

     Other Income. Other income increased by 138.3% from $101,843 for the fiscal
year ended March 31, 1997 to $242,669  for the fiscal year ended March 31, 1998,
primarily  as a result of  increased  assembly  subcontracting  work for a third
party.                                                                          

     Foreign  Exchange  Losses/Gains.  Foreign exchange rates produced a loss of
$135,780  for the fiscal year ended March 31, 1997 and a gain of $35,187 for the
fiscal year ended March 31, 1998. This difference was primarily  attributable to
the difference between the pegged exchange rate and actual transaction rate.    

     Interest Expenses. Interest expenses decreased by 2.7% from $470,655 in the
fiscal  year ended March 31, 1997 to $457,838 in the fiscal year ended March 31,
1998, as a result of reduced bank borrowings.                                   

     Income Taxes. Bonso received an income tax credit of $71,368 for the fiscal
year ended March 31, 1997 and $27,117 for the fiscal year ended March 31,  1998.
The  decrease in tax credit is  basically  due to the increase in tax expense of
$35,926                                                                         

     Net Income.  Net income  increased  by 316.2% from  $546,589 for the fiscal
year ended March 31, 1997 to $2,274,645 for the fiscal year ended March 31, 1998
primarily as a result of increased  turnover,  better control of  administrative
overhead and other factors described above.                                     

Seasonality                                                                     

     The first  calendar  quarter of each year is  typically  the slowest  sales
period as Bonso's manufacturing facilities in China are closed for two weeks for
Chinese New Year holidays to permit employees to travel to their homes in China.
Throughout  the  remainder  of the year,  Bonso's  products  do not appear to be
subject to significant seasonal variation.                                      

     Employee incentive  compensation is conditioned on the employee's return to
work  following  the Chinese  New Year and is paid to  employees  following  the
reopening  of the factory  after the  holidays.  Management  believes  that this
method  has  resulted  in lower  employee  turnover  than might  otherwise  have
occurred.                                                                       

Liquidity and Capital Resources                                                 

     Bonso has  traditionally  relied on borrowings to meet its working  capital
requirements.  These borrowings have been  supplemented by internally  generated
funds and trade credits from suppliers. As of March 31, 1999, Bonso had in place
general  banking  facilities  with  three  financial  institutions   aggregating
$6,217,949.  These facilities include the ability to obtain overdrafts,  letters
of credit,  notes  payable  and fixed  loans.  As of March 31,  1999,  Bonso had
utilized  $2,059,357  under its  general  banking  facilities.  Interest on this

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indebtedness  fluctuates  with the prime  rate and HIBOR as set by the Hong Kong
Bankers  Association.  The bank credit facilities are  collateralized by certain
bank deposits of Bonso,  by Bonso's real property  located at Savanna  Garden in
Hong Kong and by a bank guarantee in the amount of $150,000. Bonso's bank credit
facilities are due for renewal  annually.  Management of Bonso  anticipates that
the  banking  facilities  will be  renewed  on  substantially  the  same  terms.
Excluding the current  portion of long term debt and capital lease  obligations,
the amount of total short-term bank borrowings  outstanding as of March 31, 1998
was $3,199,737,  and as of March 31, 1999 it was  $1,944,756.  During the fiscal
year  ended  March 31,  1999,  Bonso paid a total of  $445,644  in  interest  on
indebtedness  (including capitalized interest),  and during the six months ended
September 30, 1999, it paid $125,121 (unaudited).                               

     Operating  activities  provided  $2,644,612 of net cash for the fiscal year
ended March 31,  1999  compared  to  $3,262,259  of net cash for the fiscal year
ended March 31, 1998.  The decrease from the fiscal year ended March 31, 1998 to
the fiscal year ended March 31, 1999, was primarily due to the decrease in sales
and in net income. Investing activities used $926,312 of net cash for the fiscal
year ended  March 31, 1999 and used  $1,604,013  of net cash for the fiscal year
ended March 31, 1998. The decrease in net cash used in investing activities from
the fiscal year ended March 31, 1998 to the fiscal year ended March 31, 1999 was
primarily due to a decrease in the acquisition of property, plant and equipment.
Financing activities used $1,892,619 of net cash for the fiscal year ended March
31, 1999 and used  $1,294,420  for the fiscal year ended  March 31,  1998.  This
increase was primarily due to the repayment of banking facilities.              

     As of March 31, 1999,  Bonso had $271,447 in cash and cash  equivalents  as
opposed to $448,454 as of March 31,  1998.  As of  September  30,  1999,  it had
$383,747  (unaudited).  There are no other  material  unused  sources  of liquid
assets.  Bonso  believes  that  there are no  material  restrictions  (including
foreign  exchange  controls) on the ability of Bonso's  subsidiaries to transfer
funds   to  Bonso  in  the  form  of  cash   dividends,   loans,   advances   or
product/material purchases.                                                     

     Bonso's  current  ratio  (current  assets  divided by current  liabilities)
increased from 1.54 as of March 31, 1998 to 1.83 as of March 31, 1999. Its quick
ratio (cash and cash  equivalents,  restricted  cash  deposits  and  receivables
divided by current liabilities) increased from 0.53 as of March 31, 1998 to 0.65
as of March 31, 1999.                                                           

     As of March  31,  1999,  Bonso  had  contingent  liabilities  to banks  for
outstanding letters of credit of $114,601 as opposed to $502,270 as of March 31,
1998.                                                                           

Impact of Inflation                                                             

     Management  does not believe that  inflation  has had a material  effect on
Bonso's its business  between 1998 and 1999.  Bonso has  generally  been able to
modify and improve  its product  designs so that it could  either  increase  the
prices of its products or lower the  production  cost in order to keep pace with
inflation.  All of Bonso's  manufacturing  is being done in China,  and China is
experiencing  deflation.  If this trend  continues,  Bonso could incur decreased
labor costs with regard to its Chinese operations, resulting in lower production

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costs. Although the costs to Bonso of certain components used in the manufacture
of its products have increased significantly over the past few years, management
believes that any possible  significant  increase in material costs would affect
the entire  electronics  industry  and thus  would not have a negative  material
impact on Bonso's competitive position.                                         

Year 2000                                                                       

     Bonso,  like many owners of computer  software,  will be required to modify
portions  of its  software so that it will  function  properly in the year 2000.
Bonso's  information  technology  systems  are  maintained  under a  maintenance
arrangement with the primary vendor of its information  technology software. The
vendor  has  advised  that it does not  anticipate  any  problems  in making the
necessary  modifications to Bonso's  software.  Bonso's inventory and purchasing
software,  as well as its  accounting  system,  have been  updated for Year 2000
compliance,  including  upgrading  of  hardware.  The  total  expected  costs in
relation to these upgrades are immaterial to Bonso.  Management anticipates that
all necessary  changes to Bonso's software will be completed before December 31,
1999,  and that it will not experience  any  significant  impact with respect to
Year  2000  compliance  with  Bonso's  non-information  technology  systems  and
equipment.                                                                      

Taxation                                                                        

     Under current  British  Virgin  Islands law, Bonso is not subject to tax on
its income. Most of Bonso's profits accrue in Hong Kong, where the corporate tax
rate is currently 16%.  There is no tax payable in Hong Kong on offshore  profit
or on dividends  paid to Bonso  Electronics  Limited by its  subsidiaries  or by
Bonso Electronics Limited to Bonso. Therefore, the overall effective tax rate of
Bonso may be lower than that of most United States corporations;  however,  this
could be materially and adversely affected by changes in the tax laws applicable
to Bonso.                                                                       

Exchange Rates                                                                  

     Bonso  sells  most of its  products  to  international  customers.  Bonso's
principal  export markets are North America (mainly the United  States),  Europe
(mainly Germany) and Asia.  Other markets are other European  countries (such as
the United Kingdom),  Australia and Africa. Sales to international customers are
made  directly from Bonso to its  customers.  Bonso sells all of its products in
United States dollars and pays for its material components principally in United
States and Hong Kong  dollars.  A very small portion of the  components  used by
Bonso are paid for in Japanese yen. Most factory expenses  incurred by Bonso are
paid in Chinese  renminbi.  Because the Hong Kong dollar is pegged to the United
States  dollar,  the only  material  foreign  exchange risk to Bonso arises from
potential  fluctuations in the Chinese renminbi;  however,  the Chinese renminbi
was very stable in the past  fiscal  year and it is unlikely  that there will be
material  fluctuations  in the coming year.  Bonso does not currently  engage in
hedging transactions, and does not intend to do so in the future.               

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Recent Accounting Pronouncements                                                

     The Financial Accounting Standards Board has issued certain  pronouncements
which are  effective  as  indicated  below  with  respect  to the  fiscal  years
presented in the consolidated financial statements.                             

     SFAS No. 130,  "Reporting  Comprehensive  Income," is effective  for fiscal
years  beginning  after  December  15,  1997.   Reclassification   of  financial
statements for earlier periods  provided for  comparative  purposes is required.
This  statement  establishes   guidelines  for  the  reporting  and  display  of
comprehensive income and its components (revenues,  expenses,  gains and losses)
in a full set of  general-purpose  financial  statements.  It requires  that all
items  that  are  required  to  be  recognized  under  accounting  standards  as
components of comprehensive  income be reported in a financial statement that is
displayed with the same  prominence as other financial  statements;  it does not
address  issues  of  recognition  of   measurement.   The  primary   element  of
comprehensive  income  applicable  to Bonso is the foreign  currency  cumulative
translation  adjustment.  The adoption of SFAS No. 130 in fiscal 1999 has had no
impact on Bonso's consolidated results of operations, financial position or cash
flows.                                                                          

     SFAS No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information"  is effective for fiscal years  beginning  after December 15, 1997.
Reclassification  of  financial  statements  for earlier  periods  provided  for
comparative purposes is required.  This statement establishes guidelines for the
way that public business enterprises report information about operating segments
in financial statements.  This statement also establishes guidelines for related
disclosures  about products and services,  geographic areas and major customers.
The  adoption  of SFAS No.  131 in  fiscal  1999 has had no  impact  on  Bonso's
consolidated results of operations, financial position or cash flows.           

     SFAS  No.  132,   "Employers'   Disclosures   about   Pensions   and  Other
Post-retirement Benefits" is effective for fiscal years beginning after December
15,  1997.   Restatement  of  disclosures  for  earlier  periods   provided  for
comparative purposes is required.  This statement revises employers' disclosures
about pension and other  post-retirement  benefit plans.  It does not change the
measurement  or  recognition  of those plans.  It  standardizes  the  disclosure
requirements  for  pensions  and other  post-retirement  benefits  to the extent
practicable,   requires  additional   information  on  changes  in  the  benefit
obligations  and fair  values  of plan  assets  that will  facilitate  financial
analysis,  and eliminates  certain  disclosures  that are no longer useful.  The
statement  suggests  combined  formats  for  presentation  of pension  and other
post-retirement benefit disclosures.The  adoption of SFAS No. 132 in fiscal 1999
has had no impact on  Bonso's  consolidated  results  of  operations,  financial
position or cash flows.                                                         

     SFAS  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities,"  is  effective  for fiscal  years  beginning  after June 15,  2000.
Restatement of disclosures for earlier periods provided for comparative purposes
is required.  This statement establishes  accounting and reporting standards for
derivative  instruments,  including certain derivative  instruments  embedded in
other  contracts,  and for hedging  activities.  The statement  requires that an
entity  recognize  all  derivatives  as  either  assets  or  liabilities  in the
statement of financial  position and measure  those  instruments  at fair value.
Bonso has evaluated  the  disclosure  requirements  of SFAS No. 133 and believes
that  implementation  of the new standard  will have no impact on its results of
operations and financial position.                                              

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BUSINESS

Overview                                                                        

     Bonso designs,  develops,  manufactures  and sells a comprehensive  line of
electronic  scales and weighing  instruments and electronic  consumer and health
care products.  Bonso  manufactures all of its products in the People's Republic
of China. Bonso's electronic scales include bathroom,  kitchen, office, jewelry,
laboratory,  pocket, hanging, postal, industrial and parcel scales that are used
in consumer, commercial and industrial applications. Bonso's electronic consumer
and  health  care  products   include   pedometers,   chronographs,   electronic
thermometers and blood pressure meters.                                         

     Bonso  also  plans to enter  the  digital  telecommunications  market,  and
anticipates that its first  telecommunications  product will be a two-way radio.
Bonso  has  engaged  a senior  manager  with  experience  in  telecommunications
manufacturing.  There can be no  assurance,  however,  that  development  of any
telecommunications  products  will be  successfully  completed,  that Bonso will
obtain  customers  for any of  these  products  or that  sales  of any of  these
products will be profitable.                                                    

Business Strategy                                                               

     Bonso  experienced  dramatic  growth  from  1994 to 1998,  with  net  sales
increasing  from  $12,548,770  in 1994 to  $23,715,576  in the fiscal year ended
March 31, 1998, and  profitability  increasing  from net income of $1,023,821 in
the fiscal year ended March 31, 1994 to net income of  $2,274,645  in the fiscal
year ended March 31, 1998.  However,  net sales decreased to $13,046,265 for the
fiscal year ended March 31, 1999 and net income  decreased  to $13,754.  For the
six  months  ended  September  30,  1999,  Bonso  had net  sales  of  $7,854,730
(unaudited) and net income of $621,536 (unaudited).  Management attributes these
decreases  primarily to decreased  orders from two major  customers,  as well as
various smaller customers of Bonso.  Management  believes that Bonso's continued
growth  depends on its ability to strengthen  its customer base by enhancing and
diversifying its products, increasing the number of customers and expanding into
additional  markets,  while  maintaining or increasing  sales of its products to
existing customers. Bonso's continued growth and profitability is also dependent
upon its ability to control production costs and increase  production  capacity.
Bonso's strategy to achieve these goals is as follows:                          

     Product Enhancement and Diversification. Bonso continually seeks to improve
and  enhance  its  existing  products  in order  to  provide  a  longer  product
life-cycle and to meet  increasing  customer  demands for  additional  features.
Bonso's research and development  staff are currently  working on these types of
projects such as redesigning the existing pedometer,  bicycle computer and blood
pressure  monitor,  redesigning  Bonso's  bicycle  accelerator  in response to a
change in the requirements of the Japanese government, expanding the health care
line and  attempting  to make Bonso's  products  more  competitive  in price and
features.  During the last fiscal year,  Bonso has  completed  development  of a

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waterproof digital  thermometer,  a chronograph,  an ear protector and two newly
designed   body  scales.   In  addition,   Bonso  plans  to  enter  the  digital
communications  market and it also has,  in  varying  stages of  development,  a
bicycle  accelerator  and  postal,  kitchen  and Gem  scales,  which  are  being
developed to the specifications of OEM customers. See "Products," below.        

     Maintaining and Expanding Business Relations with Existing Customers. Bonso
promotes  its  relationships  with its  significant  customers  through  regular
communication  with them, visits to its customers in their home countries and by
providing direct access to Bonso's  manufacturing and quality control personnel.
This  access,  together  with  Bonso's  concern for  quality,  has resulted in a
relatively low level of defective products.  Moreover,  management believes that
Bonso's emphasis on timely  delivery,  good service and low cost has contributed
and will  continue  to  contribute  to good  relations  with its  customers  and
increased  orders.  Further,  management of Bonso solicits  suggestions from its
customers  for  product   enhancement  and  will  develop  and  incorporate  the
enhancements suggested by its customers into its products when feasible.        

     Market  Expansion.  In 1998,  Bonso  expanded its marketing  efforts in the
United  States  and  Europe.  Management  intends  to  continue  increasing  its
marketing efforts with the use of its Web page and mailing product brochures. In
addition,   Bonso   intends  to  increase  the   frequency  of  its  direct  and
telemarketing  contacts  with  both  existing  and  potential  customers  and is
negotiating with an individual to represent it in Hamburg,  Germany, in order to
expand Bonso's marketing efforts in the European Union.                         

     Controlling  Production  Costs. In 1989,  recognizing  that labor cost is a
major  factor  permitting  effective  competition  in  the  consumer  electronic
products industry,  Bonso relocated all of its manufacturing operations to China
to  take  advantage  of the  large  available  pool  of  relatively  inexpensive
manufacturing  labor.  Bonso  has made an  effort  to  locate  and  operate  its
manufacturing  facilities  consistent  with the exigencies of  manufacturing  in
China.  For  example,  the  location  of  Bonso's  plant  in  China  is in close
proximity,   approximately   50  miles,   to  Hong  Kong  thereby   facilitating
transportation of Bonso's products to markets outside of China.                 

     Bonso is currently  attempting to control production costs by such means as
redesigning its existing  scales in order to decrease  material and labor costs,
controlling  the number of employees,  increasing  the  efficiency of workers by
providing  regular training and tools and redesigning the flow of the production
line.                                                                           

     Increasing  Production Capacity.  Since January 1997, Bonso's products have
been  manufactured  at  Bonso's  new   manufacturing   facility  in  the  DaYang
Synthetical  Development  District in  Shenzhen,  China.  This new  facility has
triple the capacity of Bonso's old  manufacturing  plant. The floor area of this
new facility is not fully utilized.                                             

Products                                                                        

     The  following  table  sets  forth the  percentage  of net sales of each of
Bonso's product lines for the fiscal years ended March 31, 1998 and 1999.       

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                                Year ended March 31,
Product Line                        1998              1999    
------------                        ----              ----    

Scales                                77%               79%   
Health care products                  13                15    
Electronic consumer products           3                 2    
Other products and services            7                 4    
                                ----              ----
Total                               100%              100%    

Scales                                                                          

     Bonso's  weighing  equipment ranges from the simplest spring scales to high
precision  electronic  scales that translate weight readings into  corresponding
price and postage calculations.                                                 

     All of Bonso's electronic scales use strain gauge sensors, which management
believes  are one of the most  reliable  and  accurate  weight  sensing  systems
currently  available.  A strain gauge sensor is a thin metal foil resistor which
is  bonded  to a metal  block,  and  which  undergoes  a  change  in  electrical
resistance as weight is loaded onto the metal block.  The  measurement of change
in electrical resistance yields a measure of the applied weight.                

     Bonso  offers a variety  of scales for  diverse  consumer,  commercial  and
industrial  applications.  Scales currently  offered by Bonso include  bathroom,
kitchen, office, jewelry,  laboratory,  pocket, hanging, postal,  industrial and
parcel  scales.  The  following  table  sets forth the net sales of each type of
scale as a percentage  of total scale sales for the fiscal years ended March 31,
1998 and 1999:                                                                  

                                          Year ended March 31,
Type of Scale                            1998             1999
-------------                            ----             ----

 Postal and office                         45%               29%
Kitchen                                    6                 8
Jewelry and laboratory                    18                20
Bathroom                                  14                15
Pocket and hanging                        11                19
Industrial and parcel                      6                 9
                                        ----              ----
 Total scale sales                        100%              100%

     Bonso's  electronic  scales offer many advanced  features such as a talking
feature,   automatic  power  off,   automatic  range,   audio  signal,   digital
auto-calibration,  automatic  zero tracking and multiple  measuring  units.  The
scales  are built with  either  metal or  plastic  housings  and come in various
models and case designs. Bonso's scales are described in more detail below.     

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     Postal  Scales.  Bonso's postal scales are used primarily by businesses for
weighing letters and parcels of up to 2,000 grams (4.4 lbs.) and are accurate to
1 gram.  Postal  scales are  calibrated  to give postal or franking cost for the
various  classes of delivery  service  available  to various  destinations.  The
scales are marketed primarily in Europe and the United States and are customized
for the postal system of the country of destination.                            

     Office Scales.  Bonso sells several models of office scales with capacities
ranging from 2,000 grams (4.4 lbs.) to 5,000 grams (11 lbs.), and the scales are
accurate to 1 gram.  The scales are used in offices to weigh small  packages and
letters.  Bonso's  office  scales are sold  principally  in the  United  States,
Europe, Australia, Hong Kong and China.                                         

     Kitchen  Scales.   Bonso's  kitchen  scales  are  used  in  households  and
restaurants  to weigh  ingredients  for cooking and portions  for dieting,  with
capacities ranging from 1,000 grams (2.2 lbs.) to 5,000 grams (11 lbs.), and the
scales are accurate to 1 gram.  Bonso's kitchen scales are marketed  principally
in the United States and Europe.                                                

     Jewelry and Laboratory  Scales.  Jewelry and laboratory  scales are used to
weigh  precious  metals and stones.  In the  laboratory,  the scales are used to
weigh various chemicals and chemical  compounds.  Bonso's jewelry and laboratory
scales are principally  sold in the United States and Europe.  The capacities of
these  scales  range from 120 grams (0.25 lb.) to 1,200  grams (2.6  lbs.),  and
these scales are accurate to 0.01 gram or 0.1 gram, respectively.               

     Bathroom  Scales.  Bonso's bathroom scales are used by consumers to monitor
weight, with capacities up to 150 kilograms (330 lbs.).  Bonso's bathroom scales
are marketed primarily in the United States, Europe and Japan.                  

     Pocket and Hanging Scales.  Pocket and hanging scales are small  electronic
scales  that can be carried by a business  person in his or her attache or brief
case.  The  capacities of Bonso's pocket scales range from 80 grams (2.8 oz.) to
320 grams  (11.2  oz.),  and the scales are  accurate  to 0.1 gram.  The hanging
scales range from 15  kilograms  (33 lbs.) to 25  kilograms  (55 lbs.),  and the
scales are accurate to 10 grams.  The pocket scales are principally  used in the
jewelry business for weighing low value metals and stones and the hanging scales
are primarily  used in fishing.  Bonso's  pocket and hanging scales are marketed
primarily in the United States and Europe.                                      

     Industrial/Parcel   Scales.   Bonso   manufactures   different   models  of
industrial/  parcel  scales,  which are used in  business  or  industry to weigh
heavier  parcels or objects (i.e.,  objects whose weight exceeds the capacity of
Bonso's office scales). Industrial/parcel scales have a capacity ranging from 25
kilograms  (55 lbs.) to 150  kilograms  (330  lbs.).  Bonso's  industrial/parcel
scales are marketed primarily in Europe.                                        

Health Care Products                                                            

     Electronic  Thermometers.  Bonso's electronic  thermometers,  which include
both  Fahrenheit  and centigrade  versions,  measure body  temperature.  Bonso's
electronic  thermometer  is classified  as a medical  device under United States
law.  Medical  devices are required to be approved by the United States Food and

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Drug Administration (the FDA) prior to being marketed, unless the law provides a
legal exemption from FDA approval.  Bonso's electronic  thermometer has received
pre-market  approval  from  the  FDA.  Sales  of  electronic  thermometers  were
approximately  10% of Bonso's net sales in the fiscal year ended March 31, 1998,
and 12% of net sales in the fiscal year ended March 31, 1999.                   

     Blood Pressure Meters. Bonso introduced electronic blood pressure meters to
its line of products in November 1994.  Bonso's electronic blood pressure meters
have  digital  displays  for highest  blood  pressure  (systolic),  lowest blood
pressure  (diastolic)  and pulse rate (number of pulses per minute),  as well as
mean blood  pressure.  The meters have automatic power off,  automatic  pressure
release,  manual rubber bulb pump and many other  standard  features.  Bonso has
obtained FDA approval for marketing  blood pressure meters in the United States.
Sales of blood  pressure  meters were  approximately  3% of Bonso's net sales in
each of the fiscal years ended March 31, 1998 and 1999.                         

Electronic Consumer Products                                                    

     Chronographs. Bonso began shipping chronographs in 1998. A chronograph is a
device for  measuring  the speed of a projectile  by measuring the time it takes
for  it  to go  between  two  infra-red  sensors.  Sales  of  chronographs  were
approximately 0.9% of Bonso's net sales in the fiscal year ended March 31, 1999.

     Pedometers. Bonso began shipping electronic pedometers in 1993. A pedometer
is worn by a walker or jogger to measure the distance  traveled by recording the
steps taken.  Bonso's pedometer can be adjusted for varying stride lengths,  and
will keep track of distance  traveled,  elapsed time and average speed. Sales of
pedometers were approximately 0.7% of Bonso's net sales in the fiscal year ended
March 31, 1998, and 0.9% of net sales in the fiscal year ended March 31, 1999.  

     Distance  Meters.  Bonso began shipping  distance meters in 1998.  Sales of
distance  meters  were less than 0.1% of Bonso's  net sales in the  fiscal  year
ended March 31, 1999.                                                           

     Other Electronic  Consumer  Products.  In the past, Bonso also manufactured
joysticks and bicycle  computers.  Sales of joysticks were approximately 1.9% of
Bonso's  net sales in the fiscal  year ended March 31, 1998 and sales of Bonso's
bicycle computers were approximately  0.014% of its net sales in the fiscal year
ended  March 31,  1998.  Bonso did not  manufacture  any  joysticks  or  bicycle
computers during the fiscal year ended March 31, 1999.                          

Other Products and Services                                                     

     Bonso also receives  revenue from customer  funded research and development
for products  subsequently produced and sold to them, the sale of semi-completed
units and the sale of spare  parts for  repair  work by its  customers  and from
repair work  performed by Bonso for its customers.  These  revenues  constituted
approximately 7% of net sales for the fiscal year ended March 31, 1998 and 4% of
net sales for the fiscal year ended March 31, 1999.                             

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Product Development, Design and Research                                        

     The major responsibility of the product design and research and development
personnel  is to  develop  and  produce  designs to the  satisfaction  of and in
accordance with the specifications provided by the OEMs. Management believes its
engineering  and product  development  capabilities  are important to the future
success of  Bonso's  business.  Some of Bonso's  product  design,  research  and
development  activities  are  customer  funded and are  initiated  under  verbal
agreements with specific customers for specific products. Bonso has successfully
lowered its costs for its research and development  team by moving most research
and development  activities to its facility in China and  principally  employing
Chinese  engineers and  technicians at costs that are  substantially  lower than
would be required in Hong Kong.                                                 

     At March 31,  1999,  Bonso  employed  two  individuals  in Hong Kong and 16
individuals in China on its engineering  staff, who are at various times engaged
in research and  development.  Bonso also  contracted  with a firm in Germany to
develop the software for its proposed cordless  telephone.  Bonso spent $158,706
and $566,030 on research and development during the fiscal years ended March 31,
1998 and 1999,  respectively.  Management  intends  to  increase  the  number of
research and development personnel to approximately 25.                         

     Bonso has, in varying  stages of  development,  a bicycle  accelerator  and
postal,  kitchen,  industrial and Gem scales,  which are being  developed to the
specifications of OEM customers, and has recently commenced production of an ear
protector and newly designed body scales.                                       

Manufacturing                                                                   

     Bonso  currently  manufactures  and assembles all of its products in China.
Generally, raw materials,  electronic components and other parts are transported
to  Bonso's  manufacturing  plant in  China  where  the  finished  products  are
assembled. The finished goods are then transported back to Hong Kong for sale by
Bonso.                                                                          

     Bonso manufactures some of its own components,  metal parts and casings and
plastic parts at its facility in China. In 1997,  Bonso commenced  manufacturing
its own strain gauges,  and it currently  produces over 80% of the strain gauges
utilized  in  its  scales.   Management  believes  that  Bonso  will  realize  a
substantial  cost saving  from  producing  its own strain  gauges in the future.
Management's  objective  is to  eventually  produce  100% of the  strain  gauges
utilized by Bonso; however, management may decide not to produce some low-demand
strain gauges if it determines that to produce them would not be cost effective.

     To take  advantage  of lower  overhead  costs and  competitive  labor rates
available in China,  Bonso  constructed  a  manufacturing  facility in Shenzhen,
China in 1989.  The location of that  factory in  Shenzhen,  only about 30 miles
from Hong Kong, permitted Bonso to manage easily  manufacturing  operations from
Hong Kong,  and  facilitated  transportation  of Bonso's  products  out of China
through the port of Hong Kong, the busiest seaport for containerized shipping in
the world. As sales  increased since the year ended March 31, 1990,  Bonso's use
of available  factory  capacity  increased.  In planning for its future  growth,
Bonso entered into a contract to acquire a land lease for  construction of a new
manufacturing complex which, when completed,  would approximately triple Bonso's
production  capacity.  The  construction  of phase one of the new  manufacturing

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complex was completed in December 1996 and Bonso commenced operations in the new
complex in January 1997. The second, and final, phase was completed in May 1998.
The new manufacturing  complex is located in the DaYang Synthetical  Development
District in Shenzhen,  China and is  approximately  50 miles from Hong Kong. See
"Properties--China," below.                                                     

     Because Bonso  primarily sells and ships its products  "F.O.B.  Hong Kong,"
most of its  customers  are  responsible  for  the  transportation  of  finished
products  from Hong Kong to their  final  destination  and bear the risk of loss
from  transportation.  Components and finished  products are  transported to and
from China primarily with Bonso's own truck.  The majority of Bonso's  component
parts  purchased from Japan,  Taiwan and Korea are transported by ship or by air
to Hong Kong. In recent  years,  Bonso has not been  materially  affected by any
transportation problems.                                                        

     Management  believes that it has  sufficient  water and power  supplies for
daily usage at its new manufacturing  complex. Bonso has drilled two water wells
to obtain additional water and to minimize cost.                                

     The  availability  of adequate  power to run Bonso's  factory is one of the
difficulties  of  having a  factory  located  in  China.  In  order to  minimize
potential  power  problems  that could  develop  in the  Shenzhen  factory,  the
factory, like most Chinese factories,  is equipped with power generators capable
of providing adequate electric power to operate the assembly line.              

Component Parts and Suppliers                                                   

     Bonso  purchases over 1,000  different  component  parts from more than 100
major  suppliers  and is not  dependent  upon any  single  supplier  for any key
component.  Bonso purchases components for its products from suppliers in Japan,
Taiwan,  South Korea,  Hong Kong and elsewhere.  Bonso has not experienced,  and
management  does not expect to experience,  any  difficulty in obtaining  needed
component parts for its products.                                               

     The  major  component  parts  purchased  by Bonso are  integrated  circuits
(chips),  LEDs,  LCDs,  strain  gauges,  force sensors,  resistors,  capacitors,
transistors,  diodes, printed circuit boards and batteries. Bonso purchases both
stock or off the shelf chips and custom chips.  There are many suppliers of both
stock and custom chips in Japan and Taiwan.  At the present time, Micro Chips in
Taiwan,  Samsung in South Korea and  Hitachi,  Toshiba and NEC in Japan  provide
most of  Bonso's  chips.  Chips are one of the most  expensive  component  parts
purchased by Bonso.                                                             

     Strain gauges are the second most expensive  components purchased by Bonso.
Bonso  currently  produces over 80% of the strain gauges utilized in its scales,
and obtains the remainder  principally  from a Japanese  manufacturer.  However,
Bonso could also  purchase  strain gauges from  suppliers  located in the United
States  and China.  LEDs and LCDs are  generally  custom  made to match the chip
design and are principally supplied by companies in Taiwan, Korea and Japan. The
circuit boards can be purchased from circuit board  manufacturers  in Hong Kong.
Resistors,  capacitors,  transistors,  diodes and batteries  are standard  stock
items and are generally purchased in Hong Kong and Taiwan.                      

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     Bonso produces metal and plastic casings and parts for use in its products.
Plastic resin and metal sheet can be purchased  from  suppliers in Hong Kong and
Japan.                                                                          

Quality Control                                                                 

     Management  maintains  strict quality control  procedures for every product
manufactured  by  Bonso  throughout  the  manufacturing  process.  Incoming  raw
materials  and  components  are checked by Bonso's  quality  control  personnel.
Moreover, during the production stage, Bonso's quality control personnel monitor
each operation in the manufacturing process, including the bonding of the chips,
component insertion and assembly of the printed circuit boards and casings.  All
work in process is also checked during the manufacturing and assembly processes.
After the assembly  stage,  every product is checked for proper  functioning and
cosmetic  appearance.  After packing and before  shipment,  the quality  control
personnel   randomly   check   goods   according   to  product   specifications.
Historically, Bonso's level of defective products has been low, and not material
to its  financial  statements.  Bonso's  products  are  generally  covered  by a
one-year  limited warranty which provides for repair or replacement of defective
products.  In certain  circumstances,  an extended  warranty may be offered.  To
date, claims against Bonso under its warranty program have been negligible.     

     In April  1995,  Bonso  received  an ISO 9001  certificate  from Det Norske
Veritas  Industry  B.V., The  Netherlands.  Bonso passed a reviewed audit by Det
Norske  Veritas,  processed in March 1999,  and is qualified to maintain the ISO
9001 certificate.                                                               

     The  ISO  9000  is a  program  developed  initially  by  the  International
Organization  for  Standardization  in Geneva,  Switzerland,  to provide quality
control  registration  standards that could be relied upon to provide assurances
with regard to a  registrant's  quality  control and  manufacturing  operations.
Management  believes  that ISO 9000  registration  provides its  customers  with
quality control  assurances that are recognized  internationally,  and that this
registration  also provides  Bonso with a competitive  advantage over many other
manufacturers   in  the  Far  East  who  have  not   registered   for  ISO  9000
certification. In addition, Bonso has submitted applications for the CE mark for
some  products  and,  at the  present  time,  over 36 product  groups  have been
approved,  including the electromagnetic  compatibility  directive (EMC) and the
medical  devices  directive  (MDD).  A CE mark  serves  as  confirmation  to the
European  authorities  that the marked product  complies with all European Union
directives  relevant to the product and that the product may be traded freely in
the European market.                                                            

Customers and Marketing                                                         

     Bonso sells its products in the United States,  Europe, Asia, Australia and
Africa.   Customers  for  Bonso's  scales  are  primarily   original   equipment
manufacturers, which market the products under their own brand names.           

     Net export sales to customers by geographic area consisted of the following
for each of the three years ended March 31, 1997, 1998 and 1999.                

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                                                        [Enlarge/Download Table]


                                        Year ended March 31,                             
                      ---------------------------------------------------------          
                      1997                       1998                      1999          

                                                                                         
North America     $ 7,537,401      44%       $12,598,672     53%        $5,597,402    43%
Europe              5,492,294      33          8,129,063     34          6,248,263    48 
Asia                3,454,505      20          2,117,914      9          1,041,377     8 
Australia             425,314       3            756,354      3            130,173     1 
Africa                 79,505      --            113,573      1             29,050    -- 
                 ------------    ----      -------------   ----       ------------  ---- 
Total Net Sales   $16,989,019     100%       $23,715,576    100%        13,046,265   100%

     Bonso  maintains a marketing team in Hong Kong.  Bonso markets its products
primarily through use of its Web page, advertising in trade publications such as
Hong  Kong  Enterprise  and  the  use of  direct  mail  catalogues  and  product
literature. In addition,  Bonso's marketing team contacts existing and potential
customers by telephone, mail, fax and in person.                                

     Major   Customers.   Sales  of  Bonso's  products  to  OEMs  accounted  for
approximately  87% of Bonso's  total net sales  during  each of the years  ended
March 31, 1997,  1998 and 1999.  Bonso's  principal  OEM  customers  include the
following  entities which market Bonso's products under the brand name indicated
opposite their respective names:                                                

                                                        [Enlarge/Download Table]

                                                                 Percent of Company's Sales
                                                                     Year ended March 31,  
      Customer            Brand Name        Products                1997      1998     1999
      --------            ----------        --------                ----      ----     ----
                                                                                           
Pitney Bowes, Inc. (USA)  Pitney Bowes  Postal scales                18%       30%      15%

Werner Dorsch Gmbh & Co.  WEDO          Postal, office and                                 
(Germany)                               parcel scales                11%        9%      15%

Globaltec Corporation     ACCULAB       Jewelry, educational and                           
(USA)                                   high precision scales        13%       15%      11%

Omron Health Care         OMRON         Digital thermometers         11%        8%      10%

Gottl Kern & Sohn Gmbh    KERN          Laboratory, hanging,          3%        4%       7%
                                        pocket and parcel scales                           

     Werner Dorsch Gmbh & Co. and Globaltec  Corporation  have been customers of
Bonso for fourteen and twelve  years,  respectively.  Management  believes  that
Bonso offers its  customers  superior  quality of products and superior  product
design and development  capabilities,  together with the low costs of production
associated with its operations in China.                                        

     If Bonso were to lose any customers  who account for a material  portion of
total sales, or if any of these customers were to  substantially  decrease their
purchases from Bonso, Bonso's revenues, earnings and financial position would be
materially and adversely affected.  With the exception of Globaltec Corporation,
Bonso's dependence on the above-listed  customers is expected to continue in the
foreseeable future. Bonso follows normal and customary business practices in the
acceptance of orders from its customers.  Orders from the above-listed customers
are generally supported by bank guarantees,  letters of credit or insurance from

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the Hong Kong Export Credit Insurance Corporation.  For updated information with
respect  to a  decrease  in orders  from two of  Bonso's  major  customers,  see
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations--Overview."                                                          

     Sales of  Bonso's  products  directly  by Bonso  under its own  brand  name
accounted  for  approximately  13% of Bonso's  total net sales  during the years
ended March 31, 1997, 1998 and 1999.                                            

     Backlog.  Bonso's  backlog  consists  of orders  from major  customers  and
purchase orders from other  customers of products  scheduled for shipment within
three to twelve months.  It is Bonso's  practice to charge  customers 50% of the
total  order  price  when  orders  are  cancelled  and,  as a result,  Bonso has
experienced nominal cancellations. This practice is not represented by a written
agreement,  and Bonso may not be able to enforce this  arrangement in every case
in the future.  Bonso  generally has not  experienced any difficulty in shipping
orders by the dates  requested by its  customers  or in material  returns of its
products.  The amount of backlog  that is  manufactured  and shipped  during any
period is dependent on various  factors,  including the timing and scheduling of
orders from  material  customers and  accordingly,  the amount of backlog at any
date is not  necessarily  indicative  of actual  shipments  and  sales.  Bonso's
backlog was $3,040,771 at March 31, 1999, compared to a backlog of $4,386,485 at
March 31, 1998                                                                  

Competition                                                                     

     The  electronic  products  business is highly  competitive.  Bonso's  major
competitors in the scale market include Management  Investment & Technology Co.,
Ltd. in Hong Kong and Charder Electronic  Company,  Ltd. in Taiwan. In the blood
pressure meter market,  Bonso's major competitor is AnD Co. Ltd of Japan. In the
electronic  thermometer  market,  its major  competitors are Citizen Company and
Terumo, both of Japan.  Competition is primarily based upon unit price,  product
quality,   reliability,   product  features  and  management's   reputation  for
integrity.  Management  believes that Bonso  competes  favorably with respect to
each of these factors.                                                          

Employees                                                                       

     At September 30, 1999, Bonso employed 950 persons on a full-time basis. All
of Bonso's 30  employees  located  in Hong Kong held  administrative,  clerical,
sales and marketing  positions.  Of the 920 employees located in China, 810 were
engaged in  manufacturing  and 110 were engaged in  administrative  and clerical
positions.  Bonso is not a party to any labor contract or collective  bargaining
agreement. Bonso has experienced no significant labor stoppages in recent years,
and management believes that relations with its employees are satisfactory.     

     Bonso currently  houses all 920 employees  located in China at the Shenzhen
facility,  including  administrative  staff. The facility is able to house up to
2,180 employees.                                                                

Patents, Licenses, Trademarks, Franchises, Concessions and Royalty Agreements   

     Bonso  has  no  patents,  licenses,  franchises,   concessions  or  royalty
agreements  that are material to its  business as a whole.  Bonso has obtained a
trademark  registration  in Hong Kong and China for the marks BONSO and MODUS in
connection with certain electronic  apparatus and intends to file an application
in the United States for registration of these trademarks.                      

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Government Regulation                                                           

     In the United States,  the Medical Device Amendments of 1976 to the federal
Food,  Drug and Cosmetic Act and the regulations  issued or proposed  thereunder
provide for  regulation by the Food and Drug  Administration  of the  marketing,
manufacturing,  labeling,  packaging and distribution of medical devices.  These
regulations include  requirements that manufacturers of medical devices register
with  the FDA and  furnish  lists  of  devices  manufactured  by  them.  Certain
pre-market  requirements  must be met prior to the marketing of medical  devices
introduced after May 28, 1976. These range from a minimum requirement to wait 90
days after  notification  to the FDA  before  introduction  of  medical  devices
substantially  similar to devices already on the market to a maximum requirement
to  comply  with  the  potentially  expensive  and  time  consuming  process  of
pre-market  analysis and testing  necessary to obtain FDA approval  prior to the
commercial  marketing of new medical devices. In addition,  the FDA also has the
authority  to  prescribe  performance  standards  for the types of  health  care
products  manufactured by Bonso.  Should standards of this nature be prescribed,
Bonso's  products would be required to conform to them. To date, no standards of
this nature have been adopted and Bonso cannot predict what changes, if any, may
be necessitated  in its products  should these type of performance  standards be
issued in the  future.  In addition to the  Amendments,  there are also  certain
requirements of other federal laws and of state,  local and foreign  governments
that may apply to the manufacture and marketing of Bonso's health care products.

     The  only  products  of Bonso  that  are  subject  to  material  government
regulation are its electronic thermometers and electronic blood pressure meters,
which  are  subject  to  qualifying  procedures  with  the FDA.  The  qualifying
procedures  set forth by the FDA for  pre-market  approval  with  respect to the
electronic thermometers and blood pressure meters have been satisfied.          

     In the European Union, Medical Devices Approval is required for the sale of
Bonso's  electronic  thermometers and blood pressure meters.  Bonso has obtained
Medical  Devices  Approval  for  its  electronic  thermometers.  A  customer  is
currently  seeking Medical  Devices  Approval,  on behalf of Bonso,  for Bonso's
blood pressure meters and management  expects such approval to be granted within
six months to a year.                                                           

Properties                                                                      

British Virgin Islands                                                          

     The offices of Bonso are located at Cragmuir Chambers,  Road Town, Tortola,
British Virgin Islands. Only corporate  administrative  matters are conducted at
these offices, through Bonso's registered agent, HWR Services Limited.          

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Hong Kong                                                                       

     Bonso owns  approximately  9,185  square feet in the  Universal  Industrial
Centre, 23-25 Shan Mei Street, Fo Tan, Shatin, New Territories,  Hong Kong. This
facility  is  used  primarily  as  Bonso's  principal  executive  office.  Bonso
purchased  the  property  from an  unaffiliated  third  party  in May  1999  for
approximately $743,590.                                                         

     Bonso owns a residential property in Hong Kong, which is located at Savanna
Garden, House No. 27, Tai Po, New Territories,  Hong Kong. House No. 27 consists
of  approximately  2,475  square feet plus a 177 square foot terrace and a 2,308
square foot garden area.  The use of House No. 27 is provided to Mr.  Anthony So
as part of his compensation. See "Management-- Certain Transactions."           

China                                                                           

     Bonso's  existing  factory in China is located  at  Shenzhen  in the DaYang
Synthetical  Development  District,  close to the border  between  Hong Kong and
China.   This  factory  consists  of  two  factory   buildings,   which  contain
approximately   194,990   square  feet,   two  workers'   quarters,   containing
approximately   115,050  square  feet,  a  canteen  and  recreation   center  of
approximately   25,270   square  feet,   an  office   building,   consisting  of
approximately  25,230 square feet,  and staff  quarters for Bonso's  supervisory
employees,  consisting  of  approximately  35,110  square  feet,  for a total of
approximately  395,650  square  feet.  The  facility is  utilized  pursuant to a
Contract  on the Use of Land and  Supply of  Workers  with  Shenzhen  Baoan Fuan
Industrial  Company.  The agreement  provides that Bonso will use  approximately
269,000  square feet of land for a period of 50 years,  commencing May 10, 1994.
To  obtain  the land  lease,  Bonso  agreed  to pay  $1,810,344  plus a  monthly
management  fee in the amount of $2,750.  Bonso used part of the  proceeds  of a
$1,500,000  loan it  received  in  July  1994 to pay a  portion  of the  initial
acquisition  cost; the balance of the initial  acquisition  cost was paid out of
the net  proceeds  of a public  offering  of  Bonso's  securities  conducted  in
December 1994. The facility is  wholly-owned  by Bonso.  The agreement  provides
that at the  expiration  of the land  lease,  Bonso will be given  priority  for
negotiation of a new agreement for the use of the land. Bonso's total investment
in the  facility is  approximately  $8,000,000.  Phase one of the  facility  was
completed in December 1996, and  manufacturing  commenced in the new facility in
January 1997. The second,  and final, phase of the facility was completed in May
1998.                                                                           

     Bonso also owns two residential properties, one consisting of approximately
1,000  square  feet,  located at  Lijingge  Court,  Unit F, 15th  Floor,  Hai Li
Building, Shenzhen, China, and one consisting of approximately 1,125 square feet
located at the 12th floor, Yuk Yui Court,  Gui Hua Garden,  Shenzhen Bay, China.
Both properties are utilized by management staff and directors when they require
accommodations in China.                                                        

     On June 18, 1998, Bonso purchased Units 12 and 13 on the 3rd floor, Block A
of Sunshine Plaza in Beijing, China for an aggregate purchase price of $600,999,
payable as follows:  $383,468 was paid before June 18, 1998;  and the balance of
$217,531,  plus  interest in the amount of $30,241,  is payable on or before May
18, 2000.  Unit 12 consists of 102.38 square meters.  Unit 13 consists of 172.77
square  meters.  Both  Units are rented to  unaffiliated  third  parties  for an
aggregate monthly rental of $3,353.                                             

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     Adequacy of Facilities.  Management believes that Bonso's new manufacturing
complex will be adequate for its reasonably foreseeable needs.                  

Legal Proceedings                                                               

     On August 28, 1998, a lawsuit was filed in the United States District Court
for the Central  District of California  against Bonso and Bonso's warrant agent
alleging that Bonso had committed  securities fraud, common law fraud and breach
of contract  arising out of the original sale of the public warrants in 1994 and
the issuance on July 22, 1998 of a notice to redeem those  warrants on September
4, 1998 for $0.05 per warrant. The lawsuit was dismissed,  without prejudice, on
September 2, 1998,  and Bonso  rescinded the redemption of the warrants that was
noticed on July 22, 1998.                                                       

     Management  is not  aware  of any  legal  proceedings  contemplated  by any
governmental  authority involving Bonso, its subsidiaries or their property.  No
director, officer or affiliate of Bonso, or any associate of a director, officer
or affiliate of Bonso:  (1) is a party adverse to Bonso or its  subsidiaries  in
any  legal  proceedings;  or  (2)  has  an  adverse  interest  to  Bonso  or its
subsidiaries in any legal proceedings. Except as described herein, Bonso and its
subsidiaries  are not  parties to any legal  proceedings  and there are no other
material legal proceedings pending with respect to the property of Bonso and its
subsidiaries.                                                                   

Certain Foreign Issuer Considerations                                           

     Transfer of Sovereignty  over Hong Kong to China.  The principal  executive
offices  of Bonso  and all  manufacturing  operations  and  assets  of Bonso are
located in Hong Kong and China.  Prior to July 1, 1997,  Hong Kong was a British
Crown Colony with  responsibility  for  administering  its own internal affairs.
After several years of negotiations concerning Hong Kong's future, Great Britain
and China signed (December 1984) and ratified (May 1985) the Sino-British  Joint
Declaration on the Future of Hong Kong (the "Sino-British Agreement").  Pursuant
to the Sino-British Agreement, Hong Kong was restored to China on July 1, 1997. 

     Ownership  of  Real  Property.  All  land  in Hong  Kong  is  owned  by the
government  of the Hong Kong  Special  Administrative  Region.  Prior to July 1,
1997, the government granted Crown Leases to persons,  firms and corporations on
the basis of an annual  crown  rental  payment  and other  terms and  conditions
therein  contained.  Crown Leases were freely  assignable  during their term. In
implementation  of  the  Sino-British  Agreement,  the  New  Territories  Leases
(Extension)  Ordinance  was  enacted  and came into  effect  on April 25,  1988.
Pursuant to that Ordinance,  all leases in the New Territories of Hong Kong were
extended up to June 30, 2047.  This  extension was at no premium but was subject
to an annual fee  equivalent  to 3% of the ratable  value of the  property to be
charged  with  effect  from the date on which  the  original  lease  would  have
expired.                                                                        

     The land  ownership  system in China is similar to Hong Kong,  in which all
land is  owned  by the  government.  The  Chinese  government  and  its  various
government  instrumentalities grant leases to persons, firms and corporations on
the basis of an annual  rental  payment  and other terms and  conditions.  These
leases are generally freely transferable during their term.                     

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MANAGEMENT

Directors and Executive Officers                                                

     The  directors,  executive  officers  and a key  employee  of Bonso  are as
follows:                                                                        

Name                      Age     Position with Bonso                           
----                      ---     -------------------                           

Anthony So                 55     President, Chief Executive Officer, Secretary,
                                Treasurer, Chief Financial Officer, Chairman
             of the Board and Director

Kim Wah Chung              41     Director of Engineering and Research and      
            Development and Director
Kam Sun Luk                54     General Manager and Director                  
Cathy, Kit Teng Pang       36     Director of Finance and Director              
Henry F. Schlueter         48     Assistant Secretary                           
Woo-Ping Fok               50     Director                                      
George O'Leary             61     Director                                      

     ANTHONY SO is the founder of Bonso. He has been president,  chairman of the
board of  directors  and  treasurer  of Bonso since its  inception  and has been
secretary  of Bonso  since July 1991.  Mr. So  received  his BSE degree in civil
engineering  from National  Taiwan  University  in 1967 and a masters  degree in
business  administration  from the Hong Kong campus of the  University  of Hull,
Hull,  England in 1994. Mr. So has been chairman of the Hong Kong GO Association
since 1986,  and also served as chairman of the Alumni  Association  of National
Taiwan  University  for the  1993-1994  academic  year.  Mr. So has  served as a
trustee of the Chinese University of Hong Kong, New Asia College since 1994.    

     KIM WAH CHUNG has been a director of Bonso since  September  21, 1994.  Mr.
Chung has been employed by Bonso since 1981 and currently  holds the position of
director of engineering and research and  development.  Mr. Chung is responsible
for all research  projects and product  development of Bonso. Mr. Chung's entire
engineering  career has been spent with  Bonso,  and he has been  involved  with
every major product  development  made by Bonso.  Mr. Chung was  graduated  with
honors in 1981 from the  Chinese  University  of Hong  Kong with a  bachelor  of
science degree in electronics.                                                  

     KAM SUN LUK was elected to the board of directors of Bonso on September 21,
1994 and has been  employed  by Bonso as director  of new  projects  and quality
control since October 1993. Mr. Luk obtained his bachelors  degree in electrical
engineering from National Taiwan University in 1968. Mr. Luk is also a member of
the Institute of Electrical Engineers United Kingdom and a chartered engineer in
electrical  engineering.  Mr. Luk was employed by Semiconductor  Devices Ltd. of
Hong Kong in a variety of positions  between 1970 and 1992 when he joined Bonso,
including  serving as  Semiconductor  Devices'  general  manager and senior vice
president.                                                                      

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     CATHY,  KIT TENG PANG has been a director of Bonso  since  January 1, 1998.
Ms. Pang was first  employed by Bonso as financial  controller  in December 1996
and was  promoted  to  director  of finance on  January  1, 1998.  Ms.  Pang was
employed  as an auditor  in an  international  audit firm from 1987 to 1991,  at
which  time she  joined a Hong Kong  Listed  company  in the  field of  magnetic
industry as assistant financial controller.  From 1994 until she joined Bonso in
1996,  she was employed as deputy chief  accountant in a management and property
development  company in Hong Kong and China. Ms. Pang has a bachelor of business
administration  degree from York University in Toronto,  Canada. She is a member
of the American  Institute of Certified Public  Accountants and of the Hong Kong
Society of Accountants.                                                         

     HENRY F. SCHLUETER has served as assistant secretary of Bonso since October
6, 1988. Since 1992, Mr. Schlueter has been the managing director of Schlueter &
Associates, P.C., a law firm, practicing in the areas of securities, mergers and
acquisitions,   finance  and  corporate  law.  From  1989  to  1991,   prior  to
establishing  Schlueter & Associates,  P.C., Mr.  Schlueter was a partner in the
Denver,  Colorado office of Kutak Rock (formerly  Kutak,  Rock & Campbell),  and
from 1984 to 1989,  he was a partner in the  Denver  office of Nelson & Harding.
Mr.  Schlueter  is a  member  of the  American  Institute  of  Certified  Public
Accountants,  the  Colorado  Society  of CPA's,  the  Colorado  and  Denver  Bar
Associations  and the Wyoming State Bar. Mr.  Schlueter  received his law degree
from the University of Wyoming College of Law in 1978.                          

     WOO-PING  FOK was elected to the board of  directors  of Bonso on September
21, 1994.  Mr. Fok and his firm,  Norman M.K.  Yeung & Co.,  have served as Hong
Kong counsel to Bonso since 1993.  Mr. Fok was admitted to the Canadian Bar as a
Barrister & Solicitor in December  1987 and was a partner in the law firm of Woo
& Fok, a Canadian law firm with its head office in Edmonton, Alberta, Canada. In
1991,  Mr. Fok was  qualified to practice as a Solicitor  of England & Wales,  a
Solicitor  of Hong  Kong and a  Barrister  &  Solicitor  of  Australian  Capital
Territory.  Mr. Fok practices law in Hong Kong and is a partner with Norman M.K.
Yeung & Co. Mr.  Fok's  major  areas of practice  include  conveyancing  or real
property  law,  corporations  and  business  law,  commercial  transactions  and
international trade with a special emphasis in China trade matters.             

     GEORGE  O'LEARY  has been a director  of Bonso  since  January  1997.  From
November 1994 to the present time, Mr. O'Leary has been president of Pacific Rim
Products,  Newport Beach,  California,  a trading company that provides offshore
sourcing alternatives to U.S. based electronics companies. For eight years prior
to 1994,  Mr.  O'Leary  was  president,  CEO and a  director  of  Micro  General
Corporation, Santa Ana, California, a manufacturer and distributor of mechanical
and electronic  scale  products.  For eight years prior to that, Mr. O'Leary was
vice  president  and  general  manager  of Lanier  Business  Products,  Atlanta,
Georgia,  a manufacturer and distributor of office  products.  Mr. O'Leary has a
bachelor  of  science  degree  in  electrical   engineering  from   Northeastern
University, Boston, Massachusetts.                                              

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     At the present  time no family  relationship  exists among any of the named
directors and  executive  officers;  however,  Mr. Cham Some So, who served as a
director  until his  resignation on April 30, 1998, is the father of Anthony So.
No  arrangement  or  understanding  exists  between  any of these  directors  or
officers  and any other  persons  pursuant to which any  director  or  executive
officer was elected as a director or executive  officer of Bonso.  The directors
of Bonso are elected  annually and serve until their  successors  take office or
until their death,  resignation or removal.  The executive officers serve at the
pleasure of the board of directors of Bonso.                                    

Compensation                                                                    

     Executive  Officers and Directors.  The following  table sets forth certain
information as to the compensation paid to certain of Bonso's executive officers
and directors  and for all  directors and executive  officers as a group for the
year ended March 31, 1999:                                                      

                                                        [Enlarge/Download Table]

                                                                      Cash        Non-Cash   
Name of Individual                  Capacities in Which Served    Compensation  Compensation 
------------------                  --------------------------    ------------  ------------ 
                                                                                             
Anthony So                 President, Chief Executive Officer,                               
                           Secretary, Treasurer, Chief Financial                             
                           Officer, Chairman of the Board and                                
                           Director                                $346,153(1)    $ 95,385(1)
Kim Wah Chung              Director of Engineering and Research                              
                           and Development and Director            $ 59,615(2)    $ 53,974(2)
Kam Sun Luk                Director of New Projects and Quality                              
                           Control and Director                    $ 86,539(3)    $  4,615(3)
Cathy Pang                 Director of Finance and Director        $ 85,817(4)    $  4,577(4)
Henry F. Schlueter         Assistant Secretary                     $    --        $   --     
Woo Ping Fok               Director                                $    --        $   --     
George O'Leary             Director                                $115,342(5)    $   --     
Cham Some So               Director                                $ 13,000(6)    $   --     
All directors and                                                                            
officers as a group (8 persons)(7)                                 $706,466(7)    $158,551   

----------------------                                                          
(1)  Cash compensation consists of emoluments of $346,153. Non-cash compensation
     consists of a $15,385  contribution to Bonso's  Provident Fund Plan and the
     value of housing  provided to Mr. So valued at $80,000  during fiscal 1999.
   See "Provident Fund Plan," below, and "Management--Certain Transactions."
(2)  Cash compensation consists of emoluments of $59,615.  Non-cash compensation
     consists of a $10,461  contribution  to Bonso's  Provident Fund Plan,  life
     insurance of $5,051 and a housing allowance of $38,462. See "Provident Fund
Plan," below, and "Management--Certain Transactions."                 
(3)  Cash compensation consists of emoluments of $86,539.  Non-cash compensation
     consists  of a $4,615  contribution  to Bonso's  Provident  Fund Plan.  See
"Provident Fund Plan," below.                                         
(4)  Cash compensation consists of emoluments of $85,817.  Non-cash compensation
     consists  of a $4,577  contribution  to Bonso's  Provident  Fund Plan.  See
"Provident Fund Plan," below.                                         
(5)  Consists of payments made pursuant to a sales  commission  arrangement with
Bonso. See "Management-- Certain Transactions."                       
(6)  Consists of $13,000  paid as a  director's  fee.  Mr. Cham Some So resigned
from the Board of Directors as of April 30, 1998.                     
(7)  Includes Mr. Cham Some So who resigned as a director as of April 30, 1998. 

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     Bonso  did  not set  aside  or  accrue  any  amounts  to  provide  pension,
retirement  or similar  benefits for  directors and officers for the fiscal year
ended March 31, 1999, other than  contributions  to Bonso's  Provident Fund Plan
which aggregated $35,038 for officers and directors in 1999.                    

     Directors.  Except  for Cham  Some So,  who was  paid a  director's  fee of
$13,000  during the fiscal year ended March 31,  1999,  directors do not receive
any additional monetary compensation for serving as directors of Bonso. However,
outside  directors  receive  stock  options  pursuant  to the 1996  Non-Employee
Directors' Stock Option Plan and have been granted other options.  (See "--Stock
Option Plans--The 1996 Non-Employee  Directors' Stock Option Plan," and "Options
to Purchase  Securities from Bonso or its  Subsidiaries,"  below.) All directors
are reimbursed for all reasonable  expenses incurred in connection with services
as a director.                                                                  

     Provident  Fund Plan. On January 1, 1988,  Bonso  started a provident  fund
plan with a major international  assurance company to provide life insurance and
retirement  benefits  to  its  employees.  All  permanent  full-time  employees,
excluding employees of the China subsidiaries, are eligible to join the plan.   

     Each  participant is required to contribute 5% of his salary,  which amount
is deducted monthly from the participant's  salary. The contribution by Bonso is
either 5%, 7.5% or 10% of the  participant's  salary,  depending  on whether the
length of the  participant's  service is less than five years,  between five and
ten years or more than ten years, respectively.                                 

     At  normal   retirement  age  or  "ill  health"  (defined   essentially  as
disability),  the  participant  is entitled to receive  from the plan a lump sum
equal to the total of the  participant's  and Bonso's  balances.  On resignation
prior to normal  retirement  age, a participant  is entitled to receive from the
plan a lump sum equal to his balance plus a percentage of the employer's balance
determined  in  accordance  with a  predetermined  scale.  Upon  the  death of a
participant, the benefit (calculated as at normal retirement age) is paid to the
employer  to be held in trust for the  participant's  beneficiaries  and paid to
them as the employer determines.                                                

     Bonso's  aggregate  contributions  to the  Provident  Fund Plan amounted to
$54,924 for the year ended March 31, 1997,  $45,227 for the year ended March 31,
1998 and $54,046 for the year ended March 31, 1999.                             

Options to Purchase Securities from Bonso or its Subsidiaries                   

     The following table sets forth all options to purchase common stock granted
by Bonso which are outstanding as of the date of this prospectus:               

Number of              Exercise Price               Expiration
Options                  per Share                    Date  
----------              --------------               ---------- 

    20,000                    $2.25               October 16, 2006
   420,000                    $2.00               January 31, 2007
     40,000                    $5.06               September 8, 2007
220,000                    $6.20               January 2008 
415,000                    $3.60               October 2008 
15,000                    $3.70               October 2008

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Stock Option Plans                                                              

     The 1996 Stock Option Plan. In August 1996, the board of directors of Bonso
adopted the 1996 Stock  Option Plan which  provides  for the grant of options to
purchase an aggregate of not more than 400,000  shares of Bonso's  common stock.
The  purpose of the 1996  Stock  Option  Plan is to make  options  available  to
management  and  employees  of Bonso in order to  encourage  them to  secure  or
increase on  reasonable  terms their stock  ownership  in Bonso and to encourage
them to remain in the employ of Bonso.                                          

     The 1996 Stock Option Plan is administered by a committee  appointed by the
board of directors which  determines the persons to be granted options under the
plan,  the number of shares  subject to each option,  the exercise price of each
option and the option period,  subject to the requirement  that no option may be
exercisable more than 10 years after the date of grant. The exercise price of an
option may be less than fair  market  value of the  underlying  shares of common
stock.  No options  granted under the plan will be  transferable by the optionee
other than by will or the laws of descent and  distribution and each option will
be exercisable, during the lifetime of the optionee, only by the optionee.      

     The exercise price of an option  granted  pursuant to the 1996 Stock Option
Plan may be paid in cash, by the surrender of options, in common stock, in other
property,  including the optionee's  promissory note, or by a combination of the
above.                                                                          

     The 1996  Non-Employee  Directors'  Stock Option Plan. In August 1996,  the
board of directors of Bonso adopted a 1996 Non-Employee  Directors' Stock Option
Plan which  provides  for the grant of options to purchase an  aggregate  of not
more than  100,000  shares of  Bonso's  common  stock.  The  purpose of the 1996
Non-Employee  Directors'  Plan is to promote the  long-term  success of Bonso by
creating a long-term  mutuality of interests between the non-employee  directors
and the  stockholders  of Bonso,  to provide an  additional  inducement  for the
non-employee directors to remain with Bonso and to provide a means through which
Bonso  may  attract  able  persons  to serve as  directors  of  Bonso.  The 1996
Non-Employee  Directors' Plan is  administered  by a committee  appointed by the
board of directors.                                                             

     Under the 1996  Non-Employee  Directors'  Plan,  on the third  business day
following each annual meeting of the stockholders, each director who is not then
an employee of Bonso or any of its subsidiaries will  automatically be granted a
stock option to purchase  10,000 shares of common stock.  The exercise  price of
all options granted under the 1996 Non-Employee Directors' Plan will be equal to
the fair market value of the  underlying  shares on the date of grant,  based on
guidelines set forth in the plan. The exercise price may be paid in cash, by the
surrender  of  options,  in  common  stock,  in other  property,  including  the
optionee's  promissory  note, or by a combination of the above. The term of each
option granted  pursuant to the 1996  Non-Employee  Directors'  Plan will be ten
years from the date of grant;  however,  no option may be  exercised  during the

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first six months of its term. The term of an option granted pursuant to the 1996
Non-Employee  Directors'  Plan may be  reduced  in the event  that the  optionee
ceases to be a director of Bonso. No option granted pursuant to the plan will be
transferable otherwise than by will or the laws of descent and distribution.    

Certain Transactions                                                            

     Over the years,  Bonso has provided to and  received  from its officers and
directors  cash  advances.  In October  1994,  the board of directors  adopted a
policy resolution  prohibiting Bonso from making any loan or advance of money or
property, or guaranteeing the obligation of any directors of Bonso, and limiting
Bonso's ability to make these loans, advances or guarantees to officers of Bonso
or its  subsidiaries  unless a majority of  independent,  disinterested  outside
directors  determine  that the loan,  advance or  guarantee  may  reasonably  be
expected to benefit Bonso. Further, all future material affiliated transactions,
loans  and  loan  guarantees,  if any,  will be made on  terms  that are no less
favorable to Bonso than those that are  generally  available  from  unaffiliated
third parties.  Bonso has neither  provided nor received any cash advances to it
officers or directors since this policy resolution was adopted.                 

     It is common  practice  in Hong Kong,  the  location  of Bonso's  principal
executive offices,  to provide a housing allowance or living  accommodations for
senior executives as part of their  compensation.  Bonso provides Mr. Anthony So
with living accommodations  consisting of a company-owned  townhouse,  for which
Bonso paid a total purchase price of approximately $1,337,000. Bonso valued this
benefit at  $80,000  during the fiscal  year ended  March 31,  1999.  Bonso also
provides  Mr. Kim Wah Chung,  its  director  of  engineering  and  research  and
development and a director of Bonso,  with a housing allowance which amounted to
$38,462 during the fiscal year ended March 31, 1999.                            

     Mr.  George  O'Leary,  a director of Bonso,  is paid a commission on orders
placed by customers which he obtains for Bonso.  The amount of the commission is
negotiated on a  deal-by-deal  basis,  without a written  agreement.  During the
fiscal year ended March 31, 1998,  Mr. O'Leary was paid an aggregate of $354,835
in  commissions  and during the fiscal year ended March 31, 1999, he was paid an
aggregate of $115,342 in commissions.                                           

PRINCIPAL SHAREHOLDERS

     Bonso is not  directly or  indirectly  owned or  controlled  by any foreign
government  or by another  corporation.  The following  table sets forth,  as of
September 30, 1999,  the  beneficial  ownership of Bonso's  common stock by each
person  known by Bonso to own  beneficially  more than 5% of the common stock of
Bonso  outstanding as of that date and by the officers and directors of Bonso as
a group. Except as otherwise indicated, all shares are owned directly.          

Person or Group                               Amount Owned                
   ---------------              ------------------------------------------------
                                  Shares of    Options to Purchase    Percent of
                              Common Stock       Common Stock          Class
                                ------------   -------------------    ----------
 Anthony So                     1,168,421          567,000             47.1%
 Officers and directors         1,168,421        1,021,000             52.9%
as a group (7 persons)                                                  

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     The above  percentages are based on beneficial  ownership of both shares of
common  stock and  options  to  purchase  common  stock  which  are  immediately
exercisable. All of the shares beneficially owned by Mr. Anthony So are owned of
record by a  corporation  that is wholly owned by a trust of which Mr. So is the
sole beneficiary.                                                               

     There are no  arrangements  known to Bonso the  operation of which may at a
subsequent date result in a change in control of Bonso.                         

SELLING SHAREHOLDERS

     The following  table sets forth the number of warrants  owned of record and
beneficially by the selling shareholders as of the date of this prospectus,  the
number of shares of common  stock that are to be offered and sold by the selling
shareholders  from time to time under this prospectus,  assuming exercise of all
of the  representatives'  warrants and all of the public warrants underlying the
representatives'  warrants,  and the amount of Bonso's shares of common stock to
be owned by the selling  shareholders  after the offering,  assuming the sale of
all  330,000  of the shares of common  stock by the  selling  shareholders.  The
shares  listed below  represent  the number of shares  issuable upon exercise of
representatives'  warrants  issued in 1994 and the  public  warrants  underlying
those representatives' warrants.                                                

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                                                        [Enlarge/Download Table]


             Selling                   Shares Owned      Shares to be   Shares Owned 
           Shareholder               Prior to Offering      Offered    After Offering
           -----------               ------------------  ------------  --------------
                                                                                     
H.J. Meyers & Associates, Inc.            152,700           152,700           0      
EBI Securities Corporation                 54,120            54,120           0      
(formerly Cohig & Associates, Inc.)                                                  
Harold Meyers                              22,650            22,650           0      
Gene McColley                              17,160            17,160           0      
Rick Rappaport                             15,855            15,855           0      
Steve Bathgate                             13,200            13,200           0      
Fred Birner                                12,540            12,540           0      
Steven R. Hinkle                           10,560            10,560           0      
Dennis Gentry                               8,580             8,580           0      
F.B. Rodgers                                6,795             6,795           0      
James Hosch                                 6,600             6,600           0      
Ed Larkin                                   5,280             5,280           0      
David Drennen                               2,640             2,640           0      
Rike Wooten                                 1,320             1,320           0      

     It is anticipated  that H.J.  Meyers & Associates,  Inc. and EBI Securities
Corporation will transfer  representatives'  warrants exercisable for the number
of shares of common stock indicated below,  including the shares of common stock
issuable upon exercise of the public  warrants  underlying the  representatives'
warrants, to the following individuals  immediately after they indicate a desire
to exercise the representatives' warrants.                                      

                                                                [Download Table]

             Selling      Shares Owned     Shares to be   Shares Owned 
           Shareholder  Prior to Offering     Offered    After Offering
           -----------  -----------------  ------------  --------------
                                                                       
Aaron Gurewitz                 2,100            2,100           0      
Myrna Domingo                  2,100            2,100           0      
Steven R. Hinkle              14,859           14,859           0      
Richard Lawrence               6,315            6,315           0      
Clarence Bixler, Jr.           4,875            4,875           0      
Joseph Lavigne                 4,275            4,275           0      
Ralph Olson                    4,275            4,275           0      
Terri E. Lowe                  1,206            1,206           0      
Jacob Kuijper                  2,232            2,232           0      
David Lavigne                  1,578            1,578           0      
Gary Gossett                     465              465           0      

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                                                                [Download Table]


             Selling      Shares Owned     Shares to be   Shares Owned 
           Shareholder  Prior to Offering     Offered    After Offering
           -----------  -----------------  ------------  --------------
                                                                       
Kathleen N. Gavin                555              555           0      
Gregory Norton                 2,787            2,787           0      
Kelly McCarthy                   648              648           0      
Russell Bean                     537              537           0      
Harold Golz                    1,395            1,395           0      

     Bonso  will not  receive  any  proceeds  from the sale of the shares by the
selling  shareholders.  The selling shareholders will not participate in Bonso's
offering of common stock.  The selling  shareholders  have no agreement with the
selling  agents with  respect to the sale of their shares of common  stock.  The
common stock may be sold from time to time to purchasers directly by the selling
shareholders.  Alternatively,  the  selling  shareholders  may from time to time
offer the common  stock  through  underwriters,  dealers  or  agents,  which may
receive  compensation  in the form of  underwriting  discounts,  concessions  or
commissions  from the selling  shareholders  and/or the purchasers of the common
stock for whom they may act as agents. The selling  shareholders and any agents,
dealers or underwriters that participate in the distribution of the common stock
may be deemed to be  "underwriters"  under the  Securities  Act of 1933, and any
profit on the sale of the common stock by them and any discounts, commissions or
concessions received by any person deemed to be underwriters,  dealers or agents
might be  determined to be  underwriting  discounts  and  commissions  under the
Securities Act.                                                                 

     At the time a particular offer of the shares is made by or on behalf of the
selling  shareholders,  to the extent required, a prospectus  supplement will be
distributed  which  will set forth the  number of shares of common  stock  being
offered  and the  terms  of the  offering,  including  the  name or names of any
underwriters,  dealers or agents, the purchase price paid by any underwriter for
common stock purchased from the selling shareholders, any discounts, commissions
and other items constituting  compensation from the selling shareholders and any
discounts,  commissions or concessions allowed or re-allowed or paid to dealers,
and the proposed selling price to the public.                                   

     The shares may be sold from time to time in one or more  transactions  at a
fixed offering price, which may be changed,  at varying prices determined at the
time of sale or at  negotiated  prices.  These prices will be  determined by the
selling  shareholders or by agreement  between the selling  shareholders and any
underwriters.                                                                   

     In order to comply with the applicable  securities  laws of certain states,
if any,  the shares  will be  offered or sold  through  registered  or  licensed
brokers or dealers in those states.  In addition,  in certain  states the shares
may not be offered or sold unless they have been  registered  or  qualified  for
sale in those  states or an exemption  from the  registration  or  qualification
requirement is available and is complied with.                                  

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     Under  applicable  rules and regulations  promulgated  under the Securities
Exchange Act of 1934, any person engaged in a distribution of securities may not
simultaneously  engage in any market  making  activities  with regard to Bonso's
securities for a period from five business days (or any other applicable  period
as Regulation M may provide) prior to the commencement of the distribution.  See
"Plan of Distribution."                                                         

 DESCRIPTION OF SECURITIES

Common Stock                                                                    

     Bonso's  authorized  capital consists of 23,333,334 shares of common stock,
$0.003 par value per share.                                                     

     Holders of common  stock are  entitled  to one vote for each whole share on
all  matters  to be  voted  upon by  shareholders,  including  the  election  of
directors.  Holders of common stock do not have cumulative  voting rights in the
election of  directors.  All shares of common stock are equal to each other with
respect to liquidation and dividend rights. Holders of common stock are entitled
to receive  dividends if and when  declared by Bonso's board of directors out of
funds legally available  therefor under British Virgin Islands law. In the event
of the  liquidation  of Bonso,  all assets  available  for  distribution  to the
holders of the common  stock are  distributable  among them  according  to their
respective  holdings.  Holders  of common  stock  have no  preemptive  rights to
purchase any additional, unissued shares of common stock. All of the outstanding
shares of common  stock of Bonso are,  and those to be issued  pursuant  to this
offering will be, fully paid and non-assessable.                                

     Under Bonso's  Memorandum and Articles of  Association  and the laws of the
British Virgin  Islands,  Bonso's  Memorandum and Articles of Association may be
amended by the board of directors without  shareholder  approval.  This includes
amendments  increasing  or reducing the  authorized  capital  stock of Bonso and
increasing  or reducing the par value of its shares.  The board of directors may
also increase the capital of Bonso without shareholder  approval by transferring
a portion  of Bonso's  surplus  to  capital  or reduce  the  capital of Bonso by
transferring  a portion of Bonso's  capital to surplus.  The ability of Bonso to
amend its Memorandum and Articles of Association  without  shareholder  approval
could have the effect of delaying,  deterring or  preventing a change in control
of Bonso  without  any further  action by the  shareholders,  including  but not
limited to a tender  offer to purchase  the common  stock at a premium over then
current market prices.                                                          

     Under United States law,  majority and controlling  shareholders  generally
have  certain   fiduciary   responsibilities   to  the  minority   shareholders.
Shareholder  action  must be taken in good  faith  and  actions  by  controlling
shareholders that are obviously  unreasonable may be declared null and void. The
British Virgin Islands law protecting the interests of the minority shareholders
may not be as protective in all  circumstances  as the laws protecting  minority
shareholders  in United States  jurisdictions.  While British Virgin Islands law
does  permit a  shareholder  of a  British  Virgin  Islands  company  to sue its

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directors derivatively, i.e., in the name of and for the benefit of the company,
and to sue the  company  and its  directors  for his  benefit and the benefit of
others similarly situated,  the circumstances in which any action may be brought
and the procedures and defenses that may be available with respect to any action
may result in the rights of  shareholders  of a British Virgin  Islands  company
being more limited than those rights of shareholders in a United States company.

Warrants                                                                        

     Public  Warrants.  Bonso  issued  and sold  2,200,000  publicly  registered
warrants  (the "public  warrants")  in a public  offering of units  conducted in
1994. The warrants originally expired on December 14, 1999;  however,  the board
of directors  has extended the exercise  period to 2:00 P.M.  (Pacific  Time) on
January 31, 2000. Each public warrant  entitles the holder to purchase one share
of common stock at a price of $7.35 per share at any time, or from time to time,
until January 31, 2000,  unless further  extended by the board of directors.  An
aggregate  of 25,597 of the  public  warrants  have been  exercised.  The public
warrants  are  redeemable  by Bonso,  at $0.05 per  warrant,  upon 30 to 45 days
notice,  at any time if the  closing  price  per  share of  common  stock for 20
consecutive  trading  days within the 30-day  period prior to the date notice of
redemption  is given equals or exceeds  $8.575 per share.  Establishment  of the
exact  number of days for the  redemption  period will be based upon a number of
factors  including the time of year, the day of the week upon which the decision
to redeem the public warrants is made, the day of the week upon which the notice
of redemption is sent to holders,  the number of intervening holidays during the
redemption period and other similar practical considerations that may affect the
time within which  holders may elect to exercise  the public  warrants or accept
the  redemption  price.  In the event Bonso  gives  notice of its  intention  to
redeem,  a holder would be forced either to exercise his or her public  warrants
within the 30 to 45 days  specified  in the notice of  redemption  or accept the
redemption  price.  Bonso may, in the sole discretion of its board of directors,
reduce  the  exercise  price  and/or  extend the  expiration  date of the public
warrants  should  it deem  that  action  to be in the best  interests  of Bonso.
Bonso's  board of directors  has no present  intention to extend the  expiration
date of, or to reduce the exercise price of, the public warrants.  At this time,
the board of directors is unable to predict whether or not it may at any time in
the future take these types of actions. In addition,  the board of directors has
not  determined  the criteria that it may use in making this type of decision in
the future. In the event that the board of directors determines,  at some future
date, to reduce the exercise price of the public warrants (as to which there can
be no assurance),  the board of directors may or may not determine to refund all
public  warrant  holders the difference  between the exercise price  immediately
prior  to the  reduction  and  the  exercise  price  immediately  following  the
reduction.  This determination will be made solely in the absolute discretion of
the board of directors.  Any  modification  of the terms of the public  warrants
will be made in  compliance  with  Rules  13e-4  and 14e  under  the  Securities
Exchange Act of 1934 to the extent applicable.                                  

     The public  warrants are in registered  form.  They are detachable from the
units and may be traded separately in the over-the-counter market. The shares of
common stock  underlying  the public  warrants,  when issued upon  exercise of a
public warrant,  will be fully paid and non- assessable,  and Bonso will pay any
transfer  tax incurred as a result of the issuance of common stock to the holder
upon its exercise.                                                              

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     The public  warrants  contain  provisions  that protect the holders against
dilution by adjustment of the exercise  price in certain  events,  such as stock
dividends  and  distributions,  stock  splits,  recapitalizations,   mergers  or
consolidations.  Bonso is not  required  to  issue  fractional  shares  upon the
exercise of a public warrant,  and any fractional shares will be paid in cash at
the  current  market  price of the  common  stock on the date of  exercise.  The
current market price is defined in the warrant  agreement as the average for the
30 consecutive  trading days  immediately  preceding the date of exercise of the
daily per share closing prices of the common stock in the National  Market.  The
holder of a public warrant will not possess any rights as a shareholder of Bonso
until the holder  exercises  the public  warrant.  A copy of the form of warrant
agreement was filed as an exhibit to the registration  statement under which the
public warrants were registered.                                                

     Exercise  of Public  Warrants.  The public  warrants  may be  exercised  on
surrender of the applicable warrant certificate on or prior to expiration of the
warrant  exercise  period,  with the "Purchase  Form" on the reverse side of the
certificate  executed  as  indicated,  and  accompanied  by  payment of the full
exercise price for the number of public warrants being  exercised.  Payment must
be by cash or by  certified  or  official  bank check  payable in United  States
currency to the order of the warrant agent.                                     

     Tax  Consequences of Public Warrants.  For federal income tax purposes,  no
gain or loss  will be  realized  by any  holder  of public  warrants  who,  upon
exercise of his public  warrants,  receives  common  stock in  exchange  for his
public  warrants and payment of the exercise  price.  The holder's  basis in the
common  stock  received  will be  equal  to his  basis  in the  public  warrants
exercised,  plus the amount of the exercise  price. If the public warrants being
exercised  have been purchased by the holder as part of a Unit, the basis of the
holder in the public warrants for the purposes of the preceding sentence will be
determined by separately  allocating the consideration  paid for the Unit to the
underlying  common stock and public  warrants,  in proportion to the fair market
values  of the  common  stock  and  public  warrants  at the  time  the Unit was
purchased.  Any loss  realized  by a public  warrant  holder due to a failure to
exercise  the public  warrants  prior to their  expiration  will be treated  for
federal  income tax  purposes  as a loss from the sale or  exchange  of property
which  has the same  character  as would the  common  stock if  acquired  by the
holder.  Whether the loss  realized  by the holder is  long-term  or  short-term
capital loss or ordinary loss will be determined by the length of the period for
which the holder has held the public  warrants  and by whether the common  stock
would have been a capital  asset if it had been  acquired by the public  warrant
holder.                                                                         

     Public  warrant  exercise  price  adjustments,  or the  omission  of  these
adjustments,  may under certain circumstances be deemed to be distributions that
could be taxable as  dividends  for  federal  income tax  purposes to the public
warrant holders or to the holders of the common stock.                          

     The United States  Internal  Revenue Code provides that a corporation  does
not recognize  gain or loss upon the issuance,  lapse or repurchase of a warrant
to acquire its own stock.                                                       

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Therefore,   Bonso  will  not  recognize  income  upon  the  expiration  of  any
unexercised public warrants.                                                    

     Representatives'  Warrants.  Bonso has outstanding 110,000 representatives'
warrants which were issued to the  representatives  of the  underwriters  of its
1994 public offering. Each representatives'  warrant entitles the holder thereof
to purchase  one unit,  consisting  of one share of common  stock and two public
warrants,  at $9.1875 per unit at any time prior to 5:00 p.m.  (Pacific Time) on
December 14, 1999. The  representatives'  warrants are not redeemable.  Upon any
transfer of the  representatives'  warrants  to a person  other than an officer,
shareholder or director of the representatives, the transferred representatives'
warrants must be exercised immediately or they will lapse.                      

Transfer and Warrant Agent                                                      

     The transfer agent and registrar for the common stock and the warrant agent
for the public warrants is U.S. Stock Transfer Corporation,  1745 Gardena Avenue
#200, Glendale, California 91204.                                               

Reports to Shareholders                                                         

     Bonso  intends to furnish  annual  reports to  shareholders  which  include
audited  financial  statements  reported on by its  independent  accountants and
quarterly  reports for each of its first three quarters which contain  unaudited
financial statements.  Bonso will continue to comply with the periodic reporting
requirements  imposed on foreign  issuers by the  Exchange  Act.  Bonso plans to
furnish the same annual and quarterly reports to holders of its public warrants.

Exchange Controls and Other Limitations Affecting Shareholders                  

     There are no exchange  control  restrictions  on payments of  dividends  on
Bonso's  common  stock or on the  conduct of Bonso's  operations  either in Hong
Kong,  where Bonso's  principal  executive  offices are located,  or the British
Virgin Islands, where Bonso is incorporated.  Other jurisdictions in which Bonso
conducts   operations  may  have  various   exchange   controls.   Taxation  and
repatriation  of profits  regarding  Bonso's China  operations  are regulated by
Chinese laws and  regulations.  To date, these controls have not had and are not
expected to have a material impact on Bonso's  financial  results.  There are no
material  British Virgin Islands laws that impose foreign  exchange  controls on
Bonso or that affect the  payment of  dividends,  interest or other  payments to
nonresident  holders of  Bonso's  securities.  British  Virgin  Islands  law and
Bonso's  Memorandum  and Articles of  Association  impose no  limitations on the
right of nonresident or foreign owners to hold or vote Bonso's securities.      

 SHARES ELIGIBLE FOR FUTURE SALE

     Upon  completion  of this  offering,  Bonso will have  5,423,562  shares of
common stock  outstanding.  Of these,  approximately  4,255,141 shares of common
stock,   other  than  shares  held  by  affiliates  of  Bonso,  will  be  freely
transferable  and tradable  without  restriction  under the Securities Act. This
includes the 2,504,403  shares to be issued upon exercise of the public warrants
and the  representatives'  warrants.  The remaining  1,168,421  shares of common

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stock are  beneficially  owned by  Anthony So and may only be sold in the public
United  States  market  pursuant to an  effective  registration  statement or in
accordance with Rule 144 promulgated under the Securities Act.                  

     In general,  under Rule 144 as  currently  in effect,  a person (or persons
whose shares are required to be aggregated)  who has  beneficially  owned his or
her  shares  for at least  one year,  including  affiliates  of Bonso,  would be
entitled to sell within any  three-month  period a number of shares equal to the
greater  of 1%  of  the  then  outstanding  shares  of  common  stock  of  Bonso
(approximately  54,236  shares  immediately  after this  offering  if all of the
warrants are  exercised) or the average  weekly trading volume of Bonso's common
stock during the four calendar weeks preceding the filing of the required notice
of the sale.  Sales  under Rule 144 also are  subject to certain  manner of sale
restrictions,  notice  requirements  and  the  availability  of  current  public
information  about Bonso.  Under Rule 144(k), a person who is not deemed to have
been an affiliate of Bonso at any time during the 90 days  preceding a sale, and
who has  beneficially  owned  the  shares  proposed  to be sold for at least two
years,  is  entitled  to sell the  shares  without  regard  to the  requirements
described above. Sales of substantial numbers of shares of common stock pursuant
to a registration statement, Rule 144 or otherwise, whether in the United States
or abroad, could adversely affect the market price of the common stock.         

     Bonso also has reserved  1,130,000 shares of common stock for issuance upon
exercise of certain  outstanding  options and 30,000  shares for  issuance  upon
exercise of stock options which may be granted in the future under Bonso's stock
option plans. If the holders of the options exercise the options,  the shares of
common stock to be issued will constitute restricted securities, subject to Rule
144.                                                                            

PLAN OF DISTRIBUTION

Warrant Solicitation                                                            

     Bonso has entered into an exclusive  agency  agreement  with EBI Securities
Corporation  (formerly  Cohig &  Associates,  Inc.)  pursuant  to  which it will
advise,  direct,  solicit and coordinate the solicitation of the exercise of the
public warrants. This type of agreement includes an agreement to pay a fee equal
to 2% of the gross U. S.  dollars  paid  pursuant to the  exercise of the public
warrants.  EBI Securities  Corporation is referred to in this  prospectus as the
"selling  agent." The selling agent may enter into  sub-agency  agreements  with
other NASD member  broker/dealer  firms  pursuant to which it may re-allow up to
the full amount of its fee to the broker/dealer firms.                          

     No NASD member  broker/dealers  will be entitled to receive a  solicitation
fee if (1) the exercise of the public warrants is made at a time when the market
price of Bonso's  common  stock is lower than the  exercise  price of the public
warrants; or (2) the public warrants to be exercised are held in a discretionary
account.  Each  NASD  member  broker/dealer  will be  required  to  commit to an
undertaking to the effect that as a participating  dealer (1) it did not, within
the 10 business days immediately  preceding the exercise of the public warrants,

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bid for or  purchase  Bonso's  common  stock or any  security  of Bonso which is
immediately convertible into or exchangeable for Bonso's common stock, including
the  warrants;  and (2) it did not,  within  the 10  business  days  immediately
preceding the date of exercise of the public  warrants,  otherwise engage in any
activity that would be prohibited by Rule 10b-6 under the Securities Act of 1934
to one engaged in the distribution of Bonso's securities.                       

     The selling agent acted as a representative of the underwriters of the 1994
public  offering.  Other than the  securities  underlying  the  representatives'
warrants  granted  to the  selling  agent,  Bonso  is  not  aware  of any  other
securities  of Bonso owned by the selling  agent.  Regulation M may prohibit the
selling  agent from  engaging  in any market  making  activities  with regard to
Bonso's securities for a period from five business days (or any other applicable
period as  Regulation M may provide)  prior to any  solicitation  by the selling
agent of the exercise of the public  warrants until the later of the termination
of the solicitation  activity or the termination (by waiver or otherwise) of any
right  that the  selling  agent may have to  receive a fee for the  exercise  of
public warrants  following the solicitation.  As a result, the selling agent may
be unable to provide a market for Bonso's  securities  during  certain  periods,
including while the public warrants are exercisable.                            

Sales by Selling Shareholders                                                   

     Bonso has been advised that the shares of common  stock  offered  hereby by
the Selling  Shareholders  may be sold by the Selling  Shareholders  or by their
transferees or other successors in interest.  The distribution of the shares may
be effected from time to time in one or more transactions on the Nasdaq National
Market or on other  exchanges  on which the common  stock may be traded,  in the
over-the-counter  market,  in  negotiated  transactions,  through the writing of
options on the common stock or a combination  of the methods of sale, or through
other  means.  Sales may be effected at fixed  prices  which may be changed,  at
market  prices  prevailing  at the  time  of  sale,  at  prices  related  to the
prevailing market prices or at negotiated prices.  The Selling  Shareholders are
not  restricted  as to the  price  or  prices  at  which  they  may  sell  their
securities. Sales of shares by Selling Shareholders may depress the market price
of the common stock.                                                            

     Transactions may be effected by sales to or through  broker-dealers and the
broker-dealers may receive compensation in the form of discounts, concessions or
commissions  from the  sellers  or the  purchasers  of the  shares  for whom the
broker-dealers  may act as  agent or to whom  they  sell as  principal,  or both
(which  compensation  to a  particular  broker-dealer  might  be  in  excess  of
customary  commissions).  The Selling  Shareholders  and any  broker-dealers  or
agents who  participate  in the  distribution  of common stock  hereunder may be
deemed to be  "underwriters"  as that term is defined in the Securities Act, and
any commissions received by them and profit on any resale of the common stock as
principal  might be deemed to be underwriting  discounts and  commissions  under
that Act. No underwriter is being utilized in connection with this offering.    

     Certain of the Selling Shareholders are subject to applicable provisions of
the Exchange Act and the rules and  regulations  thereunder,  including  without
limitation  Regulation M, which provisions may limit the timing of purchases and
sales of shares of common stock.                                                

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     Bonso has agreed to pay the expenses of  registration  in  connection  with
this offering.                                                                  

     At the time a  particular  offer of  common  stock is made,  to the  extent
required,  a  supplement  to this  prospectus  will be  distributed  which  will
identify and set forth the  aggregate  amount of common stock being  offered and
the terms of the offering.                                                      

     In order to comply with certain states' securities laws, if applicable, the
common  stock may be sold in those  jurisdictions  only  through  registered  or
licensed brokers or dealers.  In certain states the common stock may not be sold
unless it has been  registered or qualified for sale in any of those states,  or
unless an exemption  from  registration  or  qualification  is available  and is
obtained.                                                                       

 LEGAL MATTERS

     The validity of the common  stock  underlying  the warrants  will be passed
upon by Harney,  Westwood & Riegels,  Tortola,  British Virgin Islands, who have
also  advised  Bonso on all  matters of BVI law  disclosed  in this  prospectus.
Schlueter  &  Associates,  P.C.,  Denver,  Colorado  has acted as United  States
counsel for Bonso in connection  with this  offering.  Norman M.K.  Yeung & Co.,
Solicitors,  Hong  Kong,  has acted as Hong Kong  counsel  with  respect  to all
matters herein concerning the Hong Kong subsidiaries and Hong Kong law.         

 EXPERTS

     The financial statements as of March 31, 1999 and 1998, and for each of the
three years in the period  ended March 31,  1999,  included in this  prospectus,
have been so included in reliance on the report of PricewaterhouseCoopers,  Hong
Kong, independent accountants, given on the authority of said firm as experts in
auditing and accounting.                                                        

ADDITIONAL INFORMATION

     Bonso is subject to the reporting  requirements of the Securities  Exchange
Act of  1934  and in  accordance  with  that  Act it  files  reports  and  other
information  with the  Securities  and  Exchange  Commission.  Reports and other
information  filed by Bonso can be inspected and copied at the public  reference
facilities  maintained by the  Securities  and Exchange  Commission at Judiciary
Plaza,  450 Fifth  Street,  N.W.,  Washington,  D.C.  20549 and at the  Regional
Offices of the Securities and Exchange Commission located at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago,  Illinois 60621-2511 and 7
World Trade Center, Suite 1300, New York, New York 10048. Furthermore, copies of
those  materials  can be  obtained  from the  Public  Reference  Section  of the
Securities and Exchange Commission, Washington, D.C., at prescribed rates.      

     Bonso  intends to furnish to its  shareholders  annual  reports  containing
audited financial statements certified by independent accountants.              

     Bonso has filed a registration  statement under the Securities Act of 1933,
as amended, with the U.S. Securities and Exchange Commission with respect to the
common stock offered by this prospectus. This prospectus, which constitutes part
of the registration statement, omits certain of the information contained in the
registration  statement and the exhibits to the  registration  statement on file
with the  Securities and Exchange  Commission in accordance  with the Securities
Act and the rules and  regulations of the  Securities  and Exchange  Commission.
Statements  contained in this prospectus such as the contents of any contract or

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other  document  referred to are not  necessarily  complete and in each instance
that  reference is made to the copy of a contract or other  document filed as an
exhibit to the  registration  statement,  each  statement  is  qualified  in all
respects by any reference to the exhibits. A copy of the registration statement,
including the exhibits to the registration  statement,  may be inspected without
charge at the Commission's principal office at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and copies of all or any part of the registration
statement,  may be obtained from the Commission upon the payment of certain fees
prescribed by the  Commission.  The  Commission  also maintains a World Wide Web
site  that  contains  reports,   proxy  and  information  statements  and  other
information regarding registrants,  such as Bonso, that file electronically with
the Commission.  The address of the site is  http://www.sec.gov.  Bonso does not
file electronically with the Commission since it is a foreign private issuer and
is not  required  to do so.  Accordingly,  copies  of  Bonso's  filings  are not
available on the Commission's web site.                                         

 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents are hereby incorporated herein by reference:  

     1. Bonso's  Annual  Report on Form 20-F for the fiscal year ended March 31,
1999 filed with the Commission on August 4, 1999; and                           

 2.  Bonso's  Form  6-K  filed  with the  Commission  on August 3, 1999.

     All subsequent  annual reports filed on Form 20-F,  Form 40-F or Form 10-K,
and all  subsequent  filings  on  Forms  10-Q and 8-K  filed  by Bonso  with the
Commission  under the Exchange Act,  prior to the  termination  of the offering,
shall be deemed to be incorporated by reference into this prospectus.  Bonso may
incorporate by reference  into this  prospectus  certain Forms 6-K  subsequently
submitted  to the  Commission  by  identifying  in the forms that they are being
incorporated  by reference  into this  prospectus.  Any  statement  incorporated
herein  shall be  deemed to be  modified  or  superseded  for  purposes  of this
prospectus  to the  extent  that a  statement  contained  herein or in any other
subsequently  filed  document which also is or is deemed to be  incorporated  by
reference herein modifies or supersedes the statement. Any statement so modified
or  superseded  shall not be deemed,  except as so  modified or  superseded,  to
constitute a part of this prospectus. Bonso hereby undertakes to provide without
charge to each person,  including any beneficial  owner,  to whom a copy of this
prospectus  has been  delivered,  upon written or oral request of the person,  a
copy of any or all of the foregoing  documents  incorporated herein by reference
(other than exhibits to those  documents,  unless the exhibits are  specifically
incorporated by reference into the documents). Requests for the documents should
be  submitted to Bonso,  C/O  Schlueter &  Associates,  P.C.,  1050  Seventeenth
Street,  Suite  1700,  Denver,  Colorado  80265;   telephone:   (303)  292-3883;
facsimile: (303) 296-8880.                                                      

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 Consolidated Financial Statements

Bonso Electronics International Inc.
(Incorporated in the British Virgin Islands)
and Subsidiaries

March 31, 1999

PricewaterhouseCoopers
 Independent Accountants

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 Bonso Electronics International Inc. and Subsidiaries
Index to Consolidated Financial Statements

Contents                                                                   Pages

Report of Independent Accountants............................................. 2

Consolidated Balance Sheets as of March 31, 1998 and 1999..................... 3

Consolidated Statements of Comprehensive Income                                 
for the years ended 31, 1997, 1998 and 1999................................... 4

Consolidated Statements of Changes in Shareholders'                             
Equity for the years ended 31,  1997, 1998 and 1999........................... 5

Consolidated Statements of Cash Flows for the years ended                       
March 31, 1997, 1998 and 1999................................................. 6

Notes to Consolidated Financial Statements...............................7 to 27

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 Report of Independent Accountants

Board of Directors and Shareholders                                             
Bonso Electronics International Inc. and Subsidiaries                           

We  have  audited  the  accompanying   consolidated   balance  sheets  of  Bonso
Electronics  International  Inc. and Subsidiaries  (the "Group") as of March 31,
1998 and 1999 and the related consolidated  statements of comprehensive  income,
changes in  shareholders'  equity and cash flows for each of the three  years in
the period ended March 31, 1999. These consolidated financial statements are the
responsibility of the Group's  management.  Our  responsibility is to express an
opinion on these consolidated financial statements based on our audits.         

We conducted our audits in accordance with generally accepted auditing standards
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.                                               

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of the Group as of
March 31, 1998 and 1999 and the results of their  operations  and cash flows for
each of the three years in the period ended March 31, 1999, in  conformity  with
generally accepted accounting principles in the United States of America.       

PricewaterhouseCoopers                                                          

Hong Kong, May 28, 1999                                                         

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                                 Bonso Electronics International Inc. and Subsidiaries                           
                                              Consolidated Balance Sheets                                        
                                         (Expressed in United States Dollars)                                    

                                                                                            March 31             
                                                                                 -----------------------------   
                                                                                 1998                   1999     
                                                                                 ----                   ----     
                                                                                 $                      $        
                                                                                                                 
Assets                                                                                                           

Current assets                                                                                                   

 Cash and cash equivalents ......................................                448,454                 271,447 
 Restricted cash deposits (Note 7) ..............................                952,267               1,011,688 
 Trade receivables, net (Note 2) ................................                964,958                 362,236 
 Inventories, net (Note 3) ......................................              5,966,700               4,697,928 
 Notes receivable ...............................................                340,518                 690,449 
 Deferred income tax assets - current (Note 5(d)) ...............                 35,088                  31,251 
 Other receivables, deposits and prepayments ....................                400,924                 243,231 
                                                                             -----------             ----------- 
 Total current assets ...........................................              9,108,909               7,308,230 
                                                                             -----------             ----------- 

Deposits ........................................................                447,735                    --   

Deferred income tax assets - non current (Note 5(d)) ............                 38,430                  81,223 

Property, plant and equipment                                                                                    

 Leasehold land and buildings ...................................              7,259,414               8,997,073 
 Construction-in-progress .......................................                785,364                    --   
 Plant and machinery ............................................              3,385,846               3,495,632 
 Molds ..........................................................              2,108,967               2,112,608 
 Furniture, fixtures and equipment ..............................              2,122,805               2,661,718 
 Motor vehicles .................................................                306,946                 306,979 
                                                                             -----------             ----------- 
                                                                              15,969,342              17,574,010 
 Less: accumulated depreciation and amortization ................             (4,917,853)             (6,303,179)
                                                                             -----------             ----------- 
 Net property, plant and equipment ..............................             11,051,489              11,270,831 
                                                                             -----------             ----------- 
 Total assets ...................................................             20,646,563              18,660,284 
                                                                             -----------             ----------- 

(cont'd)                                                                                                         
              See notes to these consolidated financial statements                                               

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                                 Bonso Electronics International Inc. and Subsidiaries                           
                                       Consolidated Balance Sheets (continued)                                   
                                         (Expressed in United States Dollars)                                    

                                                                                           March 31              
                                                                                 ---------------------------     
                                                                                 1998                   1999     
                                                                                 ----                   ----     
                                                                                 $                      $        
                                                                                                                 

Liabilities and shareholders' equity                                                                             

Current liabilities                                                                                              

 Bank overdrafts (Note 7) .......................................                600,721                 643,278 
 Notes payable (Note 7) .........................................              2,260,384                 581,349 
 Accounts payable ...............................................              1,560,954               1,135,910 
 Accrued charges and deposits ...................................                482,222                 516,458 
 Income taxes payable ...........................................                 30,000                  11,667 
 Short-term loans (Note 7) ......................................                338,632                 720,129 
 Current portion of long-term debt and                                                                           
  capital lease obligations                                                                                      
   (Notes 4 and 6(a)) ...........................................                652,041                 383,409 
                                                                             -----------             ----------- 
 Total current liabilities ......................................              5,924,954               3,992,200 
                                                                             -----------             ----------- 
Long-term debt and capital lease obligations, net of current                                                     
 maturities (Notes 4 and 6(a)) ..................................                242,889                  42,397 

Commitments and contingencies (Note 10)                                                                          

Shareholders' equity (Notes 8(b), 14 and 15)                                                                     

 Common stock par value $0.003 per share                                                                         
  - authorized shares - 23,333,334                                                                               
  - issued and outstanding shares - 3,119,159 ...................                  8,485                   9,353 
 Additional paid-in capital .....................................              8,724,503              10,285,105 
 Promissory note receivable from shareholder (Note 8(b)) ........             (1,350,000)             (1,430,000)
 Common stock subscribed (Note 8(b)) ............................              1,350,000                    --   
 Retained earnings ..............................................              5,512,204               5,525,958 
 Accumulated other comprehensive income .........................                233,528                 235,271 
                                                                             -----------             ----------- 
                                                                              14,478,720              14,625,687 
                                                                             -----------             ----------- 
Total liabilities and shareholders' equity ......................             20,646,563              18,660,284 
                                                                             -----------             ----------- 

See notes to these consolidated financial statements

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                   Bonso Electronics International Inc. and Subsidiaries                    
                      Consolidated Statements of Comprehensive Income                       
                           (Expressed in United States Dollars)                             

                                                        Year ended March 31                 
                                              -----------------------------------------     
                                                  1997           1998           1999        
                                                  $              $              $           

                                                                                            
Net sales (Note 16) .......................    16,989,019     23,715,576     13,046,265     
Cost of sales .............................    12,096,085     17,071,089      8,812,173     
                                              -----------    -----------    -----------     
Gross margin ..............................     4,892,934      6,644,487      4,234,092     

Selling expenses ..........................       432,518        419,755        196,974     
Salaries and related costs ................     1,973,021      1,897,412      1,625,731     
Research and development expenses (Note 11)       122,263        158,706        566,030     
Administration and general expenses .......     1,609,217      1,814,535      1,601,186     
Net gain on liquidation of a joint venture                                                  
 company (Note 13) ........................      (159,654)          --             --       
                                              -----------    -----------    -----------     
Income from operations ....................       915,569      2,354,079        244,171     
Interest income ...........................        64,248         73,431         63,488     
Interest expenses .........................      (532,068)      (503,896)      (445,644)    
Less: Interest capitalized ................        61,413         46,058         25,108     
                                              -----------    -----------    -----------     

                                                 (470,655)      (457,838)      (420,536)    
Foreign exchange (losses)/gains ...........      (135,780)        35,187         37,882     
Other income ..............................       101,843        242,669         52,662     
                                              -----------    -----------    -----------     
Income/(loss) before income taxes .........       475,225      2,247,528        (22,333)    
Income tax benefit (Note 5(c)) ............        71,364         27,117         36,087     
                                              -----------    -----------    -----------     
Net income ................................       546,589      2,274,645         13,754     

Other comprehensive income, net of tax:                                                     
Foreign currency translation adjustments ..       162,970         43,129          1,743     
                                              -----------    -----------    -----------     
Comprehensive income ......................       709,559      2,317,774         15,497     
                                              -----------    -----------    -----------     

Earning per share (Note 12)                                                                 
 Basic ....................................         19.34 cents    80.39 cents    0.45 cents
                                              -----------    -----------    -----------     

 Diluted ..................................         19.21 cents    72.57 cents    0.37 cents
                                              -----------    -----------    -----------     

See notes to these consolidated financial statements

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                        Bonso Electronics International Inc. and Subsidiaries                  
                     Consolidated Statements of Charges in Shareholders' Equity                
                                (Expressed in United States Dollars)                           

                                                                                   Promissory  
                                              Common stock                         note        
                                        -----------------------                    receivable  
                                           Shares       Amount      Additional     from        
                                        outstanding  outstanding  paid-in capital  shareholder 
                                        -----------  -----------  ---------------  ----------- 
                                                     $             $               $           
                                                                                               
Balance, March 31, 1996 ............     2,825,949         8,477     8,705,917          --     

Net income .........................                                                           

Other comprehensive income,                                                                    
 net of tax                                                                                    
Foreign currency adjustments:                                                                  
 Cumulative translation adjustments                                                            
 Reversal upon liquidation                                                                     
  of a joint venture company .......                                                           
Comprehensive income ...............                                                           
                                       -----------   -----------   -----------    ----------   
Balance, March 31, 1997 ............     2,825,949         8,477     8,705,917          --     

Net income .........................                                                           
Other comprehensive income,                                                                    
 net of tax                                                                                    
Foreign currency adjustments:                                                                  
 Cumulative translation adjustments                                                            
 Reversal upon liquidation of a                                                                
   subsidiary ......................                                                           
                                       -----------   -----------   -----------    ----------   
Comprehensive income ...............                                                           
Common stock issued upon exercise                                                              
 of warrant (Note 15) ..............         2,613             8        18,586                 
Common stock subscribed                                                                        
 (Note 8(b)) .......................          --            --            --      (1,350,000)  
                                       -----------   -----------   -----------    ----------   
Balance, March 31, 1998 ............     2,828,562         8,485     8,724,503    (1,350,000)  

Net income .........................        13,754          --          13,754                 
Other comprehensive income,                                                                    
 net of tax                                                                                    
Foreign currency adjustments:                                                                  
 Cumulative translation adjustment..          --           1,743         1,743                 
                                       -----------   -----------   -----------    ----------   

Comprehensive income ...............                                                           
Issue of common stock (Note 8(b))...       200,000           600     1,349,400          --     
Common stock issued upon                                                                       
 exercise of share option (Note (14).        5,000           193       131,202          --     
Common stock issued upon exercise                                                              
 of warrant, net of expenses (Note                                                             
15)                                         25,597            75          --            --     
Interest income from promissory                                                                
 note receivable (Note 8(b)) .......          --            --          80,000       (80,000)  
                                       -----------   -----------   -----------    ----------   
Balance, March 31, 1999 ............     3,119,159         9,353    10,285,105    (1,430,000)  
                                       -----------   -----------   -----------    ----------   

(cont'd)                                                                                       

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                        Bonso Electronics International Inc. and Subsidiaries                  
               Consolidated Statements of Charges in Shareholders' Equity (continued)          
                                (Expressed in United States Dollars)                           

                                                                     Accumulated               
                                                                     other                     
                                                                     comprehensive             
                                                                     income-                   
                                       Common                        foreign      Total        
                                       stock           Retained      currency     shareholders'
                                       subscribed      earnings      adjustments  equity       
                                       ----------      --------      -----------  ------------ 
                                       $               $             $            $            
                                                                                               
Balance, March 31, 1996 ............         --       2,690,970        27,429     11,432,793   

Net income .........................                    546,589          --          546,589   

Other comprehensive income,                                                                    
 net of tax                                                                                    
Foreign currency adjustments:                                                                  
 Cumulative translation adjustments                       --          57,746          57,746   
 Reversal upon liquidation                                                                     
  of a joint venture company .......                      --         105,224         105,224   
Comprehensive income ...............                    546,589      162,970         709,559   
                                       ----------   -----------   -----------    -----------   
Balance, March 31, 1997 ............         --       3,237,559       190,399     12,142,352   

Net income .........................                 2,274,645          --        2,274,645    
Other comprehensive income,                                                                    
 net of tax                                                                                    
Foreign currency adjustments:                                                                  
 Cumulative translation adjustments                       --          45,779         45,779    
 Reversal upon liquidation of a                                                                
   subsidiary ......................                      --          (2,650)        (2,650)   
                                       ----------   -----------   -----------    -----------   
Comprehensive income ...............         --       2,274,645        43,129      2,317,774   
Common stock issued upon exercise                                                              
 of warrant (Note 15) ..............         --            --            --           18,594   
Common stock subscribed                                                                        
 (Note 8(b)) .......................    1,350,000          --            --             --     
                                       ----------   -----------   -----------    -----------   
Balance, March 31, 1998 ............    1,350,000     5,512,204       233,528     14,478,720   

Net income .........................                     13,754          --           13,754   
Other comprehensive income,                                                                    
 net of tax                                                                                    
Foreign currency adjustments:                                                                  
 Cumulative translation adjustment..                       --           1,743          1,743   
                                       ----------   -----------   -----------    -----------   

Comprehensive income ...............                     13,754         1,743         15,497   
Issue of common stock (Note 8(b))...   (1,350,000)         --            --             --     
Common stock issued upon                                                                       
 exercise of share option (Note (14).        --            --            --          131,395   
Common stock issued upon exercise                                                              
 of warrant, net of expenses (Note                                                             
15                                           --            --            --               75   
Interest income from promissory                                                                
 note receivable (Note 8(b)) - .....         --            --            --             --     
                                       ----------   -----------   -----------    -----------   
Balance, March 31, 1999 ............         --       5,525,958       235,271     14,625,687   
                                       ----------   -----------   -----------    -----------   


See notes to these consolidated financial statements

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                             Bonso Electronics International Inc. and Subsidiaries                                                  
                                     Consolidated Statements of Cash Flows                                                          
                                     (Expressed in United States Dollars)                                                           
                                                                                                   Year ended March 31              
                                                                                     --------------------------------------------   
                                                                                     1997               1998                 1999   
                                                                                     ----               ----                 ----   
                                                                                     $                  $                    $      
                                                                                                                                    
Cash flows from operating activities                                                                                                
 Net income ............................................................            546,589           2,274,645              13,754 
 Adjustments to reconcile net income to net cash                                                                                    
  provided by operating activities                                                                                                  
 Depreciation ..........................................................            681,730             942,894           1,109,286 
 Amortization ..........................................................            279,201             482,214             275,323 
 Other .................................................................            (71,716)            113,794             (51,187)

 Changes in assets and liabilities, net of disposed                                                                                 
  subsidiary:                                                                                                                       
 Trade receivables .....................................................            394,234              45,929             596,696 
 Other receivables, deposits and prepayments ...........................            773,636             (57,577)            157,693 
 Notes receivable ......................................................           (535,685)            427,015            (349,931)
 Inventories ...........................................................            275,537              53,994           1,341,075 
 Accounts payable, accrued charges and deposits ........................          1,237,089          (1,084,467)           (390,808)
 Other .................................................................            (56,309)             63,818             (57,289)
                                                                                 ----------          ----------          ---------- 
 Net cash provided by operating activities .............................          3,524,306           3,262,259           2,644,612 
                                                                                 ----------          ----------          ---------- 
Cash flows from investing activities                                                                                                
 Restricted cash deposits ..............................................            664,820             (65,947)            (59,421)
 Deposit for properties ................................................               --               (64,215)               --   
 Proceeds from disposal of property, plant and                                                                                      
  equipment ............................................................            212,494              83,418                --   
 Acquisition of property, plant and equipment ..........................         (2,844,115)         (1,557,269)           (866,891)
                                                                                 ----------          ----------          ---------- 
 Net cash used in investing activities .................................         (1,966,801)         (1,604,013)           (926,312)
                                                                                 ----------          ----------          ---------- 
Cash flows from financing activities                                                                                                
 Issue of shares on exercise of warrants and options ...................               --                  --               317,966 
 Expenses paid for warrant redemption ..................................               --                  --              (201,586)
 Principal payments under long-term debt ...............................           (307,692)           (410,256)           (381,826)
 Capital lease payments ................................................           (169,569)           (355,750)           (372,192)
 Net repayment under banking facilities ................................         (1,180,565)           (528,414)         (1,254,981)
                                                                                 ----------          ----------          ---------- 
 Net cash used in financing activities .................................         (1,657,826)         (1,294,420)         (1,892,619)
                                                                                 ----------          ----------          ---------- 
 Effect of foreign exchange rate changes on cash .......................             23,457              (4,519)             (2,688)
                                                                                 ----------          ----------          ---------- 
 Net (decrease)/increase in cash .......................................            (76,864)            359,307            (177,007)
 Cash and cash equivalents, beginning of year ..........................            166,011              89,147             448,454 
                                                                                 ----------          ----------          ---------- 
                                                                                     89,147             448,454             271,447 
                                                                                 ----------          ----------          ---------- 
Supplemental disclosure of cash flow information                                                                                    

 Cash paid during the year for:                                                                                                     
  Interest paid, net of amounts capitalized ............................            470,655             457,838             420,536 
  Income tax paid, net of refund .......................................             50,383             (33,818)            (21,202)

See notes to these consolidated financial statements

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Bonso Electronics International Inc. and Subsidiaries 
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

1    Description of business and significant accounting policies                

     Bonso Electronics  International  Inc. ("the Company") and its subsidiaries
     are engaged in the designing,  manufacturing and selling of a comprehensive
     line of electronic  scales and weighing  instruments,  electronic  consumer
products and health care products.                                    

     The consolidated  financial  statements have been prepared in United States
     dollars and in accordance with generally accepted accounting  principles in
     the United States of America.  The  preparation of  consolidated  financial
     statements  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  dates  of  the  consolidated
     financial  statements  and the  reported  amounts of revenues  and expenses
     during the  reporting  periods.  Significant  estimates  made by management
     include provisions made against  inventories and trade receivables.  Actual
results could differ from those estimates.                            

The significant accounting policies are as follows:                   

(a)  Principles of consolidation                                                

     The consolidated  financial  statements include the accounts of the Company
     and its foreign subsidiaries  (hereinafter  collectively referred to as the
     "Group").  All  significant  intercompany  accounts  and  transactions  are
eliminated.                                                           

(b)  Cash and cash equivalents                                                  

     Cash and cash  equivalents are short-term,  highly liquid  investments with
     original maturities of three months or less. Cash equivalents are stated at
     cost, which  approximates  fair value because of the short term maturity of
these instruments.                                                    

(c)  Inventories                                                                

     Inventories  are stated at the lower of cost or net  realizable  value with
     cost determined on a first-in, first-out basis. Net realizable value is the
     price at which  inventories  can be sold in the normal  course of  business
after allowing for the costs of completion and disposal.              

(d)  Revenue recognition                                                        

Revenue is recognized when the products are shipped to customers.     

(e)  Property, plant and equipment                                              

     (i)  Property,  plant and equipment are stated at cost.  Leasehold land and
          buildings are amortized on a straight-line  basis over 15 to 50 years,
          representing  the  shorter of the  remaining  term of the lease or the
expected useful life to the Group.                          

     (ii) Construction-in-progress  represents  factories  and office  buildings
          under  construction  and is stated at cost. Cost includes the costs of
          construction  and interest  charges  arising from  borrowings  used to
          finance   these   assets   during   the   period   of    construction.
          Construction-in-progress  is not  depreciated  during  the  period  of
construction.                                               

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 Bonso Electronics International Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

1    Description of business and significant accounting policies (cont'd)       

(e)  Property, plant and equipment (cont'd)                                     

     (iii)Other  fixed  assets  are  carried at cost and  depreciated  using the
          straight-line  method over their  expected  useful lives to the Group.
The principal annual rates used for this purpose are:       

Plant and machinery                  - 14% to 33.3%         
Molds                                - 20%                  
Furniture, fixtures and equipment    - 20%                  
Motor vehicles                       - 20%                  

     (iv) The cost of major improvements and betterments is capitalized, whereas
         the cost of maintenance and repairs is expensed in the year incurred.

     (v)  Any  gain  or  loss  on  disposal  is  included  in  the  Consolidated
Statements of Comprehensive Income.                         

(f)  Research and development costs                                             

Research and development costs are charged to expense as incurred.    

(g)  Advertising                                                                

     Advertising  costs are expensed as incurred and are included within selling
expenses.                                                             

     Total  advertising  costs incurred for the years ended March 31, 1997, 1998
and 1999 amounted to $22,315 and $9,078 and $43,424 respectively.     

(h)  Deferred income taxes                                                      

     Amounts in the consolidated  financial  statements  related to income taxes
     are calculated  using the  principles of Statement of Financial  Accounting
     Standards  ("SFAS") No. 109,  "Accounting  for Income Taxes".  SFAS No. 109
     requires  recognition  of  deferred  tax  assets  and  liabilities  for the
     expected  future tax  consequences of events that have been included in the
     financial statements or tax returns. Under this method, deferred tax assets
     and liabilities are determined based on the temporary  differences  between
     the financial reporting basis and tax basis of assets and liabilities using
     enacted  tax rates in  effect  for the year in which  the  differences  are
     expected to reverse.  Future tax benefits, such as net operating loss carry
     forwards, are recognized to the extent that realization of such benefits is
more likely than not to occur.                                        

(i)  Capitalization of interest costs                                           

     Interest  attributable  to borrowings  used to finance the  construction of
     factories and office  buildings is capitalized as an additional cost of the
     related  assets.  Interest is capitalized by applying the weighted  average
     interest  rate  on  borrowings   outstanding  during  the  year  or,  where
     applicable,  the  interest  rate  related to  specific  borrowings,  to the
     average amount of the  accumulated  expenditures  for the assets during the
     period.  Capitalization  of interest  ceases when the property is ready for
its intended use.                                                     

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 Bonso Electronics International Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

1    Description of business and significant accounting policies (cont'd)       

(j)  Foreign currency translations                                              

     (i)  The  functional  currency  of the  Company  and one of its  Hong  Kong
          subsidiaries  is the United States dollar and the functional  currency
          of the other  Hong Kong  subsidiaries  is the Hong  Kong  dollar.  The
          functional  currency  of the  Company's  subsidiary  in  the  Peoples'
          Republic of China (the "PRC") is the Renminbi,  the national  currency
          of the PRC. The  functional  currency of the  Company's  subsidiary in
 Canada, which was liquidated in 1998, is the Canadian dollar.

     (ii) The financial statements of foreign subsidiaries where the U.S. dollar
          is  the  functional  currency  and  which  have  certain  transactions
          denominated  in non-U.S.  dollar  currencies  are remeasured as if the
          functional  currency were the U.S. dollar.  The remeasurement of local
          currencies into U.S. dollars creates translation adjustments which are
included in net income.                                     

     (iii)The  financial  statements  of foreign  subsidiaries,  where the local
          currency is the functional currency,  are translated into U.S. dollars
          using   exchange  rates  in  effect  at  period  end  for  assets  and
          liabilities  and average  exchange rates during each reporting  period
          for statement of income.  Adjustments  resulting  from  translation of
          financial   statements  are  reflected  as  a  separate  component  of
shareholders' equity.                                       

(k)  Adoption of new accounting standards                                       

     The Group adopted the provisions of SFAS No. 130, "Reporting  Comprehensive
     Income".  This  statement  establishes  guidelines  for the  reporting  and
     display of  comprehensive  income and its components  (revenues,  expenses,
     gains and losses) in a full set of general-purpose financial statements. It
     requires that all items that are required to be recognized under accounting
     standards as components of comprehensive  income be reported in a financial
     statement  that is displayed  with the same  prominence as other  financial
     statements;  it does not address issues of recognition or measurement.  The
     primary  element of  comprehensive  income  applicable  to the Group is the
     foreign currency cumulative translation adjustment.  The Group adopted this
     standard  from  December  15,  1998.  The  comparative  figures  have  been
restated.                                                             

     The Group  adopted  the  provisions  of SFAS No.  131,  "Disclosures  about
     Segments  of  an  Enterprise  and  Related  Information".   This  statement
     establishes  guidelines for the way that public business enterprises report
     information  about  operating  segments  in  financial   statements.   This
     statement  also  establishes   guidelines  for  related  disclosures  about
     products and services,  geographic  areas, and major  customers.  The Group
adopted this standard from December 15, 1998.                         

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 Bonso Electronics International Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

2    Allowance for doubtful accounts                                            

Changes in the allowance for doubtful accounts consist of:            

                                               1997        1998           1999
                                               ----        ----           ----
                                            $           $              $

Balance, April 1 .......................       52,919       99,856        33,333
Additions charged to expense ...........       46,937         --           6,026
Write-off ..............................         --        (26,126)         --  
Provision written back .................         --        (40,397)         --  
                                              -------      -------       -------
Balance, March 31 ......................       99,856       33,333        39,359
                                              -------      -------       -------

3    Inventories                                                                

(a)  The components of inventories are as follows:                              
                                                March 31
                                                --------------------------
                                                1998                  1999
                                                ----                  ----
                                             $                     $

Raw materials ......................            4,288,182             3,601,695 
Work in progress ...................              849,343               841,008 
Finished goods .....................            1,096,799               450,546 
                                              ----------            ----------
                                               6,234,324             4,893,249
                                              ----------            ----------
Provisions .........................             (267,624)             (195,321)
                                              ----------            ----------
                                               5,966,700             4,697,928
                                              ----------            ----------

(b)  Changes in the inventories provisions consist of the following:            

                                         1997           1998          1999
                                         ----           ----          ----
                                      $                    $       $

Balance, April 1 ...................        49,014        146,530       267,624 
Additions charged to expense .......       131,516        121,094          --   
Write-back .........................       (34,000)          --         (72,303)
                                         --------       --------      --------
Balance, March 31 ..................       146,530        267,624       195,321 
                                         --------       --------      --------

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 Bonso Electronics International Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

4    Long-term debt                                                             

    Long-term debt denominated in Hong Kong dollars consists of the following:

                                                        March 31
                                                        ----------------
                                                        1998        1999
                                                        ----        ----
                                                     $           $

Loan payable to a bank at HIBOR plus 2.25% per annum                            
(8.5% as of March 31, 1998) .............................  307,692        --    
Loan payable to a property developer at 14% per annum ...     --       131,786  
Less: current portion ................................... (307,692)   (111,494) 
                                                          --------    --------
Long-term debt, less current maturities ..................     --        20,292 
                                                          --------    --------

5    Taxation                                                                   

(a)  The companies are subject to tax on an entity basis on income arising in or
     derived  from Hong Kong and the PRC.  The current  rates of taxation of the
     subsidiaries  operating  in Hong Kong and  Shenzhen  in the PRC are 16% and
     15%, respectively.  The Group is not subject to income taxes in the British
Virgin Islands.                                                       

(b)  Pursuant  to the  relevant  income tax laws in the PRC,  Bonso  Electronics
     (Shenzhen)  Co., Ltd, a wholly owned  subsidiary  of the Company,  is fully
     exempt  from PRC state  income  tax for two years  starting  from the first
     profit-making  year  followed by a 50%  reduction  over the  ensuing  three
     years. Bonso Electronics (Shenzhen) Co., Ltd. was loss-making for the years
ended March 31, 1997, 1998 and 1999.                                  

(c)  The  components of the income tax benefit are as follows:                  

                                                 Year ended March 31
                                               ---------------------------
                                               1997       1998        1999
                                               ----       ----        ----
                                            $          $           $

Deferred income tax benefit .................     65,438     57,117      38,956 
 Current income tax benefit/(expense) .......      5,926    (30,000)     (2,869)
                                                -------    -------     -------
Total income tax benefit ....................     71,364     27,117      36,087 
                                                -------    -------     -------

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 Bonso Electronics International Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

5    Taxation (cont'd)                                                          

(d)  Deferred tax assets are comprised of the following:                        

                                          March 31
                                        ----------------
                                        1998        1999
                                        ----        ----
                                     $           $

Deferred tax liabilities                                          
Accelerated depreciation ..............    (34,387)    (11,807) 
Deferred tax assets                                               
Tax loss carry forwards ...............    133,993     127,723  
Valuation allowance ...................    (61,176)    (34,693) 
                                        --------    --------
                                          72,817      93,030
                                        --------    --------
Other .................................     35,088      31,251  
                                        --------    --------
                                         107,905     124,281
                                        --------    --------
                                          73,518     112,474
                                        --------    --------
Less: current portion ..................     35,088      31,251   
                                        --------    --------
Deferred tax assets, non current portion     38,430      81,223   
                                        --------    --------

     As of March 31, 1999,  the Group had  accumulated  tax losses  amounting to
     $798,265 (the tax effect thereon is $127,723)  which may be carried forward
     and applied to reduce future  taxable  income which is earned in or derived
     from Hong Kong. Realization of deferred tax assets associated with tax loss
     carry forwards is dependent upon generating sufficient taxable income prior
     to their expiration.  A valuation allowance is established against such tax
     losses when  management  believes it is more likely than not that a portion
may be disputed by the tax authorities.                               

     As of March 31, 1999, the Group's  accumulated  tax losses have no definite
period of expiration.                                                 

(e)  Changes in the valuation allowance consist of:                             

                                               1997       1998        1999
                                               ----       ----        ----
                                            $          $           $

   Balance, April 1 ........................     89,112    147,716      61,176
Additions/(reductions) charged/(credited)                               
     to income tax expense ..................     58,604     55,082      (4,630)
Release of valuation allowance upon:                                    
  - liquidation of subsidiary ............       --      (62,089)       --
     - approval of losses by tax authorities        --      (77,621)    (21,853)
 Effect of change in tax rate ............       --       (1,912)       --
                                               --------   --------    --------
   Balance, March 31 .......................    147,716     61,176      34,693
                                               --------   --------    --------

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 Bonso Electronics International Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

5    Taxation (cont'd)                                                          

(f)  The actual income tax benefit  attributable to earnings for the years ended
     March  31,  1997,  1998 and 1999  differed  from the  amounts  computed  by
     applying the Hong Kong  statutory tax rate in accordance  with the relevant
income tax law as a result of the following:                          

                                                                [Download Table]

                                                        Year ended March 31      
                                                 ------------------------------- 
                                                 1997          1998         1999 
                                                 ----          ----         ---- 
                                                 $             $            $    

                                                                                 
Hong Kong statutory tax rate ...............      16.5%        16.5%        16.0%
Income tax (expense)/credit at the Hong Kong                                     
 statutory tax rate ........................   (78,412)    (370,842)       3,573 

Offshore profit not subject to income tax ..   181,409      381,167       40,477 

Valuation allowance on tax loss ............   (58,604)      22,539       26,483 

Over/(under)provision for Hong Kong tax in                                       
 prior years ...............................     5,926       10,246      (22,064)

Other ......................................    21,045      (15,993)     (12,382)
                                              --------     --------     -------- 
Total income tax benefit ...................    71,364       27,117       36,087 
                                              --------     --------     -------- 

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 Bonso Electronics International Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

6    Leases                                                                     

(a)  Capital leases                                                             

     Motor  vehicles and plant and machinery  include the following  amounts for
capitalized leases:                                                   

                                       Motor vehicles        Plant and machinery
                                     March 31                 March 31
                                    ----------------        ----------------
                                    1998        1999        1998        1999
                                    ----        ----        ----        ----
                                 $           $           $           $
  Cost .........................      45,835      45,835   1,397,129   1,495,847
  Less: accumulated amortization       7,639      16,806     344,684     643,041
                                   ---------   ---------   ---------   ---------
                                      38,196      29,029   1,052,445     852,806
                                   ---------   ---------   ---------   ---------

     During the years ended March 31,  1997,  1998 and 1999,  the Group  entered
     into additional capital lease obligations  amounting to $880,261,  $143,471
and $78,974 respectively.                                             

     Future  minimum  payments  for capital  leases as of March 31, 1999 with an
initial term of more than one year are as follows:                    
                                                                   $

     2000 ........................................................       326,686
     2001 ........................................................        13,812
                                                                         -------
     Total minimum lease payments ................................       340,498

     Less: amount representing interest ..........................        46,478
                                                                         -------
Present value of net minimum lease payments (including                
      current portion of $271,915, as of March 31, 1999) .........       294,020
                                                                         -------

(b)  Operating leases                                                           

     As of March 31,  1999,  future  minimum  lease  commitments  in  respect of
     noncancellable  operating  leases for office premises and staff quarters in
     Hong Kong and the PRC are  $46,795,  payable in the year  ending  March 31,
2000.                                                                 

     Rent expense for all operating  leases  amounted to $279,311,  $196,622 and
   $166,824 for the years ended March 31, 1997, 1998 and 1999, respectively.

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 Bonso Electronics International Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

7    Banking facilities                                                         

     As of March 31, 1999,  the Group had general  banking  facilities  for bank
     overdrafts,  notes  payable,  short-term  loans  and  long-term  debt.  The
     facilities are  interchangeable  with total amounts available of $6,217,949
     (1998: $6,948,717), including facilities in respect of letters of credit of
     $1,410,257 (1998:  $1,282,051).  All general banking  facilities granted to
the Group are denominated in Hong Kong dollars.                       

     The Group's general banking facilities, expressed in United States Dollars,
are further analyzed as follows:                                      

                                                        [Enlarge/Download Table]


                           Amount available       Amount utilized    Terms of banking facilities as of
                               March 31               March 31                  March 31, 1998        
                           ----------------       -----------------       --------------------------- 

                           1998        1999       1998         1999       Interest          Repayment 
                           ----        ----       ----         ----           rate              terms 
                           $           $          $            $          --------          --------- 
                                                                                                      
Trade financing facilities:                                                                           

 Notes payable .......  3,635,726   2,771,089  2,260,384      581,349   Prime rate   Repayable in     
                                                                     to Prime rate    full within     
                                                                      plus 0.5% or    four months     
                                                                        HIBOR plus                    
                                                                                2%                    

 Short-term loans ....    723,248   1,075,064    338,632      720,129   Prime rate   Repayable in     
                                                                     to Prime rate    full within     
                                                                      plus 0.5% or   three months     
                                                                        HIBOR plus                    
                                                                                2%                    

 Letters of credit .... 1,282,051   1,410,257    502,270      114,601          Nil            Nil     

Other facilities:                                                                                     

 Bank overdrafts ......   897,436     961,539    600,721      643,278   Prime rate      Repayable     
                                                                        plus 0.25%      on demand     
                                                                     to Prime rate                    
                                                                         plus 1.5%                    

 Long-term debt, ......   410,256        --      307,692        --           HIBOR            Nil     
  including current ...                                                 plus 2.25%                    
  maturities (Note 4)                                                                                 
                        ---------   ---------  ----------   ------------                              
                        6,948,717   6,217,949  4,009,699    2,059,357                                 
                        ---------   ---------  ----------   ------------                              

     The Prime rate and HIBOR rate were  8.75% and  5.63%,  respectively,  as of
     March 31,  1999.  The Prime  rate is  determined  by the Hong Kong  Bankers
Association and is subject to revision from time to time.             

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Bonso Electronics International Inc. and Subsidiaries 
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

7    Banking facilities (cont'd)                                                

The banking facilities are collateralized by the following:           

(a)  a legal  charge over a leasehold  property of the Group with net book value
of $1,241,712 (1998: $1,269,917); and                                 

(b)  a bank guarantee of $150,000 (1998:  $150,000) and restricted cash deposits
     of $1,011,688 (1998: $952,267).  The restricted cash deposits have original
maturities of less than three months.                                 

     The weighted average interest rate of short-term borrowings of the Group is
as follows:                                                           

                                                   Year ended March 31
                                                   -------------------
                                                   1998       1999
                                                   ----       ----

 Bank overdrafts ...............................     9.5%      10.2%
 Notes payable .................................     9.4%       9.5%
 Short-term loans ..............................     9.4%       9.5%

8    Related party transactions                                                 

(a)  The Group paid  emoluments,  commissions  and/or  consultancy fees to their
directors as follows:                                                 

                                                                [Download Table]


Year ended  Mr So Hung Gun,                                                 
March 31           Anthony   Mr So Cham Some  Mr Ray Mehra  Mr Chung Kim Wah
--------    --------------   ---------------  ------------  ----------------

                                                                            
1997              $443,590          $ 66,410      $ 21,986      $115,226(ii)
1998              $500,560          $ 66,410      $ 11,000      $140,175(ii)
1999              $441,538          $ 13,000            --      $113,589(ii)

                                                 Mr George       Ms Pang Kit
            Mr Luk Kam Sun   Mr Fok Woo Ping       O'Leary       Teng, Cathy
            --------------   ---------------     ---------       -----------
1997              $100,564          $ 12,000   $ 52,605(i)               Nil
1998              $106,923               Nil   $354,835(i)          $ 24,029
1999              $ 91,154               Nil   $115,342(i)          $ 90,394

(i)  This represented commissions paid to Mr George O'Leary.

          (ii) Included in the  emoluments  is a housing  allowance  for $38,462
               payable to a company  in which Mr Chung Kim Wah has a  beneficial
               interest  for each of the three  years in the period  ended March
31, 1999.                                         

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 Bonso Electronics International Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

8    Related party transactions (cont'd)                                        

(b)  Promissory note receivable from shareholder                                

     On  March  27,  1998,  Advantage  List  &  Marketing  Corporation  ("ALMC")
     subscribed  200,000  shares of common  stock of the  Company  at a price of
     $6.75 per share  which  represented  the fair  market  value at the date of
     subscription,  in exchange for ALMC's promissory note of $1,470,000. On the
     same date, ALMC entered into a pledge agreement  simultaneously under which
     ALMC agreed to pledge the common  stock to the Company as security  for the
     payment of the promissory  note. The promissory note is with full recourse,
     interest free and shall be fully repayable on or before September 27, 1999.
     On  September  17,  1998,  a total of 200,000  shares of common  stock were
     issued and the shares were held by the  Company as security  for payment of
     the promissory  note.  The  promissory  note was recorded at its discounted
     value of $1,350,000.  Interest of $80,000 accrued thereon in the year ended
March 31, 1999 has been included in additional paid in capital.       

9    Provident fund plan                                                        

(a)  With effect from January 1, 1988,  Bonso  Electronics  Limited  ("BEL"),  a
     wholly-owned  foreign  subsidiary of the Company,  started a provident fund
     plan (the "Plan") with a major  international  assurance company to provide
     life  insurance and retirement  benefits for its  employees.  All permanent
     full time employees,  excluding  factory workers,  are eligible to join the
provident fund plan.                                                  

(b)  Members of the Plan are required to contribute 5% of their monthly  salary.
The contribution by BEL is as follows:                                

           Years of service                    % of salary as BEL's contribution
           ----------------                    ---------------------------------
Less than 5 years                                  5.0%     
5 to 10 years                                      7.5%     
More than 10 years                                10.0%     

(c)  At normal retirement age, death or ill health, the member shall be entitled
     to receive  from the Plan a lump sum equal to the total of the member's and
     BEL's contributions plus a return on their investment. On resignation prior
     to normal  retirement  age, a member  shall be entitled to receive from the
     Plan a lump sum equal to the member's  contributions  plus a percentage  of
     the employer's  balance  determined in accordance with a predetermined  set
scale.                                                                

(d)  BEL's  contributions  to the Plan for the years ended March 31, 1997,  1998
and 1999 amounted to $54,924, $45,227 and $54,046 respectively.       

10   Commitments and contingencies                                              

     As of March 31, 1999,  the Group had  contingent  liabilities  to banks for
outstanding letters of credit of $114,601 (1998: $502,270).           

11   Research and development expenses                                          

     Included in the research and development  expenses for the year ended March
31, 1999 was $392,454 incurred in connection with a telephone project.

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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

12   Earnings per share                                                         

                                             Year ended March 31
                                             ---------------------------
                                             1997        1998       1999
                                             ----        ----       ----
                                          $           $          $

Income available to common                                                      
shareholders: ............................     546,589   2,274,645      13,754
Weighted average shares outstanding .......   2,825,949   2,829,448   3,079,219 
Incremental shares from assumed exercise                                        
of:                                                                           
 Warrants ................................        --        25,562     166,024
 Stock options ...........................      20,095     279,362     429,060
Dilutive potential common shares ..........      20,095     304,924     595,084 
                                             ---------   ---------   ---------
Diluted weighted average shares ...........   2,846,044   3,134,372   3,674,303 
                                             ---------   ---------   ---------

Basic earnings per share ..................   19.34 cents 80.39 cents 0.45 cents
Diluted earnings per share ................   19.21 cents 72.57 cents 0.37 cents

     Earnings per share are computed  based on the  weighted  average  number of
     common  shares and,  as  appropriate,  dilutive  common  stock  equivalents
outstanding for the period and the related income amount.             

     Warrants to purchase  16,667 shares of common stock at $6.00 per share were
     outstanding for the fiscal years ended March 31, 1997 but were not included
     in the  calculation  of earnings per share because the  warrants'  exercise
     price was greater than the market price of the Company's  common stock. The
warrants were exercised during the year ended March 31, 1998.         

     Warrants to purchase  110,000  shares of common  stock at $9.1875 per share
     were  outstanding  during the fiscal years ended March 31,  1997,  1998 but
     were not included in the calculation of diluted  earnings per share because
     the  warrants'  exercise  price was  greater  than the market  price of the
     Company's  common stock.  The warrants,  which expire on December 14, 1999,
were still outstanding as of March 31, 1999.                          

     Warrants to purchase  2,200,000  shares of common  stock at $7.35 per share
     were outstanding  during the fiscal years ended March 31, 1997 and 1998 but
     were not included in the  calculation of diluted  earnings per share during
     the year ended March 31,  1997  because the  warrants'  exercise  price was
     greater than the market price of the  Company's  common  stock.  During the
     year ended March 31, 1999,  25,597  warrants  were  exercised by the public
     shareholders  to purchase  25,597  shares of common  stock of the  Company.
     Warrants to purchase  2,174,403  shares of common stock at $7.35 per share,
     which expire on December 14, 1999,  were still  outstanding as of March 31,
1999.                                                                 

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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

13   Minority interests                                                         

     In April  1993,  the Group,  together  with a Chinese  partner,  formed and
     invested in a joint venture company in the PRC,  Shenzhen Bonso Electronics
     Limited  ("SBEL"),  owned  as to 60% by the  Group  and 40% by the  Chinese
     partner.  According to the joint venture  agreement,  the registered  share
     capital of SBEL was $3,205,128  (HK$25 million);  the Group and the Chinese
     partner could appoint three and two directors,  respectively,  to the board
     of SBEL. The Group effectively controlled all major financial and operating
     policy  decisions  of SBEL.  Accordingly,  this joint  venture  company was
consolidated.                                                         

     In accordance with an agreement  between the Group and the Chinese partner,
     SBEL was liquidated on October 31, 1996. The land and buildings  originally
     contributed  to the joint venture by the Chinese  partner  reverted to same
     and all other assets and liabilities including the plant and machinery were
     taken up by the Group.  During the year ended March 31, 1996, the directors
     estimated  that a  provision  for  permanent  diminution  in  value of SBEL
     amounting to $152,480 was  necessary  and  accordingly a provision for this
     amount  was  recorded.  During  the year  ended  March 31,  1997,  upon the
     liquidation  of SBEL,  a gain of $159,654  was  recognized  by the Group of
     which  $152,480  represents  the reversal of the  provision  for  permanent
diminution in value.                                                  

14   Stock option plan                                                          

(a)  In October 1996, the Board of Directors approved the 1996 Stock Option Plan
     and 1996  Non-Employee  Directors'  Stock Option Plan. Under the 1996 Stock
     Option  Plan,  the  Company  may grant  options of common  stock to certain
     employees and directors of the Company for a maximum of 400,000 shares. The
     1996 Stock  Option Plan is  administered  by a committee  appointed  by the
     Board of Directors which determines the terms of options granted, including
     the  exercise  price,  the  option  periods  and the number of shares to be
     subject to each option.  The exercise  price of options  granted  under the
     1996 Stock Option Plan may be less than the fair market value of the common
     shares on the date of grant.  The maximum term of options granted under the
     1996 Stock Option Plan is 10 years.  The right to acquire the common shares
     is not  assignable  except for certain  conditions  stipulated  in the 1996
     Stock Option Plan. In January 1997, the Board of Directors  delegated to Mr
     So Hung Gun,  Anthony,  the  authority to issue  options to  employees  and
directors of the Company for an additional 25,000 shares.             

     In January 1997, the Company granted options to three directors to purchase
     an  aggregate  of  375,000  shares of  common  stock of the  Company  at an
     exercise  price of $2.00 per share,  which was equal to the market value on
     the date of grant,  in  accordance  with the 1996 Stock  Option  Plan.  The
     options  shall  expire on January 31, 2007 and can be exercised at any time
immediately after granting.                                           

     In January 1998, the Company  granted options to an employee to purchase an
     aggregate  of 25,000  shares of common  stock of the Company at an exercise
     price of $6.20 per share which is greater than the market value on the date
     of grant,  in accordance with the 1996 Stock Option Plan. The options shall
     expire on  January  1, 2008 and can be  exercised  at any time  immediately
after granting.                                                       

     No options  have been  exercised  during the years ended March 31, 1998 and
1999.                                                                 

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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

14   Stock option plan (cont'd)                                                 

(a)  (cont'd)                                                                   

     The stock options  outstanding  in respect of the 1996 Stock Option Plan as
of March 31, 1999 is summarized as follows:                           

                                                             Average per share
                                                            --------------------
                                                 Number      Exercise   Market
                                                of shares   price      price

Balance, March 31, 1997 ........................  375,000     $2.00      $2.00  
Grant at exercise price greater than the                                        
market value of the common shares .............  25,000     $6.20      $6.13  
                                                -------     -----      -----
Balance, March 31, 1998 and 1999 ...............  400,000     $2.26      $2.26  
                                                -------     -----      -----

     Under the 1996 Non-Employee  Directors' Stock Option Plan, the non-employee
     directors are automatically granted stock options on the third business day
     following the day of each annual general meeting of the Company to purchase
     an aggregate of 100,000  shares of common stock.  The exercise price of all
     options granted under the 1996  Non-Employee  Directors'  Stock Option Plan
     shall be one  hundred  percent  of the fair  market  value per share of the
     common  shares on the date of grant.  The maximum  term of options  granted
     under the 1996  Non-Employee  Directors'  Stock Option Plan is 10 years. No
     stock  option  may be  exercised  during  the first six  months of its term
     except for certain conditions provided in the 1996 Non-Employee  Directors'
     Stock Option Plan. The right to acquire the common shares is not assignable
     except  for  certain   conditions   stipulated  in  the  1996  Non-Employee
Directors' Stock Option Plan.                                         

     In October 1996, the Company issued options to three non-employee directors
     in accordance with the 1996  Non-Employee  Directors'  Stock Option Plan to
     purchase an aggregate of 30,000 shares of common stock of the Company at an
     exercise  price of $2.25 per share and the options shall expire October 16,
2006 and can be exercised at any time immediately after granting.     

     In  September  1997,  the  Company  issued  options  to  four  non-employee
     directors in accordance with the 1996 Non-Employee  Directors' Stock Option
     Plan to  purchase  an  aggregate  of 40,000  shares of common  stock of the
     Company  at an  exercise  price of $5.06 per share  and the  options  shall
     expire on September  8, 2007 and can be  exercised at any time  immediately
after granting.                                                       

     No annual  general  meeting  was held by the  Company for the year 1998 and
     therefore  no  stock  option  was  granted  in  accordance  with  the  1996
     Non-Employee  Directors'  Stock Option Plan during the year ended March 31,
1999.                                                                 

     No options  have been  exercised  during the year ended  March 31, 1998 and
     10,000 stock options were exercised to purchase  10,000 common stock of the
     Company at an exercise  price of $2.25 per share  during the year ended 31,
1999.                                                                 

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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

14   Stock option plan (cont'd)                                                 

(a)  (cont'd)                                                                   

     The stock options activity in respect of the 1996  Non-Employee  Directors'
Stock Option Plan as of March 31, 1999 is summarized as follows:      

                                                             Average per share
                                                             -----------------
                                                  Number      Exercise  Market
                                                 of shares   price     price

Balance, March 31, 1997 .......................     30,000     $2.25     $2.25  
Grant at exercise price equal to the market                                     
value of the common shares ...................     40,000     $5.06     $5.06 
                                                 -------     -----     -----
Balance, March 31, 1998 .......................     70,000     $3.86     $3.86  

Exercised during the year .....................    (10,000)    $2.25     $2.25  
                                                 -------     -----     -----
Balance, March 31, 1999 .......................     60,000     $4.12     $4.12  
                                                 -------     -----     -----

(b)  In  January  1997,  the  Company  granted  options  to  three  non-employee
     directors to purchase an aggregate of 100,000 shares of common stock of the
     Company.  The  exercise  price is $2.00 per  share,  which was equal to the
     market  value of the  Company's  common  stock on the  date of  grant.  The
     options  shall  expire on January 31, 2007 and can be exercised at any time
immediately after granting.                                           

     No options  have been  exercised  during the years ended March 31, 1997 and
     1998, and 55,000 options were exercised to purchase  55,000 common stock of
     the Company at an exercise  price of $2.00 per share  during the year ended
March 31, 1999.                                                       

  The stock options summary as of March 31, 1999 is summarised as follows:

                                                           Average per share
                                                          ------------------
                                               Number     Exercise  Market
                                               of shares  price      price

Balance, March 31, 1997 ......................        --        --       --     
Grant at exercise price equal to the market                                     
value of the common shares ..................     100,000     $2.00   $2.00   
                                              --------     -----   -----
Balance, March 31, 1998 ......................     100,000     $2.00   $2.00    

Exercised during the year ....................     (55,000)    $2.00   $2.00    
                                              --------     -----   -----
Balance, March 31, 1999 ......................      45,000     $2.00   $2.00    
                                              --------     -----   -----

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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

14   Stock option plan (cont'd)                                                 

     At  various  times in  January  1998,  the  Company  issued  options to the
     directors  and an  employee of the  Company to  purchase  an  aggregate  of
     195,000 shares of common stock of the Company at an exercise price of $6.20
     per share. The options shall expire in January 2008 and can be exercised at
     any time immediately  after granting.  The exercise prices of these options
     were equal to or greater  than the fair market  value at the time of grant.
     No options  have been  exercised  during the years ended March 31, 1998 and
1999.                                                                 

     In October 1998, the Company issued options to the directors,  non-employee
     directors and certain  employees of the Company to purchase an aggregate of
     430,000 shares of common stock of the Company at an exercise price of $3.60
     to $3.70.  The options shall expire in October 2008 and can be exercised at
     any time immediately  after granting.  The exercise prices of these options
     were greater  than the fair market  value at the time of grant.  No options
have been exercised during the year ended March 31, 1999.             

(e)  The  following  table  summarizes  the  information   about  stock  options
outstanding at March 31, 1999:                                        

               Number                          Exercisable
            outstanding at     Average life      shares at
Exercise price    March 31, 1999        (years)     March 31, 1999    
--------------    --------------     ------------     --------------  

$2.00                 420,000             7.8          420,000        
$2.25                  20,000             7.5           20,000        
$3.60                 415,000             9.5          415,000        
$3.70                  15,000             9.5           15,000        
$5.06                  40,000             8.4           40,000        
$6.20                 220,000             8.8          220,000        
            ---------             ---        ---------
$2.00 to $6.20      1,130,000             8.7        1,130,000        
            ---------             ---        ---------

(f)  Included  in the options  outstanding  as of March 31, 1999 were 10,000 and
     63,000 units held by Mr Ray Mehra and Mr So Cham Some,  respectively,  both
     of whom have  resigned as  directors  of the Company on January 2, 1998 and
April 30, 1998, respectively.                                         
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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

14   Stock option plan (cont'd)                                                 

(g)  The Company  applies  Accounting  Principles  Board ("APB") Opinion No. 25,
     "Accounting for Stock Issued to Employees" and related  interpretations  in
     accounting  for its  employee  stock  options.  Under APB  Opinion  No. 25,
     because the exercise  price of all the options issued by the Company equals
     or is higher than the market price of the  underlying  stock on the date of
grant, no compensation expense is recognized.                         

     Pro forma  information  regarding  net  income  and  earnings  per share is
     required by SFAS No. 123 "Accounting for Stock-Based Compensation", and has
     been  determined  as if the Company had  accounted  for its employee  stock
     options  under the fair value method of SFAS No. 123. The weighted  average
     fair value of options  granted  during the years  ended  March 31, 1998 and
     1999 were $820,200 and $2,503,363,  respectively.  The fair value for these
     options was  estimated  at the date of grant using a  Black-Scholes  Option
     Valuation  model with the following  weighted-average  assumptions  for the
     year ended March 31, 1999:  risk-free  interest rates of 5.48% to 5.49%; no
     dividend  yield;  volatility  factor of the  expected  market  price of the
     Company's common share of 81.20%; and a  weighted-average  expected life of
the option of ten years.                                              

     For  purposes  of pro forma  disclosure,  the  estimated  fair value of the
     options is amortized to expense over the options' vesting period. The Group
pro forma information follows:                                        

                                           1998           1999
                                           ----           ----
                                        $              $
Net income                                                          

As reported ...........................     2,274,645         13,754
 Pro forma .............................     1,454,445     (2,489,609)

Basis earnings/(losses) per share                                     

   As reported ...........................   80.39 cents        0.45 cents
    Pro forma .............................   51.40 cents      (80.85) cents

Diluted earnings/(losses) per share                                   

   As reported ...........................   72.57 cents        0.37 cents
    Pro forma .............................   46.40 cents      (67.76) cents

     Because  compensation  expense  associated with an award is recognized over
     the vesting  period,  the initial impact on pro forma net income may not be
     representative of compensation  expense in future years, when the effect of
     the  amortization  of  multiple  awards  would be  reflected  in the income
statement.                                                            

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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

15   Warrants                                                                   

     In 1994, the Company  issued 16,667  warrants under a loan agreement to the
     lender to  purchase  common  shares of the  Company at $6.00 per share.  No
     warrants were  exercised  during the year ended March 31, 1997. In December
     1997,  2,613 shares of common  stock were issued at $7.11 per share,  which
     represented  the fair market value at the date of issue,  upon the exercise
of all the warrants on a cashless basis.                              

     As a result of the Company's  second public  offering in December 1994, the
     Company issued  2,200,000  five-year  warrants to its public  shareholders.
     Each warrant  entitles  the holder  thereof to purchase one share of common
     stock of the Company at $7.35 per share.  The  warrants  expire on December
     14, 1999.  The warrants are  redeemable by the Company at $0.05 per warrant
     upon 30 to 45 days  notice at any time after  December  14,  1995,  or such
     earlier date as the  representatives of the underwriters may determine,  if
     the  closing  price  per  share  of  common  stock  of the  Company  for 20
     consecutive  trading  days  within the 30-day  period  prior to the date of
     notice of  redemption  is given  equals or exceeds  $8.575  per  share.  No
     warrants were  exercised or redeemed  during the years ended March 31, 1997
     and 1998. A total of 25,597  warrants  were  exercised  to purchase  25,597
     shares of common  stock of the  Company at $7.35 per share  during the year
ended March 31, 1999.                                                 

     In conjunction with the second public offering, the Company issued warrants
     to  the   representatives   of  the  underwriters  (the   "Representatives'
     Warrants") to purchase from the Company up to an aggregate of 110,000 units
     at an exercise  price of $9.1875 per unit;  each unit consists of one share
     of  common  stock  and  two   five-year   warrants  of  the  Company.   The
     Representatives'  Warrants  are  exercisable  for a period  of three  years
     commencing  December 15, 1996.  Upon any transfer to a person other than an
     officer,   shareholder   or   director  of  the   representatives   of  the
     underwriters,   the  transferred   five-year  warrants  must  be  exercised
     immediately or they will lapse.  No warrants have been  transferred  during
the years ended March 31, 1997, 1998 and 1999.                        

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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

16   Business segment information                                               

(a)  The Group's  operations have been classified into three business  segments:
     scales, health care products and other. Summarized financial information by
business segment for 1997, 1998 and 1999 is as follows:               

                                                        [Enlarge/Download Table]


                                                                    Identifiable   Depreciation             
                                             Net      Operating     assets as of   and           Capital    
                                             sales    profit        March 31       amortization  expenditure
                                             -----    ---------     ------------   ------------  -----------
                                             $        $             $              $             $          
                                                                                                            
1999                                                                                                        

Scales .................................. 10,306,549    3,042,936    12,098,180    1,015,272         132,395
Health care products ....................  1,956,940       55,066       212,450       17,829           2,325
Other ...................................    782,776      532,353     2,053,884      172,361          22,476
                                          ----------   ----------    ----------   ----------      ----------
Total operating segments ................ 13,046,265    3,630,355    14,364,514    1,205,462         157,196
Corporate ...............................       --     (3,386,184)    4,295,770      179,147       1,442,324
                                          ----------   ----------    ----------   ----------      ----------
Group ................................... 13,046,265      244,171    18,660,284    1,384,609       1,599,520
                                          ----------   ----------    ----------   ----------      ----------

1998                                                                                                        

Scales .................................. 18,260,994    5,234,759    14,604,822    1,110,023       1,280,219
Health care products ....................  3,083,025       73,197       204,218       15,521          17,901
Other ...................................  2,371,557      534,778     1,492,015      113,399         130,786
                                          ----------   ----------    ----------   ----------      ----------
Total operating segments ................ 23,715,576    5,842,734    16,301,055    1,238,943       1,428,906
Corporate ...............................       --     (3,488,655)    4,345,508      186,165         271,834
                                          ----------   ----------    ----------   ----------      ----------
Group ................................... 23,715,576    2,354,079    20,646,563    1,425,108       1,700,740
                                          ----------   ----------    ----------   ----------      ----------

1997                                                                                                        

Scales .................................. 11,892,313    3,188,072    13,369,205      656,807       4,534,113
Health care products ....................  2,718,243       66,246       277,802       13,648          94,216
Other ...................................  2,378,463      720,500     3,021,421      148,438       1,024,703
                                          ----------   ----------    ----------   ----------      ----------
Total operating segments ................ 16,989,019    3,974,818    16,668,428      818,893       5,653,032
Corporate ...............................       --     (3,059,249)    3,847,183      142,038           8,100
                                          ----------   ----------    ----------   ----------      ----------
Group ................................... 16,989,019      915,569    20,515,611      960,931       5,661,132
                                          ----------   ----------    ----------   ----------      ----------

     Operating  profit by segment equals total operating  revenues less expenses
     which are related to the segment's operating revenues.  Identifiable assets
     by segment are those assets that are used in the operation of that segment.
     Corporate assets consist  principally of cash and cash equivalents,  income
     tax recoverable,  deferred income tax assets and other identifiable  assets
not related specifically to individual segments.                      

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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

16   Business segment information (cont'd)                                      

(b)  The Group  primarily  operates in Hong Kong and the PRC. The manufacture of
     components and their assembly into finished  products is carried out in the
     PRC.  The Hong Kong office is mainly  responsible  for the  purchase of raw
     materials,  arrangement of shipments and research and  development.  As the
     operations are  integrated,  it is not practicable to distinguish the sales
     and net income  derived from the  activities in Hong Kong from those in the
PRC.                                                                  

Identifiable assets by geographical areas are as follows:             

                                               1998                 1999
                                               ----                 ----
                                            $                    $

    Hong Kong ....................             7,469,828             5,314,252
    The PRC ......................            13,176,735            13,346,032
                                              ----------            ----------
    Total assets .................            20,646,563            18,660,284
                                              ----------            ----------

(c)  The following is a summary of net export sales to customers by geographical
area for the years ended March 31, 1997, 1998 and 1999:               

                                                                [Download Table]


                                              Year ended March 31                  
                         --------------------------------------------------------- 
                         1997       %         1998         %        1999         % 
                         ----       -         ----         -        ----         - 
                         $                    $                     $              
                                                                                   
United States of                                                                   
  America ..........  6,873,780    40     12,570,427      53     5,609,457      43 
Germany ............  3,994,167    24      6,290,634      27     4,212,958      32 
Others  ............  6,121,072    36      4,854,515      20     3,223,850      25 
                     ----------   ---     ----------     ---    ----------     --- 
                     16,989,019   100     23,715,576     100    13,046,265     100 
                     ----------   ---     ----------     ---    ----------     --- 

(d)  The details of sales made to  customers  constituting  10% or more of total
sales of the Group is as follows:                                     

                                                        [Enlarge/Download Table]

                                                                             Year ended March 31                 
                                                      -----------------------------------------------------      
                                          Business    1997         %       1998          %       1999          % 
                                          segment     $                    $                     $               
                                          ---------   ----         -       ----          -       ----          - 
                                                                                                                 
Pitney Bowes, Inc. (USA) ............... Scales       3,007,070    18     7,075,338      30     2,011,393      15

Globaltec Corporation (USA) ............ Scales       2,252,184    13     3,721,060      15     1,454,550      11
Werner Dorsch Gmbh & Co. ...............                                                                         
 (Germany) ............................. Scales       1,906,961    11     2,105,307       9     1,998,505      15
Omron Healthcare ....................... Health care                                                             
 Group ................................. products     1,888,335    11     1,841,427       8     1,358,356      10
                                         ---------    ---------  ----    ----------    ----    ----------    ----
                                                      9,054,550    53    14,743,132      62     6,822,804      51
                                         ---------    ---------  ----    ----------    ----    ----------    ----

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Notes to Consolidated Financial Statements
(Expressed in United States Dollars)

17   Financial instruments                                                      

     In accordance with SFAS No. 107 "Disclosures  about Fair Value of Financial
     Instruments", the carrying amounts and fair values of the Group's financial
instruments are as follows:                                           

                                                        [Enlarge/Download Table]

                                             Carrying amount              Fair value      
                                                 March 31                  March 31       
                                          --------------------        -----------------   
                                          1998            1999        1998         1999   
                                          ----            ----        ----         ----   
                                          $               $           $            $      

                                                                                          
Cash and cash equivalents ............   448,454         271,447    448,454        271,447
Restricted cash deposits .............   952,267       1,011,688    952,267      1,011,688
Deposits .............................   447,735            --      447,735           --  
Bank overdrafts ......................   600,721         643,278    600,721        643,278
Notes payable ........................ 2,260,384         581,349  2,260,384        581,349
Short-term loans .....................   338,632         720,129    338,632        720,129
Long-term debt .......................   307,692         131,786    299,215        136,013
Promissory note receivable ........... 1,350,000       1,350,000  1,350,000      1,350,000
                                       ---------       ---------  ---------      ---------

     The following  methods and assumptions were used to estimate the fair value
of each class of financial instruments:                               

(a)  Cash and cash equivalents, restricted cash deposits, bank overdrafts, notes
     payable and short-term loans - the carrying amount  approximates fair value
because   of   the   short    maturity    of   these    instruments.  

(b)  Long term debt - interest  rates that are currently  available to the Group
     for issuance of debt with similar terms and remaining  maturities  are used
     to  estimate  the fair  value of debt  issues  that  are not  quoted  on an
     exchange.  Fair value  estimates  are made at a specific  point in time and
     based on relevant  market  information.  These  estimates are subjective in
     nature,  involve  uncertainties  and matters of  significant  judgement and
     therefore cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.                                   

(c)  Deposits - the carrying  amount of refundable  deposits  approximates  fair
value based on the terms of the related contracts.                    

(d)  Promissory  note  receivable - the fair value of promissory note receivable
     approximates  the carrying  value based on a comparison of interest rate to
current market rate for instruments of similar nature.                

     All  other  financial   instruments   included  among  current  assets  and
liabilities are stated at cost which approximates their fair value.   

18   Post balance sheet date events                                             

     In May  1999,  the  Group  acquired  an  office  premise  in Hong Kong at a
consideration of $743,590.                                            

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                                BONSO ELECTRONICS INTERNATIONAL INC.                              
                                     CONSOLIDATED BALANCE SHEET                                   
                                          (In U.S. Dollars)                                       

                                                                       September 30     March 31  
                                                                           1999           1999    
                                                                           ----           ----    
                                                                        (unaudited)     (audited) 
                                                                                                  
ASSETS                                                                                            

Current Assets :                                                                                  
  Cash and cash equivalents ...................................      $    383,747    $    271,447 
  Restricted cash deposits ....................................         1,036,513       1,011,688 
  Trade receivables, net ......................................           731,725         362,236 
  Inventories, net ............................................         3,982,263       4,697,928 
  Notes receivable ............................................           173,854         690,449 
  Deferred income tax assets - current ........................            31,251          31,251 
  Other receivables, deposits and                                                                 
    Prepayments ...............................................           285,063         243,231 
                                                                     ------------    ------------ 
    Total current assets ......................................      $  6,624,416    $  7,308,230 
Deferred income tax assets - non current ......................            81,223          81,223 
Net property, plant and equipment .............................        12,838,475      11,270,831 
                                                                     ------------    ------------ 
Total assets ..................................................      $ 19,544,114    $ 18,660,284 
                                                                     ============    ============ 

LIABILITIES AND SHAREHOLDERS' EQUITY                                                              
Current liabilities :                                                                             
  Bank overdrafts .............................................      $    488,428    $    643,278 
  Notes payable ...............................................         1,281,995         581,349 
  Account payable .............................................         1,207,127       1,135,910 
  Accrued charges and deposits ................................           312,720         516,458 
  Income taxes payable ........................................            98,590          11,667 
  Short-term loans ............................................           162,182         720,129 
  Current portion of long-term debt &                                                             
    capital lease obligations .................................           420,671         383,409 
                                                                     ------------    ------------ 
    Total Current Liabilities .................................      $  3,971,713    $  3,992,200 

Long term debt and capital lease                                                                  
   Obligations, net of current maturities .....................           326,923          42,397 

Shareholders' equity :                                                                            
  Common stock par value $0.003 per                                                               
  share authorized 23,333,334 shares                                                              
  issued and outstanding 2,919,159 shares .....................             8,753           8,753 
  Additional paid in capital ..................................         8,855,705       8,935,705 
  Promissory note receivable from                                                                 
     Shareholder ..............................................              --        (1,430,000)
  Common stock subscribed .....................................              --         1,350,000 
  Retained earnings ...........................................         6,147,494       5,525,958 
  Accumulated other comprehensive                                                                 
     income ...................................................           233,526         235,271 
                                                                     ------------    ------------ 
                                                                     $ 15,245,478    $ 14,625,687 
                                                                     ------------    ------------ 
Total Liabilities & Shareholders' equity ......................      $ 19,544,114    $ 18,660,284 
                                                                     ============    ============ 

See notes to unaudited consolidated financial statements

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                                BONSO ELECTRONICS INTERNATIONAL INC.                                         
                                  CONSOLIDATED STATEMENTS OF INCOME                                          
                                    (In Thousand of U.S. Dollars)                                            
                                             (unaudited)                                                     

                                                       Three months ended              Six months ended      
                                                          September 30                    September 30       
                                                    1999                1998       1999                 1998 
                                                    ----                ----       ----                 ---- 
                                                                                                             
Sales .......................................      3,515               2,720       7,855               6,946 

Cost of Sales ...............................     (2,280)             (1,948)     (5,274)             (5,067)
                                                  ------              ------      ------              ------ 
Gross Profits ...............................      1,235                 772       2,581               1,879 

Operating Expenses                                                                                           
  Selling Expense ...........................         38                  32          90                  84 
  Salary & related cost .....................        380                 346         875                 816 
  Research & development                                                                                     
  Expenses ..................................         91                   6          98                  12 
  General & administrative                                                                                   
    expenses ................................        424                 366         788                 705 
                                                  ------              ------      ------              ------ 
Income from operations ......................        302                  22         730                 262 

Other income ................................         80                  30         110                  60 

Foreign exchange Gain/                                                                                       
(Loss) ......................................          1                  15          (6)                 37 

Interest Expenses ...........................        (60)               (114)       (125)               (249)
                                                  ------              ------      ------              ------ 
Income before income tax ....................        323                 (47)        709                 110 
Income tax (credit)/charge ..................        (87)               --           (87)               --   
                                                                                                      ------ 
Net income ..................................        236                 (47)        622                 110 
                                                  ======              ======      ======              ====== 

Per share amounts (in dollars) : earnings per share                                                          
  Basic .....................................      0.076             (0.0155)       0.20               0.036 
  Diluted ...................................      0.065             (0.0137)       0.17               0.032 

Weighted average shares                                                                                      
  Outstanding ...............................  3,115,880           3,034,439   3,115,880           3,034,439 

Incremental shares from                                                                                      
  Assumed exercise of                                                                                        
  Warrants and stock                                                                                         
  options ...................................    539,950             396,687     539,950             396,687 

Adjusted weighted average                                                                                    
  Share .....................................  3,655,830           3,431,126   3,655,830           3,431,126 

See notes to unaudited consolidated financial statements

F-29

424B2
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BONSO ELECTRONICS INTERNATIONAL INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying  unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles in the United States
for interim  financial  information  and Item 319 of Regulation S-K. They do not
include all of the  information  and  footnotes  required by generally  accepted
accounting principles for for complete financial  statements.  In the opinion of
management,   all  adjustments  (consisting  of  normal  recurring  adjustments)
considered necessary for a fair presentation have been included.  The results of
operations  for the periods  presented  are not  necessarily  indicative  of the
results to be expected for the full year. The accompanying  financial statements
should be read in conjunction with the Company's  audited  financial  statements
for the year ended March 31, 1999, included elsewhere in this Form F-3.         

F-30

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B2’ Filing		Date		First		Last			Other Filings
		1/1/08		85
		9/8/07		50		86
		1/31/07		50		87
		10/16/06		50		86
		6/15/00		33
		5/18/00		45
		3/31/00		21		80			20-F,  20-F/A
		1/31/00		6		57			6-K
		12/31/99		32
		12/14/99		6		90
Filed on:		12/2/99
		11/22/99		1
		11/19/99		1		22			F-3DPOS
		9/30/99		7		52
		9/27/99		83
		8/4/99		63					20-F
		8/3/99		63					6-K
		6/30/99		21		22
		5/28/99		66
		3/31/99		7		96			20-F,  6-K
		12/31/98		21		22
		12/15/98		75
		9/30/98		8		27
		9/17/98		83
		9/4/98		46
		9/2/98		46
		8/28/98		46
		7/22/98		46
		6/30/98		21		22
		6/18/98		45
		4/30/98		49		88
		3/31/98		8		92			20-F
		3/27/98		83
		1/2/98		88
		1/1/98		48
		12/31/97		21		22
		12/15/97		33
		9/30/97		21		22
		7/1/97		10		46
		6/30/97		21		22
		3/31/97		23		92
		12/15/96		90
		10/31/96		85
		3/31/96		23		85
		12/14/95		90
		3/31/95		23
		9/21/94		47		48
		5/10/94		45
		3/31/94		34
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