SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 20-F

[   ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
       EXCHANGE ACT OF 1934
                                     OR
[ X ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934
                                     OR
[   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
                                     OR
[   ]  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934


                         Commission File Number: 0-17601

                      BONSO ELECTRONICS INTERNATIONAL INC.
              ----------------------------------------------------
             (Exact name of Registrant as specified in its charter)

                             British Virgin Islands
                 (Jurisdiction of incorporation or organization)

                                Unit 1106 - 1110
                                11/F, Star House
                                3 Salisbury Road
                                   Tsimshatsui
                               Kowloon, Hong Kong
                    (Address of principal executive offices)

 Securities registered or to be registered pursuant to Section 12(b) of the Act:
                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:

                          COMMON STOCK, PAR VALUE $.003

              Securities for which there is a reporting obligation
                   pursuant to Section 15(d) of the Act: NONE

     Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report.

     5,577,639 shares of common stock, $0.003 par value, at March 31, 2007

     Indicate by check mark if the registrant is a well known seasoned issuer,
as defined in Rule 405 of the Securities Act.

                                 Yes [ ] No [X]

     If the report is an annual or transition report, indicated by check mark if
the registrant is not required to file reports pursuant to Section 13 or 15D of
the Securities Exchange Act of 1934.

                                 Yes [ ] No [X]
<PAGE>


     Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes [X] No [ ]

     Indicate by check mark whether the Registrant is a large accelerated filer,
an accelerated filer, or a non-accelerated filer.

Large Accelerated Filer [ ]   Accelerated Filer [ ]  Non-accelerated filer   [X]

     Indicate by check mark which financial statement item the Registrant has
elected to follow:

                             Item 17 [ ] Item 18 [X]

If this is an annual report, indicated by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act.)

                                Yes [ ] No [ X ]


                                        2
<PAGE>


                                TABLE OF CONTENTS
                                -----------------



PART
I
Page

Item 1. Identity of Directors, Senior Management and Advisors.............  5
Item 2. Offer Statistics and Expected Timetable...........................  5
Item 3. Key Information...................................................  5
Item 4. Information on the Company........................................ 18
Item 5. Operating and Financial Review and Prospects...................... 29
Item 6. Directors, Senior Management and Employees........................ 43
Item 7. Major Shareholders and Related Party Transactions................. 53
Item 8. Financial Information............................................. 54
Item 9. The Offer and Listing............................................. 54
Item 10. Additional Information........................................... 56
Item 11. Quantitative and Qualitative Disclosures about Market Risk....... 60
Item 12. Description of Securities Other Than Equity Securities........... 61

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies.................. 61
Item 14. Material Modifications to the Rights of
          Security Holders and Use of Proceeds ........................... 61
Item 15. Controls and Procedures.......................................... 61
Item 16. Reserved......................................................... 62
Item 16A. Audit Committee Financial Expert................................ 62
Item 16B. Code of Ethics.................................................. 62
Item 16C. Principal Accountant Fees and Services.......................... 62
Item 16D. Exemptions from the Listing Standards for Audit Committees...... 64
Item 16E. Purchases of Equity Securities by the Issuer and
          Affiliates Purchasers .......................................... 64

PART III

Item 17. Financial Statements.............................................
Item 18. Financial Statements.............................................
Item 19. Exhibits.........................................................
SIGNATURES................................................................


                                       3

<PAGE>


FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F contains forward-looking statements. A
forward-looking statement is a projection about a future event or result, and
whether the statement comes true is subject to many risks and uncertainties.
These statements often can be identified by the use of terms such as "may,"
"will," "expect," "believe," "anticipate," "estimate," "approximate" or
"continue," or the negative thereof. The actual results or activities of the
Company will likely differ from projected results or activities of the Company
as described in this Memorandum, and such differences could be material.

Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results and performance of the Company
to be different from any future results, performance and achievements expressed
or implied by these statements. In other words, our performance might be quite
different from what the forward-looking statements imply. You should review
carefully all information included in this Annual Report.

You should rely only on the forward-looking statements that reflect management's
view as of the date of this Annual Report. We undertake no obligation to
publicly revise or update these forward-looking statements to reflect subsequent
events or circumstances. You should also carefully review the risk factors
described in other documents we file from time to time with the Securities and
Exchange Commission (the "SEC"). The Private Securities Reform Act of 1995
contains a safe harbor for forward-looking statements on which the Company
relies in making such disclosures. In connection with the "safe harbor," we are
hereby identifying important factors that could cause actual results to differ
materially from those contained in any forward-looking statements made by us or
on our behalf. Factors that might cause such a difference include, but are not
limited to, those discussed in the section entitled "Risk Factors" under Item 3.
- Key Information.

FINANCIAL STATEMENTS AND CURRENCY PRESENTATION

We prepare our consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America and publish our
financial statements in United States Dollars.

REFERENCES

In this Annual Report, "China" refers to all parts of the People's Republic of
China other than the Special Administrative Region of Hong Kong. The terms
"Bonso," "we," "our," "us," and the "Company" refer to Bonso Electronics
International Inc. and, where the context so requires or suggests, our direct
and indirect subsidiaries. References to "dollars" or "$" are to United States
Dollars, "HK$" are to Hong Kong Dollars, "Euros" or "(euro)" are to the European
Monetary Union's Currency, "GPB" are to British Pounds, "RMB" are to Chinese
Renminbi and "CDN" are to Canadian Dollars.

                                       4

<PAGE>


                                     PART I

Item 1.  Identity of Directors, Senior Management and Advisors

         Not Applicable.

Item 2.  Offer Statistics and Expected Timetable

         Not Applicable.

Item 3.  Key Information

         The selected consolidated financial data as of March 31, 2006 and 2007
and for each of the three fiscal years ended March 31, 2007 are derived from the
Audited Consolidated Financial Statements and notes which appear elsewhere in
this Annual Report. The Financial Statements are prepared in accordance with
generally accepted accounting principles in the United States of America and
expressed in United States Dollars. The selected consolidated financial data set
forth below as of March 31, 2003, 2004 and 2005, and for each of the two fiscal
years in the period ended March 31, 2004 have been derived from our audited
consolidated financial statements that are not included in this Annual Report.
The selected consolidated financial data is qualified in their entirety by
reference to, and should be read in conjunction with, the Consolidated Financial
Statements and related notes and Item 5 - "Operating and Financial Review and
Prospects" included in this Annual Report.

                                       5



<PAGE>

<TABLE>
<CAPTION>


                                            SELECTED CONSOLIDATED FINANCIAL DATA

Income Statement Data
(in 000's USD except per shares and per share data)


                                                                       Year Ended March 31,
                                           ----------------------------------------------------------------------
                                              2003(1)           2004           2005           2006        2007(1)
                                              -------           ----           ----           ----        -------
<S>                                       <C>            <C>            <C>            <C>            <C>
Net sales                                 $    46,400    $    74,964    $    69,602    $    64,543    $    66,491

Cost of sales                                 (35,528)       (57,481)       (53,138)       (51,114)       (53,946)
Gross margin                                   10,872         17,483         16,464         13,429         12,545
Selling expenses                               (2,467)        (3,122)        (2,595)        (2,111)        (2,477)
Salaries and related costs                     (4,563)        (5,150)        (5,216)        (5,681)        (5,438)
Research and development                         (393)          (740)          (710)          (847)          (983)
expenses
Administration and general                     (3,957)        (5,439)        (4,079)        (3,421)        (3,004)
expenses
Amortization of brand name                       (200)          (200)          (200)          (200)          (200)
Impairment of goodwill                           --             --             --             (258)          --
Loss from water damage                           --             --             --             --             (701)
 (Loss) Income from operations                   (708)         2,832          3,664            911           (258)
Interest income                                    85             57             81            202            313
Interest expense                                 (533)          (500)          (417)          (504)          (626)
Foreign exchange gain (loss)                      (96)            15            (98)          (184)          (184)
Other income                                       99            225            372            190            302

Consultancy fee                                  (381)          --             --             --             --
(Loss) Income before income                    (1,534)         2,629          3,602            615           (453)
taxes and minority interest
Income tax expense                                (37)          (402)          (266)          (131)          (918)
Net (loss) income before                       (1,571)         2,227          3,336            484         (1,371)
minority interest
Minority interest                                 (72)            41             14           --             --
Net (loss)                                ($    1,643)         2,268          3,350            484         (1,371)
income
(Loss) earnings per share
   - Basic                                ($   0.2936)   $    0.3979    $    0.5932    $     0.087    ($   0.2458)
   - Diluted                              ($   0.2936)   $    0.3743    $    0.5533    $     0.082    ($   0.2458)
Weighted average shares                     5,599,238      5,702,015      5,646,676      5,577,639      5,577,639
Diluted weighted average shares             5,599,238      6,060,264      6,054,303      5,937,644      5,577,639


(1) The diluted net loss per share was the same as the basic net loss per share
for the fiscal years ended March 31, 2003 and March 31, 2007 as all potential
ordinary shares including the stock options and warrants are anti-dilutive and
therefore excluded from the computation of diluted net loss per share.

                                                       6
<PAGE>


Balance Sheet Data
(in 000's USD except per shares and per share data)

                                                                       March 31,
                                    ---------------------------------------------------------------------------
                                       2003             2004             2005          2006(1)             2007
                                       ----             ----             ----          -------             ----

Cash and cash equivalents           $ 3,633          $10,815          $ 9,708          $ 8,582          $ 8,118
Working capital                     $ 9,777          $12,901          $15,345          $16,945          $16,842
Total assets                        $48,911          $53,598          $52,463          $49,479          $47,519
Current liabilities                 $18,424          $20,190          $18,319          $15,657          $16,394
Long-term debts and capital         $   606          $ 1,158          $   168          $     0          $    59
leases
Deferred income tax assets          $   167          $    67          $    99          $    83          $    87
Common stock                        $    17          $    17          $    17          $    17          $    17
Shareholders' equity                $28,379          $30,750          $33,932          $33,802          $31,051
Dividends declared per share           --            $  0.05          $  0.10          $  0.05          $  0.05


(1) Certain comparative figures have been reclassified to conform to the current year's presentation.

     Exchange Rate Information

     The Hong Kong Dollar and the United States Dollar have been fixed at
approximately 7.80 Hong Kong Dollars to 1.00 U.S. Dollars 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 (the
"Basic Law") was transferred to China.

     The noon buying rates in New York City for cable transfers as certified for
customs purposes by the Federal Reserve Bank of New York on August 31, 2007 were
U.S. $1.00 = CDN $1.0560, U.S. $1.00 = RMB 7.5462, U.S. $1.00 = HK 7.7968, U.S.
$1.3641= Euro 1.00, U.S $2.0165 = 1.00 GBP, respectively. The following table
sets forth the high and low noon buying rates between Canadian Dollars and U.S.
Dollars, Chinese Renminbi and U.S. Dollars, Hong Kong Dollars and U.S. Dollars,
Euros and U.S. Dollars and British Pounds and U.S. Dollars for each month during
the six month period ended August 31, 2007.


                                                  NOON BUYING RATE Cathy : Hank to update

                CDN$ Per U.S. $1       RMB Per U.S. $1     HK$ PER U.S. $1      U.S. $1 PER EURO       U.S. $1 per GBP
                ----------------       ---------------     ---------------      ----------------       ---------------
                High       Low         High      Low       High       Low       High      Low          High    Low
                ----       ---         ----      ---       ----       ---       ----      ---          ----    ---

March 2007      1.181      1.153       7.7454    7.8177    7.8177     7.8093    1.3374    1.3094       1.9694  1.9235
April 2007      1.1583     1.1068      7.7345    7.709     7.8212     7.8095    1.366     1.3363       2.0061  1.9608
May 2007        1.1136     1.0727      7.7065    7.6463    7.8236     7.8044    1.3616    1.3419       1.9993  1.9695
June 2007       1.0727     1.0579      7.668     7.612     7.8188     7.8062    1.3526    1.3295       2.0063  1.9657
July 2007       1.0689     1.0372      7.6055    7.5580    7.8264     7,8129    1.3831    1.3592       2.0626  2.0114
August 2007     1.0754     1.0497      7.6181    7.5420    7.8285     7.7968    1.3808    1.3402       2.0426  1.9813

     The following table sets forth the average noon buying rates between
Canadian Dollars and U.S. Dollars, between Chinese Renminbi and U.S. Dollars,
between Hong Kong Dollars and U.S. Dollars, between Euros and U.S. Dollars and
between British Pounds and U.S. Dollars for each of the calendar years, 2002,
2003, 2004, 2005 and 2006 based on daily noon buying rates for cable transfer in
New York City certified for customs purposes by the Federal Reserve Bank of New
York.

                                       7

<PAGE>


                                                   AVERAGE NOON BUYING RATE
             ---------------------------------------------------------------------------------------------------------
             CDN$ Per U.S. $1      RMB PER U.S. $1       HK$ PER U.S. $1        U.S. $1 PER EURO         US $1 PER GBP
             ----------------      ---------------       ---------------        ----------------         -------------

  2002           1.5704                8.2770                7.7997                      0.9454                1.5025
  2003           1.4013                8.2772                7.7876                      1.1315                1.6341
  2004           1.3017                8.2768                7.7891                      1.2438                1.8330
  2005           1.1689                8.0699                7.8000                      1.2096                1.7346
  2006           1.1383                7.8994                7.7802                      1.2829                1.8932
</TABLE>


     On July 21,2005, the Peoples Bank of China announced it would revalue the
RMB by 2.1%, linking the RMB to a "basket of currencies" which includes the US
dollar, Euro, Japanese Yen and Korean Won, rather than directly at 8.28 RMB to
the dollar as it has for a decade. Under the new rules, the RMB would be allowed
to move 0.3% on a daily basis against the dollar. The People's Bank of China, on
May 21 2007, widened the RMB trading band from 0.3 percent daily movement
against the US dollar to 0.5 percent. RMB has appreciated 8.87 % against the
U.S. dollar between July 21, 2005 and August 31, 2007. As of August 31, 2007,
the RMB was valued at 7.5462 per US Dollar.


     Risk Factors

     You should carefully consider the following risks, together with all other
information included in this Annual Report. The realization of any of the risks
described below could have a material adverse effect on our business, results of
operations and future prospects.

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

     We Could Face Increased Currency Risks If China Does Not Maintain The
Stability Of The Hong Kong Dollar or the Chinese Renminbi. The Hong Kong Dollar
and the United States Dollar have been fixed at approximately 7.80 Hong Kong
Dollars to 1.00 U.S. Dollar since 1983. The Chinese Renminbi had remained stable
against the U.S. Dollar at approximately 8.28 to 1.00 U.S. Dollar for several
years and not until July 21, 2005 that the Chinese currency regime was altered
linking the RMB to a "basket of currencies." which includes the US dollar, Euro,
Japanese Yen and Korean Won. Under the new rules, the RMB would be allowed to
move 0.3% on a daily basis against the dollar. The People's Bank of China, on
May 21 2007, widened the RMB trading band from 0.3 percent daily movement
against the US dollar to 0.5 percent. RMB has appreciated 8.86% against the U.S.
dollar between July 21, 2005 and August 31, 2007. Any significant revaluation of
the RMB may materially and adversely affect our cash flows, revenues, earnings
and financial position, and the value of, and any dividends payable to our
common shareholders in U.S. dollars. As of August 31, 2007, the RMB was valued
at 7.5462 per US Dollar. In addition, China's government continues to receive
significant international pressure to further liberalize its currency policy and
as a result may further change its currency policy. The Chinese government in
the past has expressed its intention in the Basic Law to maintain the stability

                                       8

<PAGE>


of the Hong Kong currency after the sovereignty of Hong Kong was transferred to
China in July 1997. However, there can be no assurance that the Hong Kong Dollar
will remain pegged against the U.S. Dollar or the Chinese Renminbi will not be
allowed to fluctuate more than 0.5% on a daily basis. If the current exchange
rate mechanism is changed, we face increased currency risks, which could have a
material adverse effect upon the Company.

     We Face Significant Risks If The Chinese Government Changes Its Policies,
Laws, Regulations, Tax Structure, Or Its Current Interpretations Of Its Laws,
Rules And Regulations Relating To Our Operations In China. Our manufacturing
facility is located in China. As a result, our 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 or regulations
or the interpretation of laws or regulations, confiscatory taxation, changes in
employment restrictions, restrictions on imports and sources of supply, import
duties, corruption, currency revaluation or the expropriation of private
enterprise could materially and adversely affect us. Over the past several
years, the Chinese government has pursued economic reform policies including the
encouragement of private economic activity and greater economic
decentralization. If the Chinese government does not continue to pursue its
present policies that encourage foreign investment and operations in China, or
if these policies are either not successful or are significantly altered, then
our business operations in China could be adversely affected. We could even be
subject to the risk of nationalization, which could result in the total loss of
investment in that country. Following the Chinese government's policy of
privatizing many state-owned enterprises, the Chinese government has attempted
to augment its revenues through increased tax collection. Continued efforts to
increase tax revenues could result in increased taxation expenses being incurred
by us. 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 we were required
to move our manufacturing operations outside of China, our profitability would
be substantially impaired, our competitiveness and market position would be
materially jeopardized and we might have to discontinue our operations.

On March 16 2007, the National People's Congress approved the Corporate Income
Tax Law of the People's Republic of China (the "new CIT Law"). The new CIT Law
increases the corporate income tax rate for foreign invested enterprises to 25%
with effect from January 1, 2008.

The new CIT Law provides that further detailed measures and regulations on the
determination of taxable profit, tax incentives and grand-fathering provisions
will be issued by the State Council in due course. As and when the State Council
announces the additional regulations, we will assess their impact, if any.

     We Face Risks By Operating In China, Because The Chinese Legal System
Relating To Foreign Investment And Foreign Operations Like Bonso's Is Evolving
And The Application Of Chinese Laws Is Uncertain. The legal system of China
relating to foreign investments is continually evolving, and there can be no
certainty as to the application of its laws and regulations in particular
instances. The Chinese legal system is a civil law system based on written
statutes. Unlike common law systems, it is a system in which decided legal cases

                                       9

<PAGE>


have little precedented value. In 1979, the Chinese government began to
promulgate a comprehensive system of laws and regulations governing economic
matters in general. Legislation over the past 20 years has significantly
enhanced the protections afforded to various forms of foreign investment in
China. 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. Continued uncertainty relating to the laws in
China could have a material adverse effect upon us and our operations in China.

     We Could Be Adversely Affected If China Changes Its Economic Policies In
The Shenzhen Special Economic Zone Where We Operate. In August 1980, the Chinese
government passed "Regulations for The Special Economy Zone of Guang Dong
Province" and officially designated a portion of Shenzhen as The Shenzhen
Special Economy Zone. Foreign enterprises in these areas benefit from greater
economic autonomy and special tax incentives than enterprises in other parts of
China. Changes in the policies or laws governing Special Economic Zones could
have a material adverse effect on us. 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, which could have a material adverse effect on us and
our operations near Shenzhen.

     Controversies Affecting China's Trade With The United States Could Harm Our
Results Of Operations Or Depress Our Stock Price. While China has been granted
permanent most favored nation trade status in the United States through its
entry into the World Trade Organization, controversies between the United States
and China may arise that threaten the status quo involving trade between the
United States and China. These controversies could materially and adversely
affect our business by, among other things, causing our products in the United
States to become more expensive resulting in a reduction in the demand for our
products by customers in the United States, which would have a material adverse
effect upon us and our results of operations. Further, political or trade
friction between the United States and China, whether or not actually affecting
our business, could also materially and adversely affect the prevailing market
price of our common shares.

     If Our Sole Factory Were Destroyed Or Significantly Damaged As A Result of
Fire, Flood Or Some Other Natural Disaster, We Would Be Adversely Affected. All
of our products are currently manufactured at our manufacturing facility located
in Shenzhen, China. Fire fighting and disaster relief or assistance in China may
not be as developed as in Western countries. Apart from our China operation, the
warehouse and storage facility in Germany and Canada are also subject to the
risks of loss or damage due to fire, flood, or any other natural disaster.
Recent flooding of the river in Germany has imposed severe loss on us as a
result of the damage of the inventory and equipment and interruption of
business. We currently maintain property damage insurance aggregating
approximately $24.75 million covering our stock in trade, goods and merchandise,
furniture and equipment and buildings. We do not maintain business interruption
insurance. Investors are cautioned that material damage to, or the loss of, our
factory due to fire, severe weather, flood or other act of God or cause, even if
insured, could have a material adverse effect on our financial condition,
results of operations, business and prospects.

                                       10
<PAGE>


     Our Results Could Be Harmed If We Have To Comply With New Environmental
Regulations. Our operations create some environmentally sensitive waste that may
increase in the future depending on the nature of our manufacturing operations.
The general issue of the disposal of hazardous waste has received increasing
attention from China's national and local governments and foreign governments
and agencies and has been subject to increasing regulation. Our business and
operating results could be materially and adversely affected if we were to
increase expenditures to comply with any new environmental regulations affecting
our operations.

     Future Changes in the Labor Laws in China may result in the Continued
Increase in Labor Costs. During the fiscal year ended March 31, 2007, we
experienced an increase in the cost of labor caused by the increase in the
minimum hourly rate. Any future changes in the labor laws in the PRC could
result in us having to pay increased labor costs. There can be no assurance that
the labor laws will not change, which may have a material adverse effect upon
our business and our results of operations.

     Risk Factors Relating to Our Business

     We Depend Upon Our Largest Customers For A Significant Portion Of Our Sales
Revenue, And We Cannot Be Certain That Sales To These Customers Will Continue.
If Sales To These Customers Do Not Continue, Then Our Sales Will Decline And Our
Business Will Be Negatively Impacted. Traditionally, we have relied upon 3
customers for a significant portion of our sales during the fiscal year. During
the fiscal year ended March 31, 2005, these three customers accounted for
approximately 45% of our sales. During the fiscal year ended March 31, 2006 and
March 31, 2007, the same three customers accounted for approximately 48% of our
sales for both years. We do not enter into long-term contracts with our
customers, but manufacture based upon purchase orders and therefore cannot be
certain that sales to these customers will continue. The loss of any of our
largest customers would likely have a material negative impact on our sales
revenue and our business.

     Defects In Our Products Could Impair Our Ability To Sell Our Products Or
Could Result In Litigation And Other Significant Costs. Detection of any
significant defects in our products may result in, among other things, delay in
time-to-market, loss of market acceptance and sales of our products, diversion
of development resources, injury to our reputation, or increased warranty costs.
Because our products are complex, they may contain defects that cannot be
detected prior to shipment. These defects could harm our reputation, which could
result in significant costs to us and could impair our ability to sell our
products. The costs we may incur in correcting any product defects may be
substantial and could decrease our profit margins.

     Since certain of our products are used in applications that are integral to
our customers' businesses, errors, defects, or other performance problems could
result in financial or other damages to our customers, which would likely result
in adverse effects upon our business with these customers. If we were involved
in any product liability litigation, even if it were unsuccessful, would be time
consuming and costly to defend. Further, our product liability insurance may not
be adequate to cover claims.

                                       11
<PAGE>


     Our Sales Through Retail Merchants Result In Seasonality And Susceptibility
To A Downturn In The Retail Economy And Sales Variances Resulting From Retail
Promotional Programs. A significant amount of our net sales, $13,437,337, is the
result of Korona's sales of bathroom and kitchen scales to retail merchants in
Europe. In addition, many of our other customers sell to retail merchants.
Accordingly, these portions of our customer base are susceptible to a downturn
in the retail economy. A greater number of our sales of scales and
telecommunications products occur between the months of April and September for
shipment in the summer in preparation of the Christmas holiday. Throughout the
remainder of the year, our products do not appear to be subject to significant
seasonal variation. However, past sales patterns may not be indicative of future
performance. A significant portion of our sales in Europe is attributable to the
promotional programs of our retail industry customers. These promotional
programs result in significant orders by customers who do not carry our products
on a regular basis. We cannot assure you that promotional purchases by our
retail industry customers will be repeated regularly, or at all. Further, our
promotional sales could cause our quarterly results to vary significantly. The
reduction in promotional purchases would likely have a material adverse effect
upon our results of operations.

     Our Customers Are Dependent On Shipping Companies For Delivery Of Our
Products And Interruptions To Shipping Could Materially And Adversely Affect Our
Business And Operating Results. Typically, we sell our products either F.O.B.
Hong Kong or Yantian (Shenzhen) and our customers are responsible for the
transportation of products from Hong Kong or Yantian (Shenzhen) to their final
destinations. Our customers rely on a variety of carriers for product
transportation through various world ports. A work stoppage, strike or shutdown
of one or more major ports or airports could result in shipping delays
materially and adversely affecting our customers, which in turn could have a
material adverse effect on our business and operating results. Similarly, an
increase in freight surcharges due to rising fuel costs or general price
increases could materially and adversely affect our business and operating
results.

     Customer Order Estimates May Not Be Indicative Of Actual Future Sales. Some
of our customers have provided us with forecasts of their requirements for our
products over a period of time. We make many management decisions based on these
customer estimates, including purchasing materials, hiring personnel, and other
matters that may increase our production capacity and costs. If a customer
reduces its orders from prior estimates after we have increased our production
capabilities and costs, this reduction may decrease our net sales and we may not
be able to reduce our costs to account for this reduction in customer orders.
Many customers do not provide us with forecasts of their requirements for our
products. If those customers place significant orders, we may not be able to
increase our production quickly enough to fulfill the customers' orders. The
inability to fulfill customer orders could damage our relationships with
customers and reduce our net sales.

     Pressure By Our Customers To Reduce Prices And Agree To Long-Term Supply
Arrangements May Cause Our Net Sales Or Profit Margins To Decline. Our customers
are under pressure to reduce prices of their products. Therefore, we expect to
experience increasing pressure from our customers to reduce the prices of our
products. Continuing pressure to reduce the price of our products could have a
material adverse effect upon our business and operating results. Our customers
frequently negotiate supply arrangements with us well in advance of placing

                                       12

<PAGE>


orders for delivery within a year, thereby requiring us to commit to price
reductions before we can determine if we can achieve the assumed cost
reductions. We believe we must reduce our manufacturing costs and obtain higher
volume orders to offset declining average sales prices. Further, if we are
unable to offset declining average sales prices, our gross profit margins will
decline which would have a material adverse effect upon our results of
operations.

         We Depend Upon Our Key Personnel And The Loss Of Any Key Personnel, Or
Our Failure To Attract And Retain Key Personnel, Could Adversely Affect Our
Future Performance, Including Product Development, Strategic Plans, Marketing
And Other Objectives. The loss or failure to attract and retain key personnel
could significantly impede our performance, including product development,
strategic plans, marketing and other objectives. Our success depends to a
substantial extent not only on the ability and experience of our senior
management, but particularly upon Anthony So our Chairman of the Board. We do
not have key man life insurance on Mr. So. To the extent that the services of
Mr. So would be unavailable to us, we would be required to obtain another person
to perform the duties Mr. So otherwise would perform. We may be unable to employ
another qualified person with the appropriate background and expertise to
replace Mr. So on terms suitable to us.

     Certain Subsidiaries of The Company Received on-going Enquiries from the
Local Tax Authorities During the Year. If The Subsidiaries Were Finally Held
Liable For Such Additional Taxation, Our Consolidated Net Income And The Value
Of Your Investment Could Be Substantially Reduced. During the fiscal year ended
March 31, 2007, certain of our subsidiaries were and continue to be subject to
enquiries from the local tax authorities. We have made an assessment under
SFAS 5 "Accounting for Contingencies" and believed that no additional income tax
expense was necessary as of March 31, 2007, as the relevant tax authority was
still in the information gathering stage on their enquiries and it was
practically difficult to have a reasonable estimate of the possible outcome of
these enquiries at this stage. We believe we have a reasonable likelihood of
success with respect to these enquiries. There can be no assurance that the
enquiry will not result in imposing additional income tax expense on the Group,
which could have a material adverse effect upon the Group and its results of
operations. The Company will adopt FIN 48 "Accounting for uncertainty in income
taxes" effective from April 1, 2007, the amount of income tax provisions
required under FIN 48 could be significantly different.

         Contractual Arrangements We Have Entered Into Among Us and Our
Subsidiaries May Be Subject To Scrutiny By The Respective Tax Authorities And A
Finding That Bonso And Its Subsidiaries Owe Additional Taxes Could Substantially
Reduce Our Consolidated Net Income And The Value Of Your Investment. We could
face material and adverse tax consequences if the respective tax authorities
determine that the contractual arrangements among our subsidiaries and Bonso do
not represent an arm's length price and adjust Bonso or any of its subsidiaries'
income in the form of a transfer pricing adjustment. A transfer pricing
adjustment could, among other things, result in a reduction, for tax purposes,
of expense deductions recorded by Bonso or any of its subsidiaries, which could
in turn increase its tax liabilities. In addition, the tax authorities may
impose late payment fees and other penalties to our affiliated entities for
under-paid taxes. Our consolidated net income may be materially and adversely

                                       13

<PAGE>


affected if our affiliated entities' tax liabilities increase or if they are
found to be subject to late payment fees or other penalties. The Company will
adopt FIN 48 effective from April 1, 2007, the amount of income tax provisions
required under FIN 48 could be significantly different.

     Increased Prices for Raw Materials May have a negative impact upon us.
During the fiscal years ended March 31, 2006 and 2007, the costs of component
parts increased due to the increase in the price of oil used in the production
of components such as plastic resin, steel and other raw materials. If oil
prices continue to increase, it will likely result in an increase in the costs
of components to us as well as an increase in our operating expenses, which may
have a material adverse effect upon our business and results of operations.

     We May Face an Increased Shortage of Factory Workers. During the fiscal
years ended March 31, 2005, March 31, 2006 and March 31, 2007, we experienced
labor shortages for factory workers. Due to increases in demand for workers in
China, we cannot assure you that we can adequately staff the factory. The
ability to adequately staff our factory could have a material impact on
production, which could lead to delays in shipments or missed sales. In the
event that we have delayed or lost sales, we may need to deliver goods by air to
ensure that our products arrive on time, which would likely result in an
increase in air freight costs, vendor fines and could result in missed sales,
any of which could have a material adverse effect upon our business and our
results from operations. For the fiscal years ended March 31, 2008, we will
reduce the labour requirements by sub-contracting out some production processes
that our sub-contractor have a competitive advantage in the cost of production.
We will benefit from the lower cost of production and higher business
flexibility.

     We Face Increasing Competition in Our Industry and May not be able to
successfully compete with our competitors. Our business is in an industry that
is becoming increasingly competitive, and many of our competitors, both local
and international, have substantially greater technical, financial and marketing
resources than we have, and as a result, we may be unable to compete
successfully with these competitors. We compete with scale manufacturers in the
Far East, the United States, and Europe. We believe that our principal
competitors in the scale and telecommunications market are other OEM and
original design manufacturer "ODM" manufacturers, and all companies engaged in
the branded, ODM and OEM business. Both the scale and the telecommunications
markets are highly competitive and we face pressures on pricing and lower
margins as evidenced by the decline in margins that we have experienced with our
telecommunications products. Lower margins may affect our ability to cover our
costs which could have a material negative impact on our operations and our
business.

     We Are Controlled By Our Management, Whose Interest May Differ From Those
Of The Other Shareholders. At the present time, Mr. Anthony So, our founder and
Chairman, beneficially owns approximately 36.41% of the outstanding shares of
common stock, including shares underlying his outstanding options, or 29.16%
without including his outstanding options. Due to his stock ownership, Mr. So
may be in a position to elect the board of directors and, therefore, to control
our business and affairs including certain significant corporate actions such as
acquisitions, the sale or purchase of assets and the issuance and sale of our
securities. Mr. So may be able to prevent or cause a change in control. We also

                                       14

<PAGE>


may be prevented from entering into transactions that could be beneficial to us
without Mr. So's consent. The interest of our largest shareholder may differ
from the interests of other shareholders.

     Compliance costs with recently enacted changes in the securities laws and
regulations pursuant to the Sarbanes-Oxley Act of 2002 will increase our costs.
The Sarbanes-Oxley Act of 2002 that became law in July 2002 has required changes
in some of our corporate governance, securities disclosure, accounting and
compliance practices. In response to the requirements of that act, the
Securities and Exchange Commission and the NASDAQ have promulgated new rules on
a variety of subjects. Compliance with these new rules as well as the
Sarbanes-Oxley Act of 2002 has increased our legal, financial and accounting
costs, and we expect the cost of compliance with these new rules to continue to
increase and to be permanent. Further, the new rules may increase the expenses
associated with our director and officer liability insurance.

     Our Operating Results And Stock Price Are Subject To Wide Fluctuations. Our
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 our 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 our common stock.

     Our Results Could be Affected By Changes In Currency Exchange Rates.
Changes in currency rates involving the Canadian Dollar, Hong Kong dollar,
Chinese Renminbi, British Pounds or the Euro could increase our expenses.

     During the fiscal years ended March 31, 2005, 2006 and 2007, our financial
results were affected by currency fluctuations, resulting in a total foreign
exchange loss of $98,051, $183,887 and $183,952, respectively. Generally, our
revenues are collected in United States Dollars, Euros and Canadian Dollars. Our
costs and expenses are paid in United States Dollars, Canadian Dollars, Hong
Kong Dollars, British Pound, Euros and Chinese Renminbi. We face a variety of
risks associated with changes among the relative value of these currencies. An
appreciation of the Canadian Dollar, Chinese Renminbi, Hong Kong Dollar, British
Pound, or the Euro against the U.S. Dollar would increase our expenses when
translated into U.S. Dollars and could materially and adversely affect our
margins and results of operations. In addition, a significant devaluation in the
Canadian Dollar, Chinese Renminbi, Hong Kong Dollar, British Pound or Euro could
have a material adverse effect upon our results of operations if it destabilizes
the economy of Canada, China, Hong Kong, Great Britain or the European Union.

     Protection And Infringement Of Intellectual Property. Except for three
patents held by Gram Precision, the trademark for KORONA and twelve trademarks
currently held by Gram Precision, we have no patents, licenses, franchises,
concessions or royalty agreements that are material to our business. We have
obtained a trademark registration in Hong Kong and China for the marks BONSO and
MODUS in connection with certain electronic apparatus. Unauthorized parties may
attempt to copy aspects of our products or trademarks or to obtain and use
information that we regard as proprietary. Policing unauthorized use of our

                                       15

<PAGE>


products is difficult. Our means of protecting our proprietary rights may not be
adequate. In addition, the laws of some foreign countries do not protect our
proprietary rights to as great an extent as do the laws of the United States.
Our failure to adequately protect our proprietary rights may allow third parties
to duplicate our products or develop functionally equivalent or superior
technology. In addition, our competitors may independently develop similar
technology or design around our proprietary intellectual property.

     Further, we may be notified that we are infringing patents, trademarks,
copyrights or other intellectual property rights owned by other parties. In the
event of an infringement claim, we may be required to spend a significant amount
of money to develop a non-infringing alternative or to obtain licenses. We may
not be successful in developing such an alternative or obtaining a license on
reasonable terms, if at all. Any litigation, even without merit, could result in
substantial costs and diversion of resources and could have a material adverse
affect on our business and results of operations.

     Cancellations Or Delays In Orders Could Materially And Adversely Affect Our
Gross Margins And Operating Income. Sales to our OEM customers are primarily
based on purchase orders we receive from time to time rather than firm,
long-term purchase commitments. Although it is our general practice to purchase
raw materials only upon receiving a purchase order, for certain customers we
will occasionally purchase raw materials based on such customers' rolling
forecasts. Further, during times of potential component shortages we have
purchased, and may continue to purchase, raw materials and component parts in
the expectation of receiving purchase orders for products that use these
components. In the event actual purchase orders are delayed, are not received or
are cancelled, we would experience increased inventory levels or possible
write-downs of raw material inventory that could materially and adversely affect
our business and operating results.

     We Generally Have No Written Agreements With Suppliers To Obtain Components
And Our Margins And Operating Results Could Suffer From Increases In Component
Prices. We are typically responsible for purchasing components used in
manufacturing products for our customers. We generally do not have written
agreements with our suppliers of components. This typically results in our
bearing the risk of component price increases because we may be unable to
procure the required materials at a price level necessary to generate
anticipated margins from the orders of our customers. Further, prices of
components have increased recently based upon the increase in oil prices and
what management believes to be a high worldwide demand for components used in
the manufacturing of our products. Accordingly, additional increases in
component prices could materially and adversely affect our gross margins and
results from operations.

     Certain Legal Consequences of Foreign Incorporation and Operations

     Judgments Against The Company And Management May Be Difficult To Obtain Or
Enforce. We are a holding corporation organized as an International Business
Company under the laws of the British Virgin Islands and our principal operating
subsidiaries are organized under the laws of Hong Kong and the laws of the
Peoples' Republic of China. Our principal executive offices are located in Hong
Kong and the Peoples' Republic of China, Korona is located in Germany and Gram
Precision is located in Canada. Outside the United States, it may be difficult

                                       16

<PAGE>


for investors to enforce judgments obtained against us in actions brought in the
United States, including actions predicated upon the civil liability provisions
of federal securities laws. In addition, most of our officers and directors
reside outside the United States and the assets of these persons 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 the Company or these persons judgments predicated upon the
liability provisions of United States federal securities laws. Our Hong Kong
counsel and our British Virgin Islands counsel have advised that there is
substantial doubt as to the enforceability against us or any of our directors or
officers in original actions or in actions for enforcement of judgments of
United States courts in claims for liability based on the civil liability
provisions of federal securities laws.

     Because We Are Incorporated In The British Virgin Islands, You May Not Have
The Same Protections As Shareholders Of U.S. Corporations. We are 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
our management, directors and controlling shareholders and the rights of our
shareholders differ from, and may not be as protective of shareholders as, those
that would apply if we were incorporated in a jurisdiction within the United
States. Our directors have the power to take certain actions without shareholder
approval, including an amendment of our 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 United States federal securities laws.

     Future issuances of preference shares could materially and adversely affect
the holders of our common shares or delay or prevent a change of control. Our
Memorandum and Articles of Association provide the ability to issue an aggregate
of 10,000,000 shares of preferred stock in four classes. While currently no
preferred shares are issued or outstanding, we may issue preferred shares in the
future. Future issuance of preferred shares could materially and adversely
affect the rights of the holders of our common shares, dilute the common
shareholders or delay or prevent a change of control.

     Our Shareholders Do Not Have The Same Protections Or Information Generally
Available To Shareholders Of U.S. Corporations Because The Reporting
Requirements For Foreign Private Issuers Are More Limited Than Those Applicable
To Public Corporations Organized In The United States. We are a foreign private
issuer within the meaning of rules promulgated under the Exchange Act. We are
not subject to 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 (the "SEC") 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 we are not subject to these rules, our shareholders are not
afforded the same protections or information generally available to investors in
public companies organized in the United States.

                                       17

<PAGE>


     Our Board's Ability To Amend Our Charter Without Shareholder Approval Could
Have Anti-Takeover Effects That Could Prevent A Change In Control. As permitted
by the law of the British Virgin Islands, our Memorandum and Articles of
Association, which are the terms used in the British Virgin Islands for a
corporation's charter and bylaws, may be amended by our board of directors
without shareholder approval. This includes amendments to increase or reduce our
authorized capital stock. Our board's ability to amend our charter documents
without shareholder approval could have the effect of delaying, deterring or
preventing a change in control of Bonso, including a tender offer to purchase
our common shares at a premium over the current market price.

     We May Not Pay Dividends In The Future. Although we have declared dividends
on April 2, 2003 and July 13, 2004 and July 12, 2005 and August 22, 2006, we may
not be able to declare dividends or the board of directors may decide not to
declare dividends in the future. We will determine the amounts of any dividends
when and if they are declared, in the future at the time of declaration.

Item 4.  Information on the Company


     History and Development of the Company

     Bonso Electronics International Inc. was formed on August 8, 1988 as a
limited liability International Business Company under the laws of the British
Virgin Islands under the name "Golden Virtue Limited." On September 14, 1988, we
changed our name to Bonso Electronics International, Inc. We operate under the
BVI Business Companies Act.

     Effective as of May 1, 2001 we acquired 100% of the equity of Korona.
Korona markets consumer scale products throughout Europe to retail merchandisers
and distributors. These products feature contemporary designs using the latest
materials and attractive packaging.

     As part of our ongoing expansion of the sensor-based product business,
effective as of August 1, 2002, we acquired 51% of the equity of Gram Precision.
Gram Precision is primarily engaged in the distribution and marketing of pocket
scales in the United States, Canada, and Europe.

     In April 2007, we set up a new wholly-owned subsidiary, Bonso USA Inc. The
new subsidiary will focus on the sales of industrial scales in the US market.

     Our corporate administrative matters are conducted through our registered
agent, HWR Services Limited, P.O. Box 71, Road Town, Tortola, British Virgin
Islands. Our principal executive offices are located at Unit 1106 - 1110, 11/F,
Star House, 3 Salisbury Road, Tsimshatsui, Kowloon, Hong Kong. Our telephone
number is 852-2605-5822, our facsimile number is 852-2691-1724, our e-mail
address is info@bonso.com and our website is www.bonso.com.

     Our principal capital expenditures for property, plant and equipment over
the last three years is set forth below:

                                       18
<PAGE>


                                          2005            2006           2007
                                          ----            ----           ----

 Property Plant & Equipment             $684,398       $1,340,134      $342,110


     Our capital expenditures include the purchase of machinery used in the
production of certain of our products.

     All of the foregoing capital expenditures were financed principally from
internally generated funds.

     In November, 2006, Bonso entered into a land purchase agreement with
Xincheng Hi-Tech Industrial Estate to acquire a piece of land of approximately
146,673 square meters for future expansion of the Company's operations in
XinXing. Pursuant to the land purchase agreement, the total consideration will
be approximately $1,472,000 (RMB11,145,500). In July 2007, the Company paid a
deposit of approximately $610,000 (RMB4,617,900).

     This new piece of land is more than triple the size of the land upon which
the Company's existing facilities are located in Shenzhen, China. It is expected
that the land transfer will be completed in 2008 and the first phase of
construction of the new manufacturing facilities will be completed in 2010. The
projected capital expenditure for the first phase of investment is approximately
$10,000,000. Our plans for capital improvements are subject to change from time
to time.

     Business Overview

     Bonso Electronics International Inc. designs, develops, produces and sells
electronic sensor-based and wireless products for private label Original
Equipment Manufacturers (individually "OEM" or collectively "OEMs"), Original
Brand Manufacturers (individually "OBM" or collectively "OBMs") and Original
Design Manufacturers (individually "ODM" or collectively "ODMs").

     Since 1989, we have manufactured all of our products in China in order to
take advantage of the lower overhead costs and competitive labor rates. Our
factory is located in Shenzhen, China, about 50 miles from Hong Kong. The
convenient location permits us to easily manage manufacturing operations from
Hong Kong and facilitates transportation of our products out of China through
the port of Hong Kong and Yantian (Shenzhen).

     Products

     Our sensor-based scale products are comprised of bathroom, kitchen, office,
jewelry, laboratory, postal and industrial scales that are used in consumer,
commercial and industrial applications. These products accounted for 68% of
revenue for the fiscal year ended March 31, 2005, 67% for 2006 and 75% for 2007.
We believe that our industrial scales will continue to be a larger portion of
our scales revenue as we are able to secure orders from our major customers.

                                       19
<PAGE>


     Our wireless telecommunications products are primarily comprised of two-way
radios and cordless telephones that are used in consumer and commercial
applications. These products accounted for 30% of revenue for the fiscal year
ended March 31, 2005, 32% for 2006 and 24% for 2007. We believe that our
telecommunications products will maintain stable due to stagnation in the
industry.

     We also receive revenue from certain customers for the development and
manufacture of tooling and molding for scales and telecommunication products.
Generally, these tools and moulds are used by us for the manufacture of
products. We also generate some sales of scrap materials. These revenues
accounted for approximately 2% of net sales for the fiscal year ended March 31,
2005, 1% for 2006 and 1% for 2007.

     The following table sets forth the percentage of net sales for each of the
product lines mentioned above, for the fiscal years ended March 31, 2005, 2006,
and 2007.


                                                    Year ended March 31,
                                         --------------------------------------
Product Line                             2005              2006           2007
                                         ----              ----           ----

Scales                                    68%               67%            75%
Telecommunications Products               30%               32%            24%
Others                                     2%                1%             1%
Total                                    100%              100%           100%


     Business Strategy

     We believe that our continued growth depends upon our ability to strengthen
our customer base by enhancing and diversifying our products, increasing the
number of customers and expanding into additional markets, while maintaining or
increasing sales of our products to existing customers. Our continued growth and
profitability is also dependent upon our ability to control production costs and
increase production capacity. Our strategy to achieve these goals is as follows:

     Product Enhancement And Diversification. We continually seek to improve and
enhance our existing products in order to provide a longer product life-cycle
and to meet increasing customer demands for additional features. Our research
and development staff are currently working on a variety of projects to enhance
our existing scale products and for the telecommunications industry and in the
postal scale/meter area. See "Products, Research and Development / Competition"
below.

                                       20
<PAGE>


     Maintaining And Expanding Business Relations With Existing Customers. We
promote relationships with our significant customers through regular
communication, including visiting certain of our customers in their home
countries and providing direct access to our manufacturing and quality control
personnel. This access, together with our concern for quality, has resulted in a
relatively low level of defective products. Moreover, we believe that our
emphasis on timely delivery, good service and low cost has contributed and will
continue to contribute to good relations with our customers and increased
orders. Further, we solicit suggestions from our customers for product
enhancement and when feasible, plan to develop and incorporate the enhancements
suggested by our customers into our products.

     Market And Product Expansion. We have significantly expanded our marketing
efforts in the United States, Canada and Europe. We have primarily done this
through the acquisitions of Gram Precision and Korona, and through efforts to
introduce the Korona brand name and products into the United States. Further, we
have taken significant steps to expand the products that we sell and to position
ourselves as both ODMs and OEMs for other companies that require a manufacturing
partner with our capabilities. We intend to increase our marketing and sales
efforts with both existing and potential customers.

     Controlling Production Costs. In 1989, recognizing that labor cost is a
major factor permitting effective competition in the consumer electronic
products industry, we relocated all of our manufacturing operations to China to
take advantage of the large available pool of lower cost manufacturing labor. We
located our manufacturing facilities within 50 miles of Hong Kong in order to
facilitate transportation of our products to markets outside of China, while
benefiting from the advantages associated with manufacturing in China and in the
Shenzhen Special Economy Zone.

     We are actively seeking to control production costs by such means as
redesigning our existing products in order to decrease material and labor costs,
controlling the number of our employees, increasing the efficiency of workers by
providing regular training and tools and redesigning the flow of our production
lines.

     Increasing Production Capacity. We have significantly expanded our
production capacity by leasing additional factory and dormitory buildings
immediately adjacent to our factory in China. We have the opportunity to
increase our capacity through the construction and/or leasing of additional
factory and dormitory space near our factory in China. Further, in November,
2006, Bonso entered into a land purchase agreement to acquire approximately
146,673 square meters of land for future expansion in XinXing, China. We intend
to carefully monitor our capacity needs and to expand capacity as necessary.

     Customers and Marketing

     We sell our products primarily in the United States and Europe. Customers
for our products are primarily OEMs, OBMs and ODMs, which market the products
under their own brand names. We continue to market our products to OEM's, OBM's
and ODM's at trade shows, via e-mail and facsimile. Gram Precision engages in
the distribution and marketing of pocket and industrial scales in the United
States, Canada, and Europe. Korona engages in the distribution and marketing of
electronic and mechanical body and kitchen scales directly to the retail and
catalogue markets in Europe.

                                       21
<PAGE>


     Net export sales to customers by geographic area consisted of the following
for each of the three years ended March 31, 2005, 2006 and 2007.
<TABLE>
<CAPTION>

                              Year ended March 31,

                               2005                        2006                           2007
                       --------------------       ---------------------        -------------------------

<S>                    <C>               <C>      <C>                 <C>      <C>                    <C>
  Canada               $2,686,951        4%       $1,637,447          3%       $2,239,419             3%
  United States        $38,638,906      55%       $37,352,618        58%       $36,432,384           55%
  of America
  Germany              $15,025,103      22%       $13,302,506        21%       $17,545,242           26%
  United Kingdom       $2,769,900        4%       $2,262,160          3%       $1,480,464             2%
  Other EC             $7,948,970       11%       $7,997,740         12%       $5,739,117             9%
  Countries
  Asia and             $2,532,362        4%       $1,990,492          3%       $3,054,754             5%
  Others
  Total                $69,602,192     100%       $64,542,963       100%       $66,491,380          100%
</TABLE>


     We maintain a marketing and sales team of 19 people in China, a marketing
team of 3 people in Canada for Gram Precision and a sales team of 12 people at
Korona in Germany (including 8 sales representative and sales agents and 4
persons who are directly employed by Korona). Also, our experienced engineering
teams work directly with our customers to develop and tailor our products to
meet the customer's specific needs. We market our products primarily through a
combination of direct contact by our experienced in-house technical sales staff
and our sales representatives, and through the use of direct mail catalogues and
product literature. Korona sells its products primarily through direct contact
by sales teams with customers. External sales agents may be hired to conduct
sales and we may pay commissions to the agents in connection with the sales.
During the fiscal years ended March 31, 2005, 2006 and 2007 we recorded a total
commission payment of $440,743, $379,162 and $543,349, respectively. In
addition, our marketing teams contact existing and potential customers by
telephone, mail, facsimile, and in person.

     A list of our major electronics sensor customers for each of the prior
three fiscal years follows:

                                       22
<PAGE>


                     Percent of Sales - Year ended March 31,
  -------------------------------------------------------------------------
     Electronics Sensor Customers          2005          2006          2007
  -------------------------------------------------------------------------

  Sunbeam Products, Inc.                   17%            16%          23%
  BSH HISNI APARATI, D.O.O.                 4%            3%            7%
  Salter Housewares Ltd.                    3%            4%            2%
  Media Markt und Saturn Verwaltungs        6%            5%            4%
  GmbH
  Pitney Bowes, Inc.                        6%            7%            7%

     A list of our major telecommunications customers for each of the prior
three fiscal years follows: Percent of Sales - Year ended March 31,


           Telecommunications              2005         2006        2007
                Customer
  --------------------------------------------------------------------------

           TTI Tech Co., Ltd.              11%           16%           12%
        Global Link Corporation Ltd.       17%           16%           13%


     Sales of our products to OEMs and ODM's accounted for approximately 67% of
our total net sales in the year ended March 31, 2005, 70% for both the year
ended March 31, 2006 and March 31, 2007. Korona contributed $16,959,313 of our
total net sales or 24% of total net sales for the year ended March 31, 2005,
$13,672,447 or 21% of total net sales for the year ended March 31, 2006 and
$13,437,337 or 20% of total net sales for the year ended March 31, 2007. Gram
Precision contributed $5,961,367 of our total net sales or 9% of total net sales
for the year ended March 31, 2005, $5,571,132 or 9% of total net sales for the
year ended March 31, 2006 and $4,767,667 or 7% of total net sales for the year
ended March 31, 2007.

     Component Parts and Suppliers

     We purchase over 1,000 different component parts from more than 100 major
suppliers and are not dependent upon any single supplier for key components. We
purchase components for our products primarily from suppliers in Japan, Taiwan,
South Korea, Hong Kong and China.

     During the fiscal years ended March 31, 2005, March 31, 2006 and March 31,
2007, the costs of component parts increased due to the increase in the price of
oil used in the production of components such as plastic resin, steel and other
raw materials. Further, we believe that costs of component parts have also
increased due to an increase in worldwide demand for electronic components such
as those used in the production of our products. We have taken steps to reduce
our exposure to any inability to obtain components by forecasting with an
increased buffer rate and placing orders for components earlier and allowing for
longer delivery lead times. Because of these actions, we do not expect to
experience any difficulty in obtaining needed component parts for our products.

                                       23
<PAGE>


     Quality Control

     We have received ISO 9001: 2000 certification from Det Norske Veritas
Certification B.V., the Netherlands. The ISO 9001: 2000 certification was
awarded to our subsidiary, Bonso Electronics Limited and to Bonso Electronics
Limited's subsidiary Bonso Electronics (Shenzhen) Company Limited. Further, we
have received TL 9000 certification for our telecommunications products. We also
received certification according to the Environmental Management Standards of
ISO 14001:2004 and the Occupational Health and Safety Management Standard of
OHSAS 18001.

     ISO 9001 is one of the ISO 9000 series of quality system standards
developed by the International Organization for Standardization, a worldwide
federation of national standards bodies. ISO 9001 provides a model for quality
assurance (and continuous improvement) in product development, manufacturing,
installation and servicing that focuses on meeting customer requirements. The TL
9000 standard was developed by the Quality Excellence for Suppliers of
Telecommunications (QuEST) Leadership Forum. The TL 9000 certification process
was developed exclusively to address the quality of products and services
provided by suppliers to the telecommunications industry.

     By integrating the Occupational Health and Safety Management Standard of
OHSAS 18001 into our quality and environmental systems, we have created a total
Integrated Management System (IMS) - Quality, Environment and Health and Safety
by combining ISO9001, ISO 14001 and OHSAS 18001 into one
Quality/Environment/Health and Safety registration.

     The European Union has enacted the Restriction of the Use of Certain
Hazardous Substances in Electrical and Electronic Equipment Directive ("RoHS").
RoHS prohibits the use of certain substances, including lead, in certain
products, sold after July 1, 2006. We believe that we can manufacture compliant
products, and believe that we can be assured a supply of compliant components
from suppliers.

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

     We have obtained a trademark registration in Hong Kong and China for the
marks BONSO and MODUS in connection with certain electronic apparatus. Also, we
have acquired the trademark registration rights to the KORONA mark for 16
European countries and in the United States. Gram Precision has three patents
for scales and twelve trademarks.

     We rely on a combination of patent, trademark and trade secret laws,
employee and third party non-disclosure agreements and other intellectual
property protection methods to protect our proprietary rights. There can be no
assurance that third parties will not assert infringement or other claims
against us with respect to any existing or future products. We cannot assure you
that licenses would be available if any of our technology was successfully
challenged by a third party, or if it became desirable to use any third-party
technology to enhance the Company's products. Litigation to protect our
proprietary information or to determine the validity of any third-party claims
could result in a significant expense to us and divert the efforts of our
technical and management personnel, whether or not such litigation is determined
in our favor.

                                       24
<PAGE>


     While we have no knowledge that we are infringing upon the proprietary
rights of any third party, there can be no assurance that such claims will not
be asserted in the future with respect to existing or future products. Any such
assertion by a third party could require us to pay royalties, to participate in
costly litigation and defend licensees in any such suit pursuant to
indemnification agreements, or to refrain from selling an alleged infringing
product or service.

     Product Research and Development/Competition

     The major responsibility of the product design, research and development
personnel is to develop and produce designs to the satisfaction of and in
accordance with the specifications provided by the OEMs, OBMs and ODMs. We
believe our engineering and product development capabilities are important to
the future success of our business. As an ODM, we take specifications that are
provided to us by the customer and design a product to meet those
specifications. Some of our product design, research, and development activities
are customer funded and are under agreements with specific customers for
specific products. We have successfully lowered the costs for our research and
development team by moving most research and development activities to our
facility in China. We principally employ Chinese engineers and technicians at
costs that are substantially lower than that would be required in Hong Kong. At
March 31, 2007, we employed 72 individuals in Hong Kong and China for our
engineering staffs, which are at various times engaged in research and
development. The major responsibility of the product design and research and
development personnel is to develop and produce designs of scales products to
the satisfaction of and in accordance with the specifications provided by the
ODMs and OEMs. We anticipate hiring additional research and development
personnel to meet the increased demand for scales products.

     The manufacturing and sale of electronic sensor-based and wireless products
is highly competitive. Competition is primarily based upon unit price, product
quality, reliability, product features and management's reputation for
integrity. Accordingly, reliance is placed on research and development of new
products, line extensions and technological, quality and other continuous
product improvement. There can be no assurance that we will enjoy the same
degree of success in these efforts in the future. Research and development
expenses, aggregated $710,355 during the fiscal year ended March 31, 2005,
$847,401 during the fiscal year ended March 31, 2006 and $983,172 during the
fiscal year ended March 31, 2007.

     Seasonality

     Generally, the first calendar quarter of each year is typically the slowest
sales period because our manufacturing facilities in China are closed for two
weeks for the Chinese New Year holidays to permit employees to travel to their
homes in China. In addition, sales during the first calendar quarter of both
scales and telecommunications products usually dip following the increase in
sales during the Christmas season. A greater number of our sales of scales and
telecommunications products occur between the months of April and September for
shipment in the summer in preparation of the Christmas holiday. Throughout the
remainder of the year, our products do not appear to be subject to significant

                                       25
<PAGE>


seasonal variation. The summer months are generally the lowest sales point of
the calendar year for Gram Precision and Korona. Sales of telecommunication
products are generally higher in the summer months off-setting Gram Precision's
and Korona's decline in sales. However, past sales patterns may not be
indicative of future performance.

     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. We believe that this method has
resulted in lower employee turnover than might otherwise have occurred.

     Transportation

     Typically, we sell products either F.O.B. Hong Kong or Yantian (Shenzhen),
which means that our customers are responsible for the transportation of
finished products from Hong Kong or Yantian (Shenzhen) to their final
destination. Transportation of components and finished products to and from the
point of shipment is by truck. To date, we have not been materially affected by
any transportation problems. However, transportation difficulties affecting air
cargo or shipping, such as an extended closure of ports that materially disrupts
the flow of our customers' products into the United States, could materially and
adversely affect our sales and margins if, as a result, our customers delay or
cancel orders or seek concessions to offset expediting charges they incurred
pending resolution of the problems causing the port closures.

     Government Regulation

     We are subject to comprehensive and changing foreign, federal, state and
local environmental requirements, including those governing discharges to the
air and water, the handling and disposal of solid and hazardous waste, and the
remediation of contamination associated with releases of hazardous substances.
We believe that we are in compliance with current environmental requirements.
Nevertheless, we use hazardous substances in our operations and as is the case
with manufacturers in general, if a release of hazardous substances occurs on or
from our properties we may be held liable and may be required to pay the cost of
remediation. The amount of any resulting liability could be material.

     Foreign Operations

     A significant amount of our products are manufactured at our factory
located in China. While China has been granted permanent most favored nation
trade status in the United States through its entry into the World Trade
Organization, controversies between the United States and China may arise that
threaten the status quo involving trade between the United States and China.
These controversies could materially and adversely affect our business by, among
other things, causing our products in the United States to become more expensive
resulting in a reduction in the demand for our products by customers in the
United States.

     Sovereignty over Hong Kong reverted to China on July 1, 1997. The 1984
Sino-British Joint Declaration, the 1990 Basic Law of Hong Kong, the 1992 United
States-Hong Kong Policy Act and other agreements provide some indication of the

                                       26
<PAGE>


business climate we believe will continue to exist in Hong Kong. Hong Kong
remains a Special Administrative Region ("SAR") of China, with certain
autonomies from the Chinese government. Hong Kong is a full member of the World
Trade Organization. It has separate customs territory from China, with separate
tariff rates and export control procedures. It has a separate intellectual
property registration system. The Hong Kong Dollar is legal tender in the SAR,
freely convertible and not subject to foreign currency exchange controls by
China. The SAR government has sole responsibility for tax policies, though the
Chinese government must approve the SAR's budgets. Notwithstanding the
provisions of these international agreements, we cannot be assured of the
continued stability of political, legal, economic or other conditions in Hong
Kong. No treaty exists between Hong Kong and the United States providing for the
reciprocal enforcement of foreign judgments. Accordingly, Hong Kong courts might
not enforce judgments predicated on the federal securities laws of the United
States, whether arising from actions brought in the United States or, if
permitted, in Hong Kong.

     Organizational Structure.

     We have one wholly-owned Hong Kong subsidiary - Bonso Electronics Limited
("BEL"). BEL was organized under the laws of Hong Kong and is responsible for
the design, development, manufacture and sale of our products.

     BEL has one active Hong Kong subsidiary - Bonso Investment Limited ("BIL").
BIL was organized under the laws of Hong Kong and has been used to acquire and
hold our property investments in Hong Kong and China.

     BEL also has one active PRC subsidiary - Bonso Electronics (Shenzhen)
Company Limited, which is organized under the laws of the PRC, and is used to
manufacture all of our products.

     We also have another wholly-owned British Virgin Islands subsidiary - Modus
Enterprise International Inc., which owns 100% of Korona and 51% of Gram
Precision. Korona is engaged in marketing, distributing and retailing of
consumer bathroom and kitchen scale products throughout Europe. Gram Precision
is primarily engaged in the distribution and marketing of pocket and industrial
scales in the United States, Canada and Europe.

     In April 2007, we set up a new wholly-owned subsidiary, Bonso USA Inc. This
subsidiary is responsible for the sale of industrial scales in the United
States.


     Property, Plant and Equipment

     British Virgin Islands

     Our offices are located at Cragmuir Chambers, Road Town, Tortola, British
Virgin Islands. Only corporate administrative matters are conducted at such
offices, through our registered agent, HWR Services Limited.

                                       27
<PAGE>


     Hong Kong

     We own approximately 5,000 square feet of office space located at Unit 1106
- 1110, 11/F, Star House, 3 Salisbury Road, Tsimshatsui, Kowloon, Hong Kong as
our principal executive office.

     We own approximately 4,593 square feet at Unit C & D, 8th floor of the
Universal Industrial Centre, 23-25 Shan Mei Street, Fo Tan, Shatin, New
Territories, Hong Kong. This facility now is used exclusively as warehouse
space.

     We own 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 as quarters to
Directors.

     China

     Our 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 five factory buildings, which contain
approximately 333,000 square feet, four workers' dormitories, containing
approximately 181,000 square feet, a canteen and recreation center of
approximately 25,500 square feet, an office building, consisting of
approximately 25,500 square feet, and two staff quarters for our supervisory
employees, consisting of approximately 35,000 square feet, for a total of
approximately 600,000 square feet. All of the facilities noted above are
wholly-owned, except three factory buildings and two workers' dormitories with
approximately 200,000 square feet. We pay a monthly management fee of $2,175
pursuant to a Contract on the Management of Land with Shenzhen Baoan Fuan
Industrial Company for our own premises.

     We also own one residential property in Shenzhen, which is located at
Lakeview Mansion, B-20C, Hujinju Building No. 63, Xinan Road, Boacheng Baoan
Shenzhen, China, It consists of approximately 1,591 square feet and is utilized
by directors when they require accommodations in China.

     We also own two office units in Beijing, namely Units 12 and 13 on the 3rd
floor, Block A of Sunshine Plaza in Beijing, China. Unit 12 consists of 1,102
square feet and Unit 13 consists of 1,860 square feet. One Unit is rented to
unaffiliated third parties for an aggregate monthly rental of RMB9,692, or
approximately $1,255.

     Germany

     Korona leases approximately 885 square meters of office space located at
Auf den Huttenberg 1-3, 35428 Langgons-Niederkleen, Germany. This facility is
used as Korona's principal executive offices and the monthly rent for this
facility is (euro) 6,427.12.

                                       28
<PAGE>


     Poland

     Korona leases approximately 86 square meters of office space located at ul.
Podmiejska 18, 01-498 Warszawa. The facility is used as office space and the
monthly rent for this facility is (euro) 533.

     United States

     Vector Distribution Systems Inc., a subsidiary of Gram Precision, leases
approximately 7,000 square feet of office and warehouse space located at. 5075
West Diablo Drive, Suite 206, Las Vegas, NV 89118-6071. This facility is used as
warehouse and the monthly rent for this facility is approximately $7,611.

     Canada

     Gram Precision leases approximately 10,800 square feet of office and
warehouse space located at 2855 Argentia Road, Unit 1, Mississauga, Ontario,
L5N8G6, Canada. The monthly rent for this facility is CDN 11,123.

Adequacy of Facilities

     We believe the manufacturing complex will be adequate for our reasonably
foreseeable needs.

Item 4A. Unresolved Staff Comments.

     Not Applicable.

Item 5. Operating and Financial Review and Prospects

     The following discussion and analysis should be read in conjunction with
Item 3 - "Key Information - Selected Financial Data" and the Consolidated
Financial Statements and Notes to Consolidated Financial Statements attached
elsewhere in this Annual Report.

Overview

     We derive our revenues principally from the sale of sensor-based and
wireless products manufactured in China, which represent 75% and 24% of total
sales for the fiscal year ended March 31, 2007, respectively. As mentioned in
Item 3 - "Key Information - Risk factors relating to our business," we are
dependent upon a limited number of major customers for a significant portion of
our revenues. Our revenues and business operation will be subject to fluctuation
if there is loss of orders from any of our largest customers. Further, the
pricing of our scales and telecommunication products are becoming increasingly
competitive, especially to our customers in the United States and Germany, who
contributed over 81% of our revenue during the fiscal year ended March 31, 2007.

                                       29
<PAGE>


     In the fiscal year ended March 31, 2005, net sales were approximately
$69,602,000 and net income was approximately $3,350,000. During the fiscal year
ended March 31, 2006 net sales decreased to approximately $64,543,000 and net
income decreased to approximately $484,000. During the fiscal year ended March
31, 2007 net sales increased to approximately $66,491,000 and net loss was
approximately $1,371,000.

     Labor costs are increasing in China and our labor costs represent
approximately 10% of our total production costs. We believe that increased labor
costs in China will have a significant effect on our total production costs or
results of operations, and that we will not be able to continue to increase our
production at our manufacturing facility without substantially increasing our
non-production salaries and related costs. There can be no assurance that labor
costs will not further increase or that any additional increase in labor costs
will not have a material adverse effect upon our results of operations.

     We have not experienced significant difficulties in obtaining raw materials
for our products and management does not anticipate any such difficulties in the
foreseeable future.


Operating Results

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

                                       30

<PAGE>


                                                 Fiscal Year Ended
                                       ------------------------------------

Income Statement Data                    2005          2006            2007
---------------------                    ----          ----            ----

Net sales
Cost of sales                          (76.3)        (79.2)          (81.1)
Gross margin                             23.7         20.8            18.9
Selling expenses                        (3.7)         (3.3)           (3.7)
Salaries and related costs              (7.5)         (8.8)           (8.2)
Research and development expenses       (1.0)         (1.3)           (1.5)
Administration and general expenses     (5.9)         (5.3)           (4.5)
Amortization of brand name              (0.3)         (0.3)           (0.3)
Impairment of goodwill                    -           (0.4)             -
Loss from water damage                    -             -             (1.1)

(Loss) income from operations
Interest income                          0.1           0.3             0.5
Interest expense                        (0.6)         (0.8)           (0.9)
Foreign exchange loss                   (0.1)         (0.3)           (0.3)
Other income                             0.5           0.3             0.4
Income   before   income   taxes  and    5.2           1.0            (0.7)
minority interest
Income tax expense                      (0.4)         (0.2)           (1.3)
Minority interest                        0.0           0.0             0.0
Net (loss) income                        4.8           0.8            (2.0)


Fiscal year ended March 31, 2007 compared to fiscal year ended March 31, 2006

     Net Sales. Our sales increased approximately $1,948,000 or 3.02% from
approximately $64,543,000 for the year ended March 31, 2006, to approximately
$66,491,000 for the year ended March 31, 2007. The increase in sales was
primarily the result of increased sales of scales products caused by the
increased orders from our major scale customers. Sales of our scales and others
business increased 14.7% from approximately $43,792,000 for the year ended March
31, 2006, to approximately $50,243,000 for the year ended March 31, 2007, and
sales for telecommunications products decreased 21.7% from approximately
$20,751,000 for the year ended March 31, 2006, to approximately $16,248,000 for
the year ended March 31, 2007. The decrease in sales for telecommunications
products was caused by the decreased orders from our major telecommunications
customers.

     Gross Margin. Gross margin as a percentage of revenue declined to
approximately 18.9% during the year ended March 31, 2007 as compared to
approximately 20.8% during the year ended March 31, 2006. The Company was
confronted with a tough operating environment in this fiscal year. One of the
challenges was rising operating overheads. Continuing from an escalating trend
in recent years, the prices of crude oil and other key raw materials remained
high, thereby driving up production costs for the Company. Furthermore, labour
costs were also increasing. The general labour shortage in Shenzhen required us
to offer higher wages to our workers in order to retain them. As a result of all
these factors, our gross profit margin had decreased by 1.9%.

                                       31
<PAGE>


     Selling Expenses. Selling expenses increased by approximately $366,000 or
17.3% from approximately $2,111,000 for the year ended March 31, 2006 to
approximately $2,477,000 for the year ended March 31, 2007. This increase was
primarily the result of increase in air freight cost to meet customers' delivery
schedule.

     Salaries And Related Costs. Salaries and related costs decreased by
approximately $243,000 or 4.3% from approximately $5,681,000 for the year ended
March 31, 2006 to approximately $5,438,000 for the year ended March 31, 2007.
This decrease was due to the decrease in the number of staff.

     Research And Development. Research and development expenses increased
approximately $136,000 or 16.1% from approximately $847,000 for the year ended
March 31, 2006 to approximately $983,000 for the year ended March 31, 2007. The
increase in research and development was primarily due to increased research and
development activities, such as hiring of additional staff and certification.
for both the telecommunications products and new scale models. Research and
Development as a percentage of revenue increased to 1.48% during the year ended
March 31, 2007 as compared to 1.31% during the year ended March 31, 2006.

     Administration And General Expenses. Administration and general expenses
decreased by approximately $415, 000 or 12.1 % from approximately $3,420,000 for
the year ended March 31, 2006 to approximately $3,005,000 for the year ended
March 31, 2007. This decrease was primarily due overall reduction in operating
expenses for the year ended March 31, 2007 owing to cost control measures.

     Amortization Of Brand Names. During the years ended March 31, 2006 and 2007
we amortized $200,000 relating to the brand names acquired upon the acquisition
of Korona. Brand names are amortized using the straight-line method over the
related estimated useful life of 15 years.

     Impairment of Goodwill. Based on the assessment for the year ended March
31, 2006, the Group made a provision for impairment of approximately $258,000
for one of the subsidiaries, Korona Hauschaltswaren Gmbh & Co.KG, due to the
continued weak performance of the scales business. There was no impairment loss
recognized during the fiscal year ended March 31, 2007.

     Loss from Water Damage. During the fiscal year ended March 31, 2007, we
incurred a loss of $700,950 from water damage which resulted from a heavy rain
which caused a river near where our Germany logistic warehouse was located to
overflow. We are now in the process of negotiating with our insurance carrier
for compensation of the loss.

     (Loss)/Income From Operations. As a result of the above changes, (loss)/
income from operations decreased by 128.3% from a gain of approximately $911,000
for the year ended March 31, 2006 to a loss of approximately $258,000 for the
year ended March 31, 2007.

                                       32
<PAGE>


     Interest Income. Interest income increased by $111,000 or 55% from
approximately $202,000 for the year ended March 31, 2006 to approximately
$313,000 for the year ended March 31, 2007. The increase were primarily the
result of depositing our cash into higher yield accounts and the increase in
interest rates.

     Interest Expenses. Interest expenses increased approximately $122,000 or
24.2% from approximately $504,000 for the year ended March 31, 2006 to
approximately $626,000 for the year ended March 31, 2007. This increase was
primarily due to the increase in interest rates on funds borrowed from the banks
and the increase in bank borrowings during the year ended March 31, 2007.

     Foreign Exchange Losses. There was no significant change in the foreign
exchange losses during the year ended March 31, 2007 compared to the year ended
March 31, 2006. Despite the continual appreciation of RMB, the effect was offset
by fluctuation of foreign currency denominated balances.

     Other Income. Other income increased approximately $112,000 or 59% from
approximately $190,000 for the year ended March 31,2006, to approximately
$302,000 for the year ended March 31, 2007. The increase was primarily due to
gain from disposal of investment properties in the PRC.

     Income Tax Expense. Income tax expense increased approximately $787,000 or
601% from approximately $131,000 during the year ended March 31, 2006 to
$918,000 during the year ended March 31, 2007, representing approximately 0.2%
and approximately 1.4% of net sales respectively. The increase was primarily the
result of assessing the impact of the new developments of tax rules in the
various tax jurisdictions that the group's subsidiaries are operating. We have
performed the assessment in pursuant to FASB No. 5 "Accounting for
Contingencies" and made a provision of approximately $737,000 in relation to
this contingent liability.

     Net Income. As a result of the above changes, net income decreased from a
profit of approximately $484,000 for the period ended March 31, 2006 to a loss
of approximately $1,371,000 for the period ended March 31, 2007, a decrease of
approximately $1,855,000, or 383.3%.

Fiscal year ended March 31, 2006 compared to fiscal year ended March 31, 2005

     Net Sales. Our sales decreased approximately $5,059,000 or 7.27% from
approximately $69,602,000 for the year ended March 31, 2005, to approximately
$64,543,000 for the year ended March 31, 2006. The decrease in sales was
primarily the result of decreased of scales products caused by the decreased
orders from our major scale customers. Sales of our scales and others business
decreased from approximately $48,946,000 for the year ended March 31, 2005, to
approximately $43,792,000 for the year ended March 31,2006, and sales for
telecommunications products increased 0.45% from approximately $20,656,000 for
the year ended March 31, 2005, to approximately $20,751,000 for the year ended
March 31, 2006.

                                       33
<PAGE>


     Gross Margin. Gross margin as a percentage of revenue declined to
approximately 20.8% during the year ended March 31, 2006 as compared to
approximately 23.7% during the year ended March 31, 2005. This decline was
primarily the result of our cost increase in the area of materials and labor and
the increased pressure on the sales prices from our customers for both our
telecommunication products and scales products.

     Selling Expenses. Selling expenses decreased by approximately $485,000 or
18.67% from approximately $2,595,000 for the period ended March 31, 2005 to
approximately $2,111,000 for the period ended March 31, 2006. This decrease was
primarily the result of decreased commissions paid as a result of decreased
sales. As a percentage of revenue selling expenses decreased to 3.27% during the
year ended March 31, 2006 as compared to 3.73% during the year ended March 31,
2005.

     Salaries And Related Costs. Salaries and related costs increased by
approximately $465,000 or 8.91% from approximately $5,216,000 for the year ended
March 31, 2005 to approximately $5,681,000 for the year ended March 31, 2006.
This increase is due to both the increase in the number of staff and the
increase in salaries to our employees.

     Research And Development. Research and development expenses increased
approximately $137,000 or 19.30% from approximately $710,000 for the year ended
March 31, 2005 to approximately $847,000 for the year ended March 31, 2006. The
increase in research and development was primarily due to increased research and
development activities, such as hiring of additional staff, certification, etc.
for both the telecommunications products and new scale models. Research and
Development as a percentage of revenue increased to 1.31% during the year ended
March 31, 2006 as compared to 1.02% during the year ended March 31, 2005.

     Administration And General Expenses. Administration and general expenses
decreased by approximately $659,000 or 16.13% from approximately $4,079,000 for
the year ended March 31, 2005 to approximately $3,420,000 for the year ended
March 31, 2006. This decrease was primarily due to reduced legal & professional
fee and no consultancy fee during the year ended March 31, 2006.

     Amortization Of Brand Names. During the years ended March 31, 2005 and 2006
we amortized $200,000 relating to the brand names acquired upon the acquisition
of Korona. Brand names are amortized using the straight-line method over the
related estimated useful life of 15 years.

     Impairment of Goodwill. Based on the assessment for the year ended March
31, 2006, the Group made a provision for impairment of approximately $258,000
for one of the subsidiaries, Korona Hauschaltswaren Gmbh & Co.KG, due to the
continued weak performance of the scales business.

     Income From Operations. As a result of the above changes, income from
operations decreased by 75.14% from approximately $3,664,000 for the year ended
March 31, 2005 to approximately $911,000 for the year ended March 31, 2006.

                                       34
<PAGE>


     Interest Income. Interest income increased by $121,000 or 60% from
approximately $81,000 for the year ended March 31, 2005 to approximately
$202,000 for the year ended March 31, 2006. The increase were primarily the
result of depositing our cash into higher yield accounts and the increase in
interest rates.

     Interest Expenses. Interest expenses increased approximately $88,000 or
20.86% from approximately $417,000 for the year ended March 31, 2005 to
approximately $504,000 for the year ended March 31, 2006. This increase was
primarily due to the increase in interest rates on funds borrowed from banks
during the year ended March 31, 2006.

     Foreign Exchange Losses/Gains. Foreign exchange loss increased from a loss
of approximately $98,000 for the year ended March 31, 2005 to a loss of
approximately $184,000 for the year ended March 31, 2006. The increase was
primarily attributable to the increased strength of the Canadian Dollar and
especially the value of the Chinese Renminbi against the U.S. Dollar. On top of
that, the RMB will no longer be linked to the US currency but rather to a basket
of currencies with a 0.3% margin of fluctuation. This change in policy has
resulted in an approximately 3.7% appreciation of the RMB against the U.S.
dollar between July 21, 2005 and August 21, 2006.

     Other Income. Other income decreased approximately $182,000 or 48.92% from
approximately $372,000 for the year ended March 31,2005, to approximately
$190,000 for the year ended March 31, 2006. The decrease was primarily due to a
decrease in the disposal of fixed assets and decreased rental income from 2 of
the properties in PRC

     Income Tax Expense. Income tax expense decreased approximately $135,000 or
50.6% from approximately $266,000 during the year ended March 31, 2005 to
approximately $131,000 during the year ended March 31, 2006, representing
approximately 0.4% and approximately 0.2% of net sales respectively. The
decrease was primarily the result of decrease profit in the current year.

     Net Income. As a result of the above changes, net income decreased from
approximately $3,350,000 for the period ended March 31, 2005 to approximately
$484,000 for the period ended March 31, 2006, a decrease of approximately
$2,866,000, or 85.55%.

Impact of Inflation

     We believe that inflation has not had a material affect on our business
during the fiscal year ended March 31, 2007. During the fiscal years ended March
31, 2002 to March 31, 2006, Hong Kong experienced a period of deflation and
Germany sustained a low inflation rate. The estimated inflation rates for 2006
of Hong Kong, PRC, Germany, United States and Canada are 2.2%, 3.5%, 1.3%, 1.7%,
2.5% and 2% respectively. We have generally been able to modify and improve our
product designs so that we could either increase the prices of our products or
lower the production cost in order to keep pace with inflation. Although our
costs of components used in the manufacture of our products have been relatively
stable, we believe that any possible significant increase in material costs
would affect the entire electronics industry. Thus, it would not have a negative
material impact on our competitive position in the industry.

                                       35
<PAGE>


Taxation

     The companies comprising the Group are subject to tax on an entity basis on
income arising in or derived from Hong Kong, the PRC, Germany, the United States
and Canada. The current rates of taxation of the subsidiary operating in Hong
Kong is 17.5%. The subsidiary of the Group in Germany is registered as a
partnership in Germany which is subject to a statutory tax rate of 14.17%. The
Group is not subject to income taxes in the British Virgin Islands. The
statutory tax rates in the United States and Canada are 15% and 36%,
respectively.

     Pursuant to the relevant income tax laws in the PRC, Bonso Electronics
(Shenzhen) Co., Ltd, a wholly owned subsidiary of the Company, was 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. The first
profit-making year of Bonso Electronics (Shenzhen) Co., Ltd. was deemed to be
the financial year ended December 31, 1998 and the last year it was entitled to
this benefit was December 31, 2002. In 2003, Bonso Electronics (Shenzhen) Co.,
Ltd was accredited as an "Advanced Corporation" and a further 50% tax reduction
was granted for another three years. The last year it was entitled to this
benefit was December 31, 2005. Under the Implementation Rules of the Foreign
Enterprise Income Tax Law, Bonso Electronics (Shenzhen) Co. Ltd. was entitled to
a further tax rate reduction to 10% for the calendar year ended December 31,
2006, as its export sale exceed 70% of its revenue.

     Most of our subsidiaries' profits accrue in Hong Kong and the PRC where the
applicable tax rates are currently 17.5% and 10%, respectively. There is no tax
payable in Hong Kong on offshore profit or on dividends paid to Bonso
Electronics Limited by its subsidiaries or to us by Bonso Electronics Limited.
Therefore, our overall effective tax rate may be lower than that of most United
States corporations; however, this advantage could be materially and adversely
affected by changes in the tax laws of the British Virgin Islands, Germany,
Canada, Hong Kong or China.

     Efforts by the Chinese government to increase tax revenues could result in
decisions or interpretations of the tax laws by the Chinese tax authorities that
are unfavorable to us and which increase our future tax liabilities, or deny our
expected refunds. Changes in Chinese tax laws or their interpretation or
application may subject us to additional Chinese taxation in the future.

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

                                       36
<PAGE>


     During the fiscal year ended March 31, 2007, certain of our subsidiaries
were and continue to be subject to enquiries from the local tax authorities. We
have made an assessment under SFAS 5 "Accounting for Contingencies" and believed
that no additional income tax expense was necessary as of March 31, 2007, as the
relevant tax authority was still in the information gathering stage on their
enquiries and it was practically difficult to have a reasonable estimate of the
possible outcome of these enquiries at this stage. We believe we have a
reasonable likelihood of success with respect to these enquiries. There can be
no assurance that the enquiry will not result in imposing additional income tax
expense on the Group, which could have a material adverse effect upon the Group
and its results of operations.

     Contractual arrangements we have entered into among us and our subsidiaries
in different locations may be subject to scrutiny by respective tax authorities
and a finding against Bonso and its subsidiaries may result in additional tax
liabilities that could substantially reduce our consolidated net income. We
could face material and adverse tax consequences if respective tax authorities
determine that the contractual arrangements among our subsidiaries and Bonso do
not represent an arm's length price and adjust Bonso or its subsidiaries'
income. Our consolidated net income may be materially and adversely affected if
or affiliated entities' tax liabilities increase. The Company will adopt FIN 48
"Accounting for uncertainty in income taxes" effective from April 1, 2007, the
amount of income tax provisions required under FIN 48 could be different.

     Dividends, if any, paid to any United States resident or citizen
shareholder are treated as dividend income for United States federal income tax
purposes. Such dividends are not 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
(the "Internal Revenue Code"). Various Internal Revenue Code provisions impose
special taxes in certain circumstances on non-United States corporations and
their shareholders. You are urged to consult your tax advisor with regard to
such possibilities and your 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.

     Foreign Currency Exchange Rates

     We sell most of our products to international customers. Our 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 by us to our customers. We sell all of our products in United States
Dollars and pay for our material components principally in United States Dollars
and Hong Kong Dollars. A very small portion of the components used are paid for
in Japanese Yen. Most factory expenses incurred are paid in Chinese Renminbi.
Because the Hong Kong Dollar is pegged to the United States Dollar, in the past
our only material foreign exchange risk previously arose from potential
fluctuations in the Chinese Renminbi and the devaluation in United States
Dollars; management believes that it may be possible that there will be some
fluctuation in the coming year.

                                       37
<PAGE>


         Gram Precision principally pays for its products in United States
Dollars and Canadian dollars and sells its products in Canadian, United States
Dollars, and United Kingdom Pound Sterling. Korona primarily pays for its
products in United States Dollars and Euros and sells its products in Euros.
During the fiscal year ended March 31, 2007, we experienced a foreign currency
loss of $183,952. We don't currently engage in hedging transactions; however we
may undertake hedging activities in the future.

         A summary of our debts from our banking facilities utilized as at March
31, 2007 which was subjected to foreign currency risk is as below:


                                                             March 31, 2007
                                                                        $

           Euro                                                 3,576,366
           Hong Kong dollars                                    2,957,631
           United States dollars                                  778,895
           Canadian dollars                                       459,710
                                                                ---------
                                                                7,772,602
                                                                =========


     All the balances above are due within one year.

     Fluctuations in the value of the Hong Kong Dollar have not been significant
since October 17, 1983, when the Hong Kong government tied the value of the Hong
Kong Dollar to that of the United States Dollar. However, there can be no
assurance that the value of the Hong Kong Dollar will continue to be tied to
that of the United States Dollar. China adopted a floating currency system on
January 1, 1994, unifying the market and official rates of foreign exchange.
China approved current account convertibility of the Chinese Renminbi on July 1,
1996, followed by formal acceptance of the International Monetary Fund's
Articles of Agreement on December 1, 1996. These regulations eliminated the
requirement for prior government approval to buy foreign exchange for ordinary
trade transactions, though approval is still required to repatriate equity or
debt, including interest thereon. On July 21, 2005, the Peoples Bank of China
announced it would revalue the RMB by 2.1%, linking the RMB to a "basket of
currencies" which includes the US dollar, Euro, Japanese Yen and Korean Won,
rather than directly at 8.28 RMB to the dollar as it has for a decade. Under the
new rules, the RMB will be allowed to move 0.3% on a daily basis against the
dollar. The People's Bank of China, on May 21 2007, widened the RMB trading band
from 0.3 percent daily movement against the US dollar to 0.5 percent. As of
August 31, 2007, the RMB was valued at 7.5462 per US Dollar. There can be no
assurance that these currencies will remain stable or will fluctuate to our
benefit.

     To manage our exposure to foreign currency and translation risks, we may
purchase currency exchange forward contracts, currency options, or other
derivative instruments, provided such instruments may be obtained at suitable
prices. Management intends to take corrective action in an effort to attempt to
minimize any negative impact foreign currency fluctuations may have upon us.
However, to date we have not done so. If we are unsuccessful in hedging against
currency fluctuations, it may have a material adverse effect on us.

                                       38
<PAGE>


     Liquidity and Capital Resources

     We have financed our growth and cash needs to date primarily from
internally generated funds and bank debt. We do not use off-balance sheet
financing arrangements, such as securitization of receivables or obtaining
access to assets through special purpose entities, as sources of liquidity. Our
primary uses of cash have been to fund expansions and upgrades of our
manufacturing facilities, to make strategic acquisitions and to fund increases
in inventory and accounts receivable resulting from increased sales.

     Operating activities provided $1,416,241 of net cash for the fiscal year
ended March 31, 2007 compared to $2,480,213 of net cash for the fiscal year
ended March 31, 2006. This decrease in the amount of cash provided by operating
activities was primarily attributable to a decrease in net income.

     As of March 31, 2007, we had $8,118,018 in cash and cash equivalents as
compared to $8,582,257 as of March 31, 2006. Working capital at March 31, 2007,
was $16,841,659 compared to $16,945,184 at March 31, 2006. There are no other
material unused sources of liquid assets. We believe there are no material
restrictions (including foreign exchange controls) on the ability of our
subsidiaries to transfer funds to us in the form of cash dividends, loans,
advances or product/material purchases. We believe our working capital is
sufficient for our present requirements.

     As of March 31, 2007, we had $6,739,567 in trade receivable as compared to
$6,740,229 as of March 31, 2006.

     As of March 31, 2007, we had $14,997,788 in inventories as compared to
$15,035,216 as of March 31, 2006.

     As of March 31, 2007, we had a total of $9,090,852 in notes payable and
accounts payable as compared to $9,598,886 as of March 31, 2006. The decrease of
$508,034 was primarily attributable to timely payment to our vendors.

     As of March 31, 2007 we had in place general banking facilities with 6
financial institutions with amounts available aggregating $30,017,128. Such
facilities include the ability to obtain overdrafts, letters of credit,
short-term notes payable, short-term loans and long-term loans. As of March 31,
2007, we had utilized $7,772,602 from these general banking facilities. Interest
on this indebtedness fluctuates with the prime rate and HIBOR as set by the Hong
Kong Bankers Association; the EONIA as set by the Germany Bankers Association
and the Prime rate as set by the Canada Bankers Association. The bank credit
facilities are collateralized by certain of our bank guarantees and one of the
credit facilities is collateralized by a personal guarantee from the director of
one of the Group's subsidiaries. Our bank credit facilities are due for renewal
annually. We anticipate that the banking facilities will be renewed on
substantially the same terms and our utilization in the next year will remain at
a similar level as that in the current year. Excluding the capital lease
obligations, the amounts of total short-term bank borrowings outstanding as of
March 31, 2007 and 2006 were $3,576,366 and $2,936,467, respectively. During the
fiscal years ended March 31, 2007 and 2006, we paid a total of $516,272 and
$480,642, respectively, in interest on indebtedness.

                                       39
<PAGE>


     Our current ratio decreased from 2.08 as of March 31, 2006 to 2.03 as of
March 31, 2007. Our quick ratio decreased from 1.12 as of March 31, 2006 to 1.11
as of March 31, 2007.

     We believe that our cash flows from operations, our current cash balance
and funds available under our working capital and credit facilities will be
sufficient to meet our working capital needs and planned capital expenditures
for at least the next 12 months. However, a decrease in the demand for our
products may affect our internally generated funds, and we would further look to
our banking facilities to meet our working capital demands.





                                       40

<PAGE>

<TABLE>
<CAPTION>

Commitments

     The following table sets forth information with respect to our commitments
as of March 31, 2007.


                                           Payments due by Period
--------------------------------------------------------------------------------------------------------
                            Total              Within 1 year    Within 1 to 3  Within 3 to More than 5
                                                                    years        5 years      years
--------------------------------------------------------------------------------------------------------
<S>                <C>                     <C>                  <C>           <C>          <C>
Notes Payable      $3,736,526              $3,736,526           $0            $0           $0
--------------------------------------------------------------------------------------------------------
Short-term loans   $3,576,366              $3,576,366           $0            $0           $0
--------------------------------------------------------------------------------------------------------
Operating Leases   $3,847,657              $1,065,588           $1,861,720    $920,349     $0
--------------------------------------------------------------------------------------------------------
Capital Leases     $154,983                $95,725              $59,258       $0           $0
--------------------------------------------------------------------------------------------------------
Acquisition of     $1,472,325              $610,000             $862,325      $0           $0
land
--------------------------------------------------------------------------------------------------------
Interest on loans  $297,933                $297,933             $0            $0           $0
--------------------------------------------------------------------------------------------------------
Interest on        $28,130                 $17,374              $10,756       $0           $0
capital leases
--------------------------------------------------------------------------------------------------------
Total              $ 13,113,920            $9,399,512           $ 2,794,059   $920,349     $0
--------------------------------------------------------------------------------------------------------
</TABLE>

Interest on loans and capital leases is estimated based on the interest rate of
HIBOR+ 1.5% to +1.8%.

Critical Accounting Policies

     The methods, estimates and judgments we use in applying our most critical
accounting policies have a significant impact on the results we report in our
financial statements. The SEC has defined the most critical accounting policies
as the ones that are most important to the portrayal of our financial condition
and results, and require us to make our most difficult and subjective judgments,
often as a result of the need to make estimates of matters that are inherently
uncertain. Based on this definition, our most critical policies include
inventories, impairment, brand name, trade receivables, and deferred income
taxes.

     Below, we discuss these policies further, as well as the estimates and
judgments involved. We believe that these other policies either do not generally
require us to make estimates and judgments that are as difficult or as
subjective, or it is less likely that they would have a material impact on our
reported results of operations for a given period. See discussion of all our
significant accounting policies in footnote 1 to the Consolidated Financial
Statements included elsewhere in this Annual Report.

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. The company continuously
reviews slow-moving and obsolete inventory and assesses any inventory
obsolescence based on inventory levels, material composition and expected usage
as of that date.

                                       41
<PAGE>


Revenue recognition

     No revenue is recognized unless there is persuasive evidence of an
arrangement, the price to the buyer is fixed or determinable, delivery has
occurred and collectibility of the sales price is reasonably assured. Revenue is
recognized when title and risk of loss transfers to the customer, which is
generally when the product is shipped to the customer from our facility.
Shipping costs billed to our customers are included within revenue. Associated
costs are classified in cost of goods sold.

     The Company provides to certain customers an additional two percent of
certain products ordered in lieu of a warranty, which are recognized as cost of
sales when these products are shipped to customers from our facility. In
addition, certain products sold by the company are subject to a limited product
quality warranty. The Company accrues for estimated incurred but unidentified
quality issues based upon historical activity and known quality issues if a loss
is probable and can be reasonably estimated. The standard limited warranty
period is one to three years. Quality returns, refunds, rebates and discounts
are recorded net of sales at the time of sale to three years and estimated based
on past history. All sales are based upon firm orders with fixed terms and
conditions, which generally cannot be modified. Historically, we have not
experienced material differences between our estimated amounts of quality
returns, refunds, rebates and discounts and the actual results. In all
contracts, there is no price protection or similar privilege in relation to the
sale of goods.

     Due to similar contractual terms, the Company's revenue recognition
policies do not differ among its significant product lines (i.e. sensor based
versus wireless products) and among various marketing venues used by the Company
(i.e. distributors and direct sales force), and do not vary in different parts
of the world.

Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets

     Long-lived assets held and used by the Group and intangible assets,
excluding goodwill, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets may not be
recoverable. The Group evaluates recoverability of assets to be held and used by
comparing the carrying amount of an asset to future net undiscounted cash flows
to be generated by the asset. If such assets are considered to be impaired, the
impairment loss is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets calculated using a discounted future
cash flows analysis. For the year ended March 31, 2007, the Group made a
provision for impairment of approximately $5,414 (2006: $69,077, 2005:
$148,198), on investment properties due to the decline in market value.

     Goodwill is subject to an annual impairment review. The evaluation of
goodwill for impairment involves two steps: (1) the identification of potential
impairment by comparing the fair value of a reporting unit with its carrying
amount, including goodwill and (2) the measurement of the amount of goodwill
loss by comparing the implied fair value of the reporting unit goodwill with the
carrying amount of that goodwill and recognizing a loss by the excess of the
latter over the former. The Company measures fair value based upon a discounted
future cash flow analysis. Based on the assessment for the year ended March 31,
2007, no provision was made by the Group on impairment of goodwill (2006:
$258,141, 2005: nil).

                                       42
<PAGE>


Brand Name

     Brand name acquired as part of the purchase of a business is capitalized
based on the estimated fair value as at the date of acquisition and amortized
using the straight-line method over the related estimated useful life of 15
years. Where an indication of impairment exists, the carrying amount of the
brand name is assessed and written down to its recoverable amount.

     Expected useful lives are reviewed at each balance sheet date and, where
these differ significantly from previous estimates, amortization periods are
changed accordingly. Where an indication of impairment exists, such as the down
turn of economic inflow from the brand name, changes in business plan and so on,
the carrying amounts of brand name is assessed and written down to their
recoverable amounts. The measurement of the fair value of brand name is subject
to management's assumptions regarding future estimated cash flows, discount
rates, etc. Changes in these assumptions could significantly affect the
recording of an impairment charge related to this asset.

Trade Receivables

     Provision is made against trade receivables to the extent that collection
is considered to be doubtful. This provision is primarily determined from our
monthly aging analysis. It also requires judgment regarding the collectibility
of certain receivables as certain receivables may be identified as collectible
that are subsequently uncollectible and which could result in a subsequent
write-off of the related receivable to the statement of operations. Any change
in the collectibility of accounts receivable that were not previously provided
for could significantly change the calculation of such provision and the results
of our operations.

Income Taxes, Deferred Income Taxes

     Amounts in the consolidated financial statements related to income taxes
are calculated using the principles of 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.

     As part of this process we are required to estimate our income taxes and
tax bases of assets and liabilities in each of the jurisdictions in which we
operate. This process involves estimating our current tax exposure together with
assessing temporary differences resulting from differing treatment of items for
tax and accounting purposes. We must then assess the likelihood of the
recoverability of future tax benefits, such as net operating loss carry
forwards, based on estimated future taxable income and recognize such benefits

                                       43

<PAGE>


to the extent that realization is more likely than not to occur. To the extent
we establish a valuation allowance or increase this allowance in a period, we
must include an expense within the tax provision in the statement of operations.
Any change in the recoverability of the deferred tax assets could significantly
affect the results of our operations or cash flows.

Research and Development, Patents and Licenses, etc.

     We believe that our engineering and product development capabilities are
important to the future success of our business. We have successfully lowered
the costs of our research and development team by moving most research and
development activities to our facility in China and principally employing
Chinese engineers and technicians at costs that are substantially lower than
that would be required in Hong Kong. Research and development costs are expensed
in the financial period during which they are incurred.

Trend Information

     Although we are optimistic about our future in the manufacture and sale of
telecommunications and scale products, we are dependent upon a limited number of
customers, and the loss of any of these customers could have a material adverse
effect upon us and our results of operations. At March 31, 2007, our backlog of
manufacturing orders was $6,024,339 compared to $10,145,015 at March 31, 2006.
We believe that in the fiscal year ended March 31, 2008, the trend of sales from
telecommunications products and scales will be similar to the year ended March
31, 2007.

Off-Balance Sheet Arrangements

     We do not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
investors.

Recent Accounting Pronouncements

     The new accounting pronouncements in the United States that may be relevant
to the Group are as follows:

Accounting for Income Taxes

     In July 2006, the FASB released FIN 48, Accounting for Uncertainty in
Income Taxes - an interpretation of FASB Statement 109 ("FIN 48"). FIN 48
prescribes a comprehensive model for how a company should recognize, measure,
present, and disclose in its financial statements uncertain tax positions that
the company has taken or expects to take on a tax return (including a decision
whether to file or not to file a return in a particular jurisdiction). Under FIN
48, the financial statements will reflect expected future tax consequences of
such positions presuming the taxing authorities' full knowledge of the position
and all relevant facts, but without considering time values. FIN 48 is effective
for annual periods beginning after December 15, 2006. The Company is in the
process of assessing the impact of the recent accounting pronouncement.

                                       44
<PAGE>


Fair Value Measurements

     In September 2006, the FASB issued FAS 157, Fair Value Measurements. FAS
157 provides guidance on the measurement of fair value in US GAAP and expands
fair value measurement disclosures. FAS 157 is applicable whenever other
accounting pronouncements require or permit fair value measurements and does not
expand the use of fair value in any new circumstances. FAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
The Company is in the process of assessing the impact of the recent accounting
pronouncement.

The Fair Value Option for Financial Assets and Financial Liabilities

     In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities-Including an amendment of FASB
Statement No. 115" ("SFAS 159"). SFAS 159 provides companies with an option to
report selected financial assets and liabilities at fair value. Unrealized gains
and losses on items for which the fair value option has been elected will be
recognized in earnings. SFAS 159 is effective for fiscal years beginning after
November 15, 2007. The Company is in the process of assessing the impact of the
recent accounting pronouncement.


Item 6. Directors, Senior Management and Employees


Directors and Senior Management.

Our board of directors and executive officers are listed below:

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

Anthony So                     64          Chairman of the Board, Chief
                                           Executive Officer and Director,
                                           President

Kim Wah Chung                  49          Director of Engineering and
                                           Research and Development and Director

Henry Wan Chong Ma             45          Chief Financial Officer, Secretary
                                           and Treasurer

Woo-Ping Fok                   58          Director

J. Stewart Jackson, IV         71          Director

Henry F. Schlueter             56          Director and Assistant Secretary

     ANTHONY SO is the founder of Bonso. He has been our Chairman of the Board
of Directors since July 1988. He was appointed as the Chief Executive Officer
and the President on November 16, 2006. Mr. So received his BSE degree in civil
engineering from National Taiwan University in 1967 and a master's degree in
business administration ("MBA") 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 years. Mr. So has served
as a trustee of the Chinese University of Hong Kong, New Asia College since
1994.

                                       45
<PAGE>


     KIM WAH CHUNG has been a director since September 21, 1994. Mr. Chung has
been employed by us 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. Mr. Chung's entire engineering career
has been spent with Bonso, and he has been involved in all of our major product
developments. Mr. Chung graduated with honors in 1981 from the Chinese
University of Hong Kong with a Bachelor of Science degree in electronics.

     CATHY KIT TENG PANG was a director of Bonso from January 1998 to November
2006. Ms. Pang was first employed by us as Financial Controller in December 1996
and was promoted to Director of Finance on April 1, 1998. She was resigned from
director and appointed as Chief Financial Officer, Secretary and Treasurer on
November 16, 2006. And she resigned from all the positions on June 28, 2007. 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 as Assistant Financial
Controller. From 1994 until she joined us 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 Institute of Certified Public
Accountants.

     WOO-PING FOK was elected to our Board of Directors on September 21, 1994.
Mr. Fok has practiced law in Hong Kong since 1991 and is a Consultant with
Messrs. C.K. Mok & 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. 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.

     J. STEWART JACKSON IV has been a director since January 10, 2000. From 1962
until its merger with Republic Industries in 1996, Mr. Jackson served in various
management capacities, including president, of Denver Burglar Alarm Co., Inc., a
business founded by his family. In addition, in the mid-1960's, Mr. Jackson
founded Denver Burglar Alarm Products, a separate company which invented,
patented, manufactured, distributed and installed the first self-contained
ionization smoke detectors and which was later sold to a conglomerate
manufacturer. After the merger of Denver Burglar Alarm Co., Inc., Mr. Jackson
founded Jackson Burglar Alarm Co., Inc. Mr. Jackson served as Chief Executive
Officer of Jackson Burglar Alarm Co. from February 1998 to October 2005. Mr.
Jackson has served as the Chief Executive Officer of J S J Corporation. Mr.
Jackson served on the advisory board of directors for Underwriter's Laboratories
for burglar and fire alarm systems for 25 years and has been an officer in the
Central Station Protection Association, which, along with the National Burglar
Alarm Association, was formed by his family in the late 1940's. Mr. Jackson
graduated from the University of Colorado in 1962 with a degree in Business
Management and Engineering.

                                       46
<PAGE>


     HENRY F. SCHLUETER has been a director since October 2001, and has been our
Assistant Secretary 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.
Mr. Schlueter has served as our United States corporate and securities counsel
since 1988. 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 and Denver Bar
Associations and the Wyoming State Bar.

     HENRY WAN CHONG MA was appointed as the Chief Financial Officer, Secretary
and Treasurer on June 28, 2007. He was first employed as the Financial
Controller of Bonso in April 2007. From 1995 to 2007, Mr. Ma was employed by an
international printing company in Hong Kong as Regional Financial Controller of
Asia. From 1992 to 1994, Mr. Ma worked for some local CPA firms as an auditor in
Alberta, Canada. Mr. Ma obtained a Bachelor degree in Economics from the
University of Alberta in Edmonton, Canada. He is a member of the Registered
Public Accountant Association of Alberta, Canada.

     There are no family relationships between any of our directors and
executive officers.

     No arrangement or understanding exists between any such director or officer
and any other persons pursuant to which any director or executive officer was
elected as a director or executive officer. Our directors 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.

Compensation

     The aggregate amount of compensation paid by us and our subsidiaries during
the year ended March 31, 2007 to all directors and officers as a group for
services in all capacities was $1,155,835. Total compensation for the benefit of
Anthony So was $741,947, for the benefit of Cathy Kit Teng Pang was $68,222, for
the benefit of Kim Wah Chung was $151,095, for the benefit of George O'Leary was
$180,000 and for the benefit of Henry F. Schlueter was an aggregate of $14,571.
The $14,571 listed as having been paid for the benefit of Mr. Schlueter was paid
to his law firm, Schlueter & Associates, P.C. for legal services rendered and
expenses incurred. Cathy Kit Teng Pang resigned as a director on November 16,
2006 and resigned as the Chief Financial Officer, Secretary and Treasurer on
June 28, 2007. George O'Leary retired from the positions of Chief Executive
Officer, President and a director on November 16, 2006.

     We 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, 2007, other than contributions to our Provident Fund Plan which aggregated
$31,836 for officers and directors during the fiscal year ended March 31, 2007.

                                       47
<PAGE>


Employment Agreements

     We have employment agreements with Anthony So and Kim Wah Chung. The
employment agreements expire on March 31, 2008; however, they are automatically
renewable on an annual basis for additional one-year increments. Mr. So's
employment agreement provides for a yearly salary of approximately $742,000 per
year plus bonus. Mr. Chung's employment agreement provides for a yearly salary
of approximately $151,000 per year plus bonus. The employment agreements contain
provisions under which we will be obligated to pay Mr. So and Mr. Chung all
compensation for the remainder of their employment agreements and five times
their annual salary and bonus compensation if a change of control as defined in
the agreements occur.

Options of Directors and Senior Management

     The following table provides information concerning options owned by the
directors and senior management at March 31, 2007.


                Number of Common Shares
                         Subject to      Exercise Price
   Name               Stock Options         Per Share        Expiration Date
-------------------------------------------------------------------------------

Anthony So               158,000              $8.00         January  6, 2010
                         128,000              $3.65            April 9, 2011
                         128,000              $2.50            March 6, 2012
                         222,500              $1.61           March 31, 2013

Kim Wah Chung             20,000              $8.00         January  6, 2010
                          20,000              $3.65            April 9, 2011
                          20,000              $2.50            March 6, 2012
                          55,000              $1.61           March 31, 2013

Cathy Kit Teng Pang       20,000              $8.00         January  6, 2010
(1)
                          20,000              $3.65            April 9, 2011
                          20,000              $2.50            March 6, 2012
                          55,000              $1.61           March 31, 2013



Woo-Ping Fok              10,000              $8.125        January 12, 2010
                          10,000              $7.875         January 9, 2011
                          10,000              $6.12           March 25, 2014
                          10,000              $6.20       September 12, 2014
                          10,000              $4.50         December 4, 2015

J. Stewart Jackson IV     10,000              $7.875         January 9, 2011
                          10,000              $2.55         October 15, 2011
                          10,000              $1.61           March 31, 2013
                          10,000              $6.12           March 25, 2014
                          10,000              $6.20       September 12, 2014
                          10,000              $4.50         December 4, 2015

Henry F. Schlueter        10,000              $8.00          January 6, 2010
                          10,000              $6.12           March 25, 2014
                          10,000              $6.20       September 12, 2014
                          10,000              $4.50         December 4, 2015

                                       48
<PAGE>


(1) Cathy Kit Teng Pang resigned as a director on November 16, 2006 and resigned
as the Chief Financial Officer, Secretary and Treasurer on June 28, 2007.

Directors

     Except for that mentioned above, our directors do not receive any
additional monetary compensation for serving in their capacities. All directors
are reimbursed for all reasonable expenses incurred in connection with services
as a director.

Provident Fund Plan

     With effect from January 1, 1988, Bonso Electronics Limited ("BEL"), our
wholly-owned foreign subsidiary, 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 who joined BEL
before December 2000, excluding factory workers, are eligible to join the Plan.

     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%

     The Mandatory Provident Fund (the "MPF") was introduced by the Hong Kong
Government commencing in December 2000. BEL joined the MPF with a major
international assurance company. All permanent full time employees who joined
BEL in or after December 2000, excluding factory workers, are eligible to join
the MPF. Members' and employers' contributions to the MPF are both at 5% of the
members' monthly salaries and are subject to a maximum contribution of HK $1,000
monthly.

     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 the 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.

     BEL's total contributions to the Plan and the MPF for the years ended March
31, 2005, 2006 and 2007 amounted to $83,277, $95,339 and $86,530, respectively.

                                       49
<PAGE>


Board Practices

     All directors hold office until our next annual meeting of shareholders or
until their respective successors are duly elected and qualified or their
positions are earlier vacated by resignation or otherwise. All executive
officers are appointed by the Board and serve at the pleasure of the Board.
There are no director service contracts providing for benefits upon termination
of employment or directorship.

NASDAQ Exemptions and Home Country Practices

     NASDAQ Marketplace Rule 4350 provides that foreign private issuers may
elect to follow certain home country corporate governance practices so long as
they provide NASDAQ with a letter from outside counsel in its home country
certifying that the issuer 's corporate governance practices are not prohibited
by home country law.

     On July 19, 2005, we submitted a letter to the NASDAQ certifying that
certain of Bonso's corporate governance practices are not prohibited by the
relevant laws of the British Virgin Islands. We will follow British Virgin
Island law in respect to the following requirements:

     o  A majority of Bonso's board of directors will not be independent;
     o  Bonso will not have a nominating committee;
     o  Bonso will not have a compensation committee;
     o  Bonso's independent directors will not meet in executive session; and
     o  Bonso's audit committee will have only one member.

Audit Committee

     Mr. Woo Ping Fok is the sole member of the Audit Committee. Mr. Fok is
"independent" as defined in the NASDAQ listing standards.

     The Audit Committee was established to (i) review and approve the scope of
audit procedures employed by our independent auditors; (ii) review and approve
the audit reports rendered by our independent auditors; (iii) approve the audit
fee charged by the independent auditors; (iv) report to the Board of Directors
with respect to such matters; (v) recommend the selection of independent
auditors; and (vi) discharge such other responsibilities as may be delegated to
it from time to time by the Board of Directors and to discharge such other
responsibilities as may be delegated to it from time to time by the Board of
Directors. Effective as of August 17, 2000, the Board of Directors adopted a
formal charter for its Audit Committee, which was amended effective June 30,
2005.

Employees

     At March 31, 2007, we employed a total of 3,366 persons, compared with
3,460 persons at March 31, 2006 and 3,050 persons at March 31, 2005; 45
employees in Hong Kong (45 in 2006 and 42 in 2005), 3,289 employees in China
(3,380 in 2006 and 2,973 in 2005), 18 employees in Germany, (20 in 2006 and 22
in 2005), 2 employees in Poland (2 in 2006 and 2005), 4 employees in the United
States (4 in 2006 and 2 in 2005) and 8 in Canada (9 in 2006 and 2005). Employees
are not covered by collective bargaining agreements. We consider our global
labor practices and employee relations to be good.

                                       50
<PAGE>


Share Ownership

     The following table shows the number of shares of common stock beneficially
owned by our directors and executive officers as of August 21, 2007:
<TABLE>
<CAPTION>
                                                                                   Total
                                                                                 Number of
                                          Shares of                               Shares of
                                         Common Stock                            Common Stock     Percent of
                                           Owned of                              Beneficially     Beneficial
    Name                                    Record               Options Held       Owned         Ownership
    ----                                    ------               ------------       -----         ---------

<S>                                      <C>                       <C>            <C>              <C>
Anthony So                               1,626,195(1)              636,500(2)     2,262,695        36.41%

Kim Wah Chung                                  93,700              115,000(3)       208,700         3.67%

Cathy Kit Teng Pang (10)                       35,438              115,000(3)       150,438         2.64%

Henry F. Schlueter                             34,000            40,000(4)(9)        74,000         1.32%

Woo-Ping Fok                                   64,407         50,000(6)(8)(9)       114,407         2.03%

J. Stewart Jackson IV                      462,575(7)          60,000(5)(8)(9)      522,575         9.27%

All Directors and Officers  as a            2,316,315               1,016,500     3,332,815        55.34%
group (6 persons)
</TABLE>


(1)  Includes 1,143,421 shares of common stock owned of record by a corporation
     that is wholly owned by a trust of which Mr. So is the sole beneficiary.
(2)  Includes options to purchase 158,000 shares of common stock at an exercise
     price of $8.00 per share expiring January 6, 2010, options to purchase
     128,000 shares of common stock at an exercise price of $3.65 per share
     expiring on April 9, 2011, options to purchase 128,000 shares of common
     stock at an exercise price of $2.50 per share expiring on March 6, 2012,
     and options to purchase 222,500 shares of common stock at an exercise price
     of $1.61 per share expiring on March 31, 2013.
(3)  Includes options to purchase 20,000 shares of common stock at an exercise
     price of $8.00 per share expiring January 6, 2010, options to purchase
     20,000 shares of common stock at an exercise price of $3.65 per share
     expiring on April 9, 2011, options to purchase 20,000 shares of common
     stock at an exercise price of $2.50 per share expiring on March 6, 2012,
     and options to purchase 55,000 shares of common stock at an exercise price
     of $1.61 per share expiring on March 31, 2013.
(4)  Includes options to purchase 10,000 shares of common stock at an exercise
     price of $8.00 per share expiring January 6, 2010.
(5)  Includes options to purchase 10,000 shares of common stock at an exercise
     price of $2.55 expiring on October 15, 2011 and 10,000 shares of common
     stock at an exercise price of $1.61 per share expiring on March 31, 2013.
(6)  Includes options to purchase 10,000 shares of common stock at an exercise
     price of $8.125 per share expiring January 12, 2010.
(7)  Includes 461,975 shares held by Mr. Jackson and 600 shares held by Mr.
     Jackson's wife.
(8)  Includes options to purchase 10,000 shares of common stock at an exercise
     price of $7.875 per share expiring on January 9, 2011.
(9)  Includes options to purchase 10,000 shares of common stock at an exercise
     price of $6.12 expiring on March 25, 2014, Includes options to purchase
     10,000 shares of common stock at an exercise price of $6.20 per share
     expiring on September 12, 2014 and options to purchase 10,000 shares of
     common stock at an exercise price of $4.50 per share expiring on December
     4, 2015.
(10) Cathy Kit Teng Pang resigned as a director on November 16, 2006 and
     resigned as the Chief Financial Officer, Secretary and Treasurer on June
     28, 2007.

                                       51
<PAGE>


Stock Option and Bonus Plans

The 1996 Stock Option Plan

     In October 1996, our stockholders adopted the 1996 Stock Option Plan (the
"Employees' Plan") which provides for the grant of options to purchase an
aggregate of not more than 400,000 shares of our common stock. In January 2000,
our shareholders approved the proposal of the Board of Directors to increase
from 400,000 to 900,000 in the aggregate the number of options to purchase
common stock under the Employees' Plan. The purpose of the Employees' Plan is to
make options available to management and employees in order to encourage them to
secure or increase on reasonable terms their stock ownership and to encourage
them to remain with the Company.

     The Employees' Plan is administered by a committee appointed by the Board
of Directors which determines the persons to be granted options under the
Employees' 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 ten 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 Employee Plan are 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 such
optionee.

     The exercise price of an option granted pursuant to the Employees' 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, at our discretion.

The 1996 Non-Employee Directors' Stock Option Plan

     In October 1996, our stockholders adopted the 1996 Non-Employee Directors'
Stock Option Plan (the "Non-Employee Directors' Plan") which provides for the
grant of options to purchase an aggregate of not more than 100,000 shares of
common stock. In January 2000, our shareholders approved the proposal of the
Board of Directors to increase from 100,000 to 600,000 in the aggregate the
number of options to purchase common stock under the Non-Employee Directors'
Plan.

     On November 16, 2006, the Board of Directors of the Company voted to
rescind the Company's 1996 Non-Employee Directors' Stock Option Plan (the
"Non-Employee Directors' Plan"). All options previously granted under the
Non-Employee Directors' Plan continue in full force and effect pursuant to their
terms of grant.

     During the fiscal year ended March 31, 2007, no options were granted under
the 1996 Non-Employee Directors' Plan.

                                       52
<PAGE>


The 2004 Stock Option Plan

     On March 23, 2004, our stockholders adopted the 2004 Stock Option Plan (the
"2004 Plan") which provides for the grant of up to six hundred thousand
(600,000) shares of the Company's common stock in the form of stock options,
subject to certain adjustments as described in the 2004 Plan.

     The purpose of the 2004 Plan is to secure key employees to remain in the
employ of the Company and to encourage such employees to secure or increase on
reasonable terms their common stock ownership in the Corporation. The Company
believes that the 2004 Plan promotes continuity of management and increased
incentive and personal interest in the welfare of the Company.

     The 2004 Plan is administered by a committee appointed by the Board of
Directors which consists of at least two but not more than three members of the
Board, one of who shall be a non-employee of the Company. The committee members
currently are Anthony So and Woo Ping Fok. The committee determines the specific
terms of the options granted, including the employees to be granted options
under the plan, the number of shares subject to each option grant, 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 2004 Plan may be
paid in cash, by the surrender of options, in common stock, in other property,
including a promissory note from the optionee, or by a combination of the above,
at the discretion of the Committee.

     As of March 31, 2007, no shares option had been granted under the Stock
Bonus Plan.

2004 Stock Bonus Plan

     On September 7, 2004, our stockholders adopted the 2004 Stock Bonus Plan
(the "Stock Bonus Plan") which authorizes the issuance of up to five hundred
thousand (500,000) shares of the Corporation's Common Stock in the form of stock
a stock bonus.

     The purpose of this Stock Bonus Plan is to: (i) induce key employees to
remain in the employ of the Corporation, or of any subsidiary of the
Corporation; (ii) encourage such employees to secure or increase their stock
ownership in the Corporation; and (iii) reward employees, non-employee
directors, advisors and consultants for services rendered or to be rendered to
or for the benefit of the Corporation, or any of its subsidiaries. The
Corporation believes that Stock Bonus Plan will promote continuity of management
and increased incentive and personal interest in the welfare of the Corporation.

     The Stock Bonus Plan shall be administered by a committee appointed by the
Board of Directors which consists of at least two but not more than three
members of the Board, one of who shall be a non-employee of the Corporation. The
Committee members currently are Anthony So and Woo Ping Fok. The Committee has
the authority, in its sole discretion: (i) to determine the parties to receive

                                       53
<PAGE>


bonus stock, the times when they shall receive such awards, the number of shares
to be issued, and the time, terms and conditions of the issuance of any such
shares; (ii) to construe and interpret the terms of the Stock Bonus Plan; (iii)
to establish, amend and rescind rules and regulations for the administration of
the Stock Bonus Plan; and (iv) to make all other determinations necessary or
advisable for administering the Stock Bonus Plan.

     As of March 31, 2007, no shares had been granted under the Stock Bonus
Plan.

Item 7.  Major Shareholders and Related Party Transactions

Major shareholders

     We are not directly or indirectly owned or controlled by any foreign
government or by another corporation. The following table sets forth, as of
August 21, 2007, beneficial ownership of our common stock by each person known
by us to own beneficially 5% or more of our common stock outstanding as of such
date. Except as otherwise indicated, all shares are owned directly and hold
equal voting rights.

<TABLE>
<CAPTION>

     Name                                                   Amount Owned
     ----                                                   ------------
                                                                                                   Percent of
                                            Shares of                 Options to                    Class (1)
                                          Common Stock           Purchase Common Stock          Beneficially Owned
                                          ------------           ---------------------          ------------------

<S>                                       <C>                         <C>                          <C>
     Anthony So                           1,626,195(2)                636,500(3)                   36.41%
     John Stewart Jackson IV                462,575                    60,000(3)                    9.27%

     W. Douglas Moreland                    501,400                         0                       8.99%
     Royce & Associates LLC                 297,000                         0                       5.32%
</TABLE>


(1)  Based on beneficial ownership of both shares of common stock and of options
     to purchase common stock that is immediately exercisable.

(2)  Includes 1,143,421 shares of common stock owned of record by a corporation
     that is wholly owned by a trust of which Mr. So is the sole beneficiary.

(3)  See "Share Ownership" for additional information.

     There are no arrangements known to us, which may at a subsequent date,
result in a change in control of the Company.


Related Party Transactions

     During the fiscal year ended March 31, 2007 we paid Schlueter & Associates,
P.C. an aggregate of $14,571 for legal fees and expenses. Mr. Henry F.
Schlueter, a director, is the Managing Director of Schlueter & Associates, P.C.

     As of March 31, 2007, Bonso Electronics Limited ("BEL"), a wholly-owned
foreign subsidiary of the Company, had paid a deposit of $795,000 with regard to
a potential investment in a hotel in the PRC. Subsequent to this fiscal year
end, Mr. Anthony So, Chairman of Bonso decided to take up BEL's potential
investment and paid BEL the full amount in July 2007. This hotel is now held by
Mr. Anthony So and three third parties.

                                       54
<PAGE>


Interests of Experts and Counsel

     Not Applicable.

Legal Proceedings

     Not Applicable.

 Item 8.  Financial Information

Financial Statements

     Our Consolidated Financial Statements are set forth under Item 18.
Financial Statements.

 Item 9.  The Offer and Listing

Listing Details

     Our common stock is traded only in the United States over-the-counter
market. It is quoted on the Nasdaq Global Market ("NASDAQ") under the trading
symbol "BNSO." The following table sets forth, for the periods indicated, the
range of high and low closing sales prices per share reported by NASDAQ. The
quotations represent prices between dealers and do not include retail markup
markdown or commissions and may not necessarily represent actual transactions.

         The following table sets forth the high and low sale prices for each of
the last five years:

                   Period                           High              Low
                   ------                           ----              ---
     April 1, 2002 to March 31, 2003                $3.45            $1.41
     April 1, 2003 to March 31, 2004                $9.71            $1.70
     April 1, 2004 to March 31, 2005                $9.09            $3.90
     April 1, 2005 to March 31, 2006                $7.00            $3.40
     April 1, 2006 to March 31, 2007                $5.47            $3.01

                                       55

<PAGE>


     The following table sets forth the high and low sale prices during each of
the quarters in the two-year period ended June 30, 2007.

                   Period                           High              Low
                   ------                           ----              ---
     April 1, 2005 to June 30, 2005                 $5.48            $3.40
     July 1, 2005 to September 30, 2005             $7.00            $4.80
     October 1, 2005 to December 31, 2005           $5.35            $3.75
     January 1, 2006 to March 31, 2006              $5.93            $4.04
     April 1, 2006 to June 30, 2006                 $5.28            $4.02
     July 1, 2006 to September 30, 2006             $4.25            $3.11
     October 1, 2006 to December 31, 2006           $5.23            $3.01
     January 1, 2007 to March 31, 2007              $5.47            $3.77
     April 1, 2007 to June 30, 2007                 $4.26            $3.42

     The following table sets forth the high and low sale prices during each of
the most recent six months.

          Period                                    High              Low
          ------                                    ----              ---

     March 2007                                     $4.90            $3.77
     April 2007                                     $4.26            $3.75
     May 2007                                       $4.15            $3.70
     June 2007                                      $3.89            $3.42
     July 2007                                      $4.00            $3.21
     August 2007                                    $3.44            $2.40

     On September 12, 2007, the closing price of our common stock was $2.13. Of
the 5,577,639 shares of common stock outstanding as of August 21, 2007,
3,713,550 were held in the United States by 208 holders of record. We have 214
shareholders of record and estimate that we have 1,239 shareholders holding
their stock in street name (who have not objected to their names being disclosed
to us).

Transfer and Warrant Agent

     The transfer agent and registrar for the common stock and the warrant agent
for the warrants is Computershare, 1745 Gardena Avenue #200, Glendale,
California 91204.

Item 10.  Additional Information

                                       56

<PAGE>


Share Capital

     Our authorized capital is $170,000 consisting of 23,333,334 shares of
common stock, $0.003 par value per share, and 10,000,000 authorized shares of
preferred stock, $0.01 par value, divided into 2,500,000 shares each of class A
preferred stock, class B preferred stock, class C preferred stock and class D
preferred stock. Information with respect to the number of shares of common
stock outstanding at the beginning and at the end of the last three fiscal years
is presented in the Consolidated Statements of Changes in Shareholders' Equity
for the fiscal years ended March 31, 2005, 2006 and 2007 included herein in Item
18.

     At August 31, 2007, there were 5,577,639 shares of our common stock
outstanding, all of which were fully paid. In addition, we had outstanding
1,104,500 options to purchase common stock as follows:

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

            228,000                  $8.00                   January 6, 2010
             20,000                  $8.125                 January 12, 2010
             30,000                  $7.875                  January 9, 2011
            196,000                  $3.65                     April 9, 2011
             10,000                  $2.55                  October 15, 2011
            168,000                  $2.50                     March 6, 2012
            342,500                  $1.61                    March 31, 2013
             40,000                  $6.12                    March 25, 2014
             40,000                  $6.20                September 12, 2014
             30,000                  $4.50                  December 4, 2015

     At August 31, 2007 there were no shares of our preferred stock outstanding.

Memorandum and Articles of Association

     We are registered in the British Virgin Islands and have been assigned
company number 9032 in the register of companies. Our registered agent is HWR
Services Limited and is at Craigmuir Chambers, P.O. Box 71, Road Town, Tortola,
British Virgin Islands. The object or purpose of the Company is to engage in any
act or activity that is not prohibited under British Virgin Islands law as set
forth in Paragraph 4 of our Memorandum of Association. As an International
Business Company, we are prohibited from doing business with persons resident in
the British Virgin Islands, owning real estate in the British Virgin Islands or
acting as a bank or insurance company. We do not believe that these restrictions
materially affect our operations.

     Paragraph 57(c) of our Amended Articles of Association (the "Articles")
provides that a director may be counted as one of a quorum in respect of any
contract or arrangement in which the director is materially interested; however,
if the agreement or transaction cannot be approved by a resolution of directors
without counting the vote or consent of any interested director, the agreement
or transaction may only be validated by approval or ratification by a resolution
of the members. Paragraph 53 of the Articles allows the directors to vote
compensation to themselves in respect of services rendered to the Company.


                                       57
<PAGE>


Paragraph 66 of the Articles provides that the directors may by resolution
exercise all the powers of the Company to borrow money and to mortgage or charge
its undertakings and property or any part thereof, to issue debentures,
debenture stock and other securities whenever money is borrowed or as security
for any debt, liability or obligation of ours or of any third party. Such
borrowing powers can be altered by an amendment to the Articles. There is no
provision in the Articles for the mandatory retirement of directors. Directors
are not required to own shares of the Company in order to serve as directors.

     Our authorized share capital is $170,000 divided into 23,333,334 shares of
common stock, $0.003 par value, and 10,000,000 authorized shares of preferred
stock, $0.01 par value. Holders of our 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 our common stock do not have cumulative voting
rights in the election of directors. All of our common shares are equal to each
other with respect to liquidation and dividend rights. Holders of our common
shares are entitled to receive dividends if and when declared by our board of
directors out of funds legally available under British Virgin Islands law. In
the event of our liquidation, all assets available for distribution to the
holders of our common shares are distributable among them according to their
respective holdings. Holders of our common stock have no preemptive rights to
purchase any additional un-issued common shares. No shares of our preferred
stock have been issued, however the board of directors has the ability to
determine the rights, preferences and restrictions to the preferred stock at
their discretion.

     Paragraph 7 of the Memorandum of Association provides that without
prejudice to any special rights previously conferred on the holders of any
existing shares, any share may be issued with such preferred, deferred or other
special rights or such restrictions, whether in regard to dividend, voting,
return of capital or otherwise as the directors may from time to time determine.

     Paragraph 10 of the Memorandum of Association provides that if at any time
the authorized share capital is divided into different classes or series of
shares, the rights attached to any class or series may be varied with the
consent in writing of the holders of not less than three-fourths of the issued
shares of any other class or series of shares which may be affected by such
variation.

     Paragraph 105 of the Articles of Association provides that our Memorandum
and Articles of Association may be amended by a resolution of members or a
resolution of directors. Thus, our board of directors without shareholder
approval may amend our Memorandum and Articles of Association. This includes
amendments to increase or reduce our authorized capital stock. Our ability to
amend our Memorandum and Articles of Association without shareholder approval
could have the effect of delaying, deterring or preventing a change in control
of the Company, including a tender offer to purchase our common shares at a
premium over the then current market price.

     Provisions in respect of the holding of general meetings and extraordinary
general meetings are set out in Paragraphs 68 through 77 of the Articles and
under the International Business Companies Act. The directors may convene
meetings of the members at such times and in such manner and places as the
directors consider necessary or desirable, and they shall convene such a meeting
upon the written request of members holding more than 30% of the votes of our
outstanding voting shares.

                                       58
<PAGE>


     British Virgin Islands law and our Memorandum and Articles of Association
impose no limitations on the right of nonresident or foreign owners to hold or
vote our securities. There are no provisions in the Memorandum and Articles of
Association governing the ownership threshold above which shareholder ownership
must be disclosed.

     A copy of our Memorandum and Articles of Association, as amended, has been
filed as an exhibit to the Registration Statement on Form F-2 (SEC File No.
333-32524).

Material Contracts

     The following summarizes each material contract, other than contracts
entered into in the ordinary course of business, to which Bonso or any
subsidiary of Bonso is a party, for the two years immediately preceding the
filing of this report:

     We signed a Banking Facility Letter, dated June 6, 2007 between Bonso and
Standard Chartered Bank for a HK $78,000,000 letter of credit, trust receipt
facility, export D/P bills, export trade loan, factoring and overdraft facility.

     We signed a Banking Facility Letter dated March 23, 2007 between Bonso and
KBC Bank Hong Kong Branch for a HK $10,500,000 letter of credit, trust receipt
facility, export D/P bills, export trade loan, factoring and overdraft facility
and a EURO 3,300,000 bank guarantee to KBC Bank Deutschland AG, Germany to
secure a trade facility to one of the subsidiaries, Korona Haushaltswaren GmbH &
Co.

     We signed a Banking Facility Letter, dated March 2, 2007 between Bonso and
Hang Seng Bank Limited for a HK $66,720,000 letter of credit, trust receipt
facility, export D/P bills, export trade loan, factoring and overdraft facility.

     We signed a Banking Facility Letter, dated June 12, 2006 between Bonso and
the Hong Kong and Shanghai Banking Corporation Limited for a HK $37,500,000
letter of credit, trust receipt facility, export D/P bills, export trade loan,
factoring and overdraft facility.


Exchange Controls

     There are no exchange control restrictions on payments of dividends on our
common stock or on the conduct of our operations either in Hong Kong, where our
principal executive offices are located, or the British Virgin Islands, where we
are incorporated. Other jurisdictions in which we conduct operations may have
various exchange controls. Taxation and repatriation of profits regarding our
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 our
financial results. There are no material British Virgin Islands laws that impose

                                       59

<PAGE>


foreign exchange controls on us or that affect the payment of dividends,
interest or other payments to holders of our securities who are not residents of
the British Virgin Islands. British Virgin Islands law and our Memorandum and
Articles of Association impose no limitations on the right of nonresident or
foreign owners to hold or vote our securities.

Taxation

     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 us to individuals are not subject to
tax as long as the recipient is not a resident of the British Virgin Islands. If
we were to pay a dividend, we 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 are treated as dividend income for United States federal income tax
purposes. Such dividends are not 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
(the "Internal Revenue Code"). Various Internal Revenue Code provisions impose
special taxes in certain circumstances on non-United States corporations and
their shareholders. You are urged to consult your tax advisor with regard to
such possibilities and your own tax situation.

     A foreign corporation will be treated as a passive foreign investment
company ("PFIC") for United States federal income tax purposes if, after
applying relevant look-through rules with respect to the income and assets of
subsidiaries, 75% or more of its gross income consists of certain types of
passive income or 50% or more of the gross value of its assets is attributable
to assets that produce passive income or are held for the production of passive
income. For this purpose, passive income generally includes dividends, interest,
royalties, rents (other that rents and royalties derived in the active conduct
of a trade or business), annuities and gains from assets that produce passive
income. We presently believe that we are not a PFIC and do not anticipate
becoming a PFIC. This is, however, a factual determination made on an annual
basis and is subject to change. If we were to be classified as a PFIC in any
taxable year, (i) U.S. Holders would generally be required to treat any gain on
sales of our shares held by them as ordinary income and to pay an interest
charge on the value of the deferral of their United States federal income tax
attributable to such gain and (ii) distributions paid by us to our U.S. Holders
could also be subject to an interest charge. In addition, we would not provide
information to our U.S. Holders that would enable them to make a "qualified
electing fund" election under which, generally, in lieu of the foregoing
treatment, our earnings would be currently included in their United States
federal income.

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

Documents on Display

     You may read and copy documents referred to in this Annual Report on Form
20-F that have been filed with the Securities and Exchange Commission (the
"Commission") at the Commission's Public Reference Room, 450 Fifth Street, N.W.,
Washington, D.C. You may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. You can also obtain
copies of our Commission filings by going to the Commission's website at
http://www.sec.gov.

                                       60
<PAGE>


     The SEC allows us to "incorporate by reference" the information we file
with the SEC. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this Annual Report on Form
20-F.

Item 11.  Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to a certain level of interest rate risk and foreign
currency exchange risk.

Interest Rate Risk

     Our interest rate risk primarily arises from our long-term debt and our
general banking facilities. As at March 31, 2007, there was no long-term debt.
We had utilized $7,772,602 of our total banking facilities of $ 30,017,128 .
Based on the maturity profile and composition of our long-term debt and general
banking facilities, including the fact that our banking facilities are at
variable interest rates, we estimate that changes in interest rates will not
have a material impact on our operating results or cash flows. We intend to
manage our interest rate risk through appropriate borrowing strategies. We have
not entered into interest rate swap or risk management agreements; however, it
is possible that we may do so in the future.

     A summary of our debts as at March 31, 2007 which were subjected to
variable interest rates is as below:

                                   March 31,                Interest
                                     2007                    rate
                                     ----

      Notes payable                $3,736,526            HIBOR + 1.5%

      Short-term loans             $3,576,366            EONIA +1.15% to 1.95%


      HIBOR: Hong Kong Inter-bank Offered Rate

      EONIA : Euro Over Night Index Average.

     All the balances above are due within one year.

     For further information concerning our banking facilities the interest
rates payable, and repayment terms please see Note 7 to our Consolidated
Financial Statements.

                                       61
<PAGE>


Foreign Currency Exchange Rates

     For a discussion of our Foreign Currency Exchange Risk, See Item 5.
Operating and Financial Review and Prospects "Foreign Currency Exchange Rates."


Item 12.  Description of Securities Other Than Equity Securities

     Not applicable.

                                     PART II

Item 13.  Defaults, Dividend Arrearages and Delinquencies.

     None.

Item 14.  Material Modifications to the Rights of Security Holders and
          Use of Proceeds.

     None.

Item 15.  Controls and Procedures

     Based on an evaluation carried out under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, as of the end of the period covered by this report, our Chief
Executive Officer and Chief Financial Officer believe that our disclosure
controls and procedures, as defined in Securities Exchange Act Rules 13a-15(d)
and 15d-15(e), were, as of the end of the period covered by this report, to the
best of their knowledge, effective. There has been no change in our internal
control over financial reporting during the year ended March 31, 2007 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.

     Our officers also concluded that disclosure controls and procedures are
also effective to ensure that information required to be disclosed in the
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the Securities and Exchange Commission and is accumulated and communicated to
management to allow timely decisions regarding required disclosure.

     During the period covered by this annual report and during the last fiscal
quarter, no change has occurred in our internal controls over financial
reporting that has materially affected, or is reasonably likely to materially
affect, our internal controls over financial reporting.

     We are aware of the importance of maintaining controls and procedures and
are continuing to work towards improving our controls and procedures. Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, ("Section 404"). On December
15, 2006, the SEC advised that it was extending further the dates that were
published on September 29, 2005, to postpone the compliance date for filing
internal control reports by companies not designated as accelerated filers.
Under this revised compliance schedule, the Company will be required to include
an internal control report of management with the annual report on Form 20-F
beginning with the fiscal year ending March 31, 2008. Further, the Company will
not be required to file the auditor's attestation report on internal control
over financial reporting until it files its annual report for the fiscal year
ending March 31, 2009.

                                       62
<PAGE>


     In connection with this required Section 404 evaluation, we are planning to
perform the system and process evaluation and testing required (and any
necessary remediation) in an effort to comply with such requirements by the
effective date for compliance. Our efforts to implement standardized internal
control procedures and develop the internal tests necessary to verify the proper
application of the internal control procedures and their effectiveness will be a
key area of focus for our board of directors, our audit committee and our senior
management. This evaluation is expected to underlie the internal control report
of management and auditor attestation requirements of Section 404.

Item 16.  Reserved

Item 16A. Audit Committee Financial Expert

     Bonso does not have an independent member of the audit committee that is
deemed to be a financial expert.

Item 16B. Code of Ethics

     We have adopted a code of ethics that applies to our Chief Executive
Officer and Chief Financial Officer. We intend to disclose any changes in or
waivers from our code of ethics by filing a Form 6-K. Stockholders may request a
free copy in print form from our Chief Financial Officer at:

Bonso Electronics International, Inc.
Unit 1106 - 1110
11/F, Star House
3 Salisbury Road
Tsimshatsui
Kowloon, Hong Kong

Item 16C.  Principal Accountant Fees and Services.

Audit Committee's pre-approval policies and procedure

     The Audit Committee must pre-approve the audit and non-audit services
performed by the independent auditor in order to assure that the provision of
such services does not impair the auditor's independence. Before the Company or
any of its subsidiaries engages the independent auditor to render a service, the
engagement must be either:

         (1) specifically approved by the Audit Committee; or

         (2) entered into pursuant to this Pre-Approval Policy.

                                       63
<PAGE>


     The term of any pre-approval is 12 months from the date of pre-approval,
unless the Audit Committee specifically provides for a different period. The
Audit Committee may periodically revise the list of pre-approved services.

     The Audit Committee may delegate pre-approval authority to one or more of
its members. The member or members to whom such authority is delegated shall
report any pre-approval decisions to the Audit Committee at its next scheduled
meeting. The Audit Committee may not delegate to management the Audit
Committee's responsibilities to pre-approve services performed by the
independent auditor.

     The Audit Committee must specifically pre-approve the terms of the annual
audit services engagement. The Audit Committee shall approve, if necessary, any
changes in terms resulting from changes in audit scope, Company structure or
other matters. In addition to the annual audit services engagement approved by
the Audit Committee, the Audit Committee may grant pre-approval for other audit
services, which are those services that only the independent auditor reasonably
can provide.

     The Audit Committee may grant pre-approval to those permissible non-audit
services classified as other services that it believes would not impair the
independence of the auditor, including those that are routine and recurring
services.

     The Audit Committee may consider the amount or range of estimated fees as a
factor in determining whether a proposed service would impair the auditor's
independence. Where the Audit Committee has approved an estimated fee for a
service, the pre-approval applies to all services described in the approval.
However, in the event the invoice in respect of any such service is materially
in excess of the estimated amount or range, the Audit Committee must approve
such excess amount prior to payment of the invoice. The Audit Committee expects
that any requests to pay invoices in excess of the estimated amounts will
include an explanation as to the reason for the overage. The Company's
independent auditor will be informed of this policy.

     The Company's management shall inform the Audit Committee of each service
performed by the independent auditor pursuant to this Pre-Approval Policy.
Requests or applications to provide services that require separate approval by
the Audit Committee shall be submitted to the Audit Committee by both the
independent auditor and the Chief Financial Officer, and must include a joint
statement as to whether, in their view, the request or application is consistent
with the SEC's and the Public Company Accounting Oversight Board's rules on
auditor independence.

     The audit fee indicated below was pre-approved by the Audit Committee
before the auditor commenced their work.

Audit Fees

     The aggregate fees billed by PricewaterhouseCoopers for professional
services rendered for the audit of the Corporation's annual consolidated
financial statements for the fiscal year ended March 31, 2007 were $261,282 and
for the fiscal year ended March 31, 2006 were $236,538.

                                       64
<PAGE>


Audit Related Fees

     There were no fees billed by PricewaterhouseCoopers for professional
services rendered for assurance and related services provided by
PricewaterhouseCoopers that were reasonably related to the performance of the
audit and are not reported above under "Audit Fees" for the fiscal year ended
March 31, 2007 and for the fiscal year ended March 31, 2006.

Tax Fees

     The aggregate fees billed by PricewaterhouseCoopers for professional
services rendered for tax compliance for the fiscal year ended March 31, 2007
were $115,000 and for the fiscal year ended March 31, 2006 were $6,000.

Item 16D.  Exemptions from the Listing Standards for Audit Committees

     Pursuant to NASDAQ Marketplace Rule 4350(a), a foreign private issuer may
follow its home country practice in lieu of Rule 4350, which sets forth the
qualitative Listing Requirements for NASDAQ listed companies. Rule 4350
requires, among other things, that a listed company have at least three members
on its audit committee. The Company currently has an audit committee consisting
of one director who is deemed to be "independent" as defined in NASDAQ
Marketplace Rule 4200. The Company has obtained a written statement from
independent counsel in the British Virgin Islands certifying that the Company's
corporate governance practices relating to the single member audit committee is
not prohibited by British Virgin Island law. See "NASDAQ Exemptions and Home
Country Practices."

Item 16E. Purchasers of Equity Securities by the Issuer and Affiliated
          Purchasers.

     In August of 2001, the Company's Board of Directors authorized a program
for the Company to repurchase up to $500,000 of its common stock. This
repurchase program does not obligate the Company to acquire any specific number
of shares or acquire shares over any specified period of time. No stocks had
been repurchased since then up to March 31, 2006. On November 16, 2006, the
Company's Board of Directors authorized another $1,000,000 for the Company to
repurchase of its common stock under the same repurchase program. This
authorization to repurchase shares increases the amount authorized for
repurchase from $500,000 to $1,500,000. During the fiscal year ended March 31,
2007, 260,717 shares valued at $1,328,560 were purchased under this program. The
Company may from time to time repurchase shares of its Common Stock under this
program. The following table sets forth information concerning the Company's
purchase of equity securities:

                                       65

<PAGE>
<TABLE>
<CAPTION>


    Period (Month)          Total number of      Average Price Paid      Total Number of      Approximate dollar
                           Shares purchased          Per Share         Shares Purchased as     value of Shares
                                                                       Part of Publically      that May Yet Be
                                                                       Announced Plans or    Purchased under the
                                                                            Programs          Plans or Programs
------------------------ ---------------------- --------------------- ---------------------- ---------------------

<S>                      <C>                    <C>                   <C>                    <C>
December 2006            4,949                  $4.38                 4,949                  $1,478,323
January 2007             166,562                $5.23                 171,511                $607,253
February  2007           64,891                 $4.91                 236,402                $288,872
March 2007               24,315                 $4.82                 260,717                $171,440


                                                PART III


Item 17.  Financial Statements.

     Not applicable.

Item 18.  Financial Statements.

     The following Financial Statements are filed as part of this Annual Report:


                                                                             Page
                                                                             ----
   Report of Independent Registered Public Accounting Firm                   F-1

   Index to Consolidated Financial Statements                                F-2

   Consolidated Balance Sheets as of March 31, 2006 and 2007                 F-4

   Consolidated Statements of Income (Loss) and Comprehensive                F-5
   Income (Loss) for the years ended March 31, 2005, 2006 and 2007

   Consolidated Statements of Changes in Shareholders' Equity for the        F-6
   years ended March 31, 2005, 2006 and 2007

   Consolidated Statements of Cash Flows for the years ended                 F-7
   March 31, 2005, 2006 and 2007

   Notes to Consolidated Financial Statements                        F-8 through F-35
</TABLE>

                                       66
<PAGE>



Item 19.  Exhibits.

     4.1  Banking Facility Letter dated March 23, 2007 between Bonso and KBC
          Bank Hong Kong Branch.

     4.2  Banking Facility Letter, dated June 6, 2007 between Bonso and Standard
          Chartered Bank


     4.3  Banking Facility Letter, dated June 12, 2006 between Bonso and the
          Hong Kong and Shanghai Banking Corporation Limited

     4.4  Banking Facility Letter, dated March 2, 2007 between Bonso and Hang
          Seng Bank Limited

     11.1 Code of Ethics For Chief Executive Officer and Chief Financial Officer
          (1)

     12.1 Certification of Officer Pursuant to Section 1350, as adopted pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002.

     12.2 Certification of Officer Pursuant to Section 1350, as adopted pursuant
          to Section 302 of the Sarbanes-Oxley Act of 2002.

     12.3 Certification Pursuant to 18 U.S.C. 1350 as adopted pursuant to
          Section 906 of the Sarbanes-Oxley Act of 2002.

-----------------

(1)       Filed as an Exhibit on Form 20-F filed with the Commission on
          August 13, 2004.

                                       67

<PAGE>


                                    SIGNATURE

     The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this Annual Report on its behalf.


                                            BONSO ELECTRONICS INTERNATIONAL INC.



Dated September 27, 2007                     /s/  Anthony So
                                             -----------------------------------
                                             Anthony So, Chairman of the Board,
                                             Chief Executive Officer,
                                             and Director

                                       68

<PAGE>





                        Consolidated Financial Statements

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

                                 March 31, 2007





<PAGE>




                      Bonso Electronics International Inc.
                   Index to Consolidated Financial Statements



Contents                                                              Pages



Report of Independent Registered Public Accounting Firm.................F-1



Consolidated Balance Sheets as of March 31, 2006 and 2007...............F-2



Consolidated Statements of Income (Loss) and
Comprehensive Income (Loss) for the years ended
March 31, 2005, 2006 and 2007...........................................F-3



Consolidated Statements of Changes in
Shareholders' Equity for the years ended
March 31, 2005, 2006 and 2007...........................................F-4



Consolidated Statements of Cash Flows for the years ended
March 31, 2005, 2006 and 2007...........................................F-5



Notes to Consolidated Financial Statements...........................F-6 to F-35



<PAGE>





             Report of Independent Registered Public Accounting Firm



Board of Directors and Shareholders of
Bonso Electronics International Inc.


In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income (loss) and comprehensive income (loss), of
cash flows and of shareholders' equity present fairly, in all material respects,
the financial position of Bonso Electronics International Inc. and its
subsidiaries at March 31, 2007 and 2006, and the results of their operations and
their cash flows for each of the three years in the period ended March 31, 2007
in conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). 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 of financial statements includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.






PricewaterhouseCoopers

Hong Kong,
September 27, 2007



                                      F-1
<PAGE>


<TABLE>
<CAPTION>

                                   Bonso Electronics International Inc.
                                        Consolidated Balance Sheets
                                  (Expressed in United States Dollars)
                                                                                                March 31
                                                                                    -----------------------------
                                                                     Note                 2006               2007
                                                                                             $                  $
<S>                                                                   <C>            <C>            <C>
Assets

Current assets
  Cash and cash equivalents                                                          8,582,257          8,118,018
  Trade receivables, net                                                2            6,740,229          6,739,567
  Inventories                                                           3           15,035,216         14,997,788
  Tax recoverable                                                                       78,735              2,117
  Other receivables, deposits and prepayments                                        2,165,479          2,678,328
  Investment                                                                                 -            700,000
                                                                                       -------            -------
  Total current assets                                                              32,601,916         33,235,818
                                                                                    ----------         ----------

Deposits                                                                                90,711                  -

Long term investment                                                                   500,000                  -

Deferred income tax assets                                              5               82,529             87,369

Goodwill                                                               10              842,821            842,821

Brand name and other intangible asset, net                             10            2,526,982          2,313,434

Property, plant and equipment

  Leasehold land and buildings                                                      13,787,334         13,672,257
  Plant and machinery                                                               16,286,028         17,294,870
  Furniture, fixtures and equipment                                                  4,341,105          4,805,189
  Motor vehicles                                                                       456,237            459,721
                                                                                    ----------         ----------
                                                                                    34,870,704         36,232,037
  Less: accumulated depreciation and impairment                                    (22,036,775)       (25,192,864)
                                                                                       -------            -------
  Property, plant and equipment, net                                                12,833,929         11,039,173
                                                                                    ----------         ----------
  Total assets                                                                      49,478,888         47,518,615
                                                                                    ==========         ==========

Liabilities and shareholders' equity

Current liabilities
  Bank overdraft                                                        7              471,254            459,710
  Notes payable                                                         7            3,310,673          3,736,526
  Accounts payable                                                                   6,288,213          5,354,326
  Accrued charges and deposits                                                       2,434,994          2,357,132
  Income tax liabilities                                                5                    -            814,374
  Short-term loans                                                      7            2,936,467          3,576,366
  Current portion of long-term debts                                    4               48,329                  -
  Current portion of capital lease obligations                          6              166,802             95,725
                                                                                    ----------         ----------
  Total current liabilities                                                         15,656,732         16,394,159
                                                                                    ----------         ----------


Capital lease obligations, net of current portion                       6                    -             59,258

Deferred income tax liabilities                                         5               19,863             13,901

Commitments and contingencies (Notes 6 and 12)

Shareholders' equity

Common stock par value $0.003 per share
  - authorized shares - 23,333,334
  - issued and outstanding shares :  2006 & 2007 - 5,577,639                            16,729             16,729
Additional paid-in capital                                                          21,764,788         21,764,788
Retained earnings                                                                   11,234,006          9,584,181
Accumulated other comprehensive income                                                 786,770          1,014,159
Common stock held at treasury (260,717 shares)                         14                    -         (1,328,560)
                                                                                    ----------         ----------
                                                                                    33,802,293         31,051,297
                                                                                    ==========         ==========

Total liabilities and shareholders' equity                                          49,478,888         47,518,615
                                                                                    ==========         ==========


                                    See notes to these consolidated financial statements


                                                            F-2
<PAGE>


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



                                                                              Year ended March 31,
                                                    Note              2005                 2006                2007
                                                               -----------------------------------------------------
                                                                         $                    $                   $

Net sales                                             16        69,602,192           64,542,963          66,491,380
Cost of sales                                                   53,138,410           51,114,155          53,946,323
                                                                ----------           ----------          ----------
Gross margin                                                    16,463,782           13,428,808          12,545,057

Selling expenses                                                 2,595,222            2,110,563           2,477,249
Salaries and related costs                                       5,215,798            5,681,175           5,437,654
Research and development expenses                                  710,355              847,401             983,172
Administration and general expenses                              4,079,201            3,420,485           3,004,358
Amortization of brand name                            10           200,000              200,000             200,000
Impairment of goodwill                                10                 -              258,141                   -
Loss from water damage                                11                 -                    -             700,950
                                                                ----------           ----------          ----------
Income (Loss) from operations                         16         3,663,206              911,043            (258,326)
Interest income                                                     80,955              202,155             312,768
Interest expenses                                                 (416,774)            (504,280)           (626,188)
Foreign exchange loss                                              (98,051)            (183,887)           (183,952)
Other income                                                       372,133              190,571             302,266
                                                                ----------           ----------          ----------
Income (Loss) before income taxes and
  minority interest                                              3,601,469              615,602            (453,432)
Income tax expense                                     5          (266,059)            (131,474)           (917,511)
                                                                ----------           ----------          ----------
Net income (loss) before minority interest                       3,335,410              484,128          (1,370,943)
Minority interest                                                   14,202                    -                   -
                                                                ----------           ----------          ----------
Net income (loss)                                                3,349,612              484,128          (1,370,943)

Other comprehensive income, net of tax:
  Foreign currency translation adjustments,
   net of tax                                                      290,354              (56,053)            227,389
                                                                ----------           ----------          ----------
Comprehensive income (loss)                                      3,639,966              428,075          (1,143,554)
                                                                ----------           ----------          ----------

Earnings (Loss) per share
  Basic                                               13              0.59                 0.09              (0.25)
                                                                ----------           ----------          ----------

  Diluted                                             13              0.55                 0.08              (0.25)
                                                                ----------           ----------          ----------


                                         See notes to these consolidated financial statements

                                                                F-3

<PAGE>


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

                                    Common stock
                            --------------------------
                                                                                                     Accumulated
                                                                                                           other
                                                                                                   comprehensive
                                 Shares                 Additional          Common                income-foreign          Total
                             issued and          Amount    paid-in      Stock held      Retained        currency  shareholders'
                            outstanding     outstanding    capital     at treasury      earnings     adjustments        equity
                            -----------     -----------    -------     -----------      --------     -----------        ------
                                                      $            $             $               $             $             $

Balance, March 31, 2004        5,527,639        16,579    21,665,801           --       8,515,793        552,469    30,750,642

Net income                          --            --            --             --       3,349,612           --       3,349,612
Common stock issued
 upon exercise of warrants        50,000           150        98,987           --            --             --          99,137
Dividends paid                      --            --            --             --        (557,763)          --        (557,763)
Foreign exchange
 translation adjustment             --            --            --             --            --          290,354       290,354
                             -----------   -----------   -----------    -----------   -----------    -----------   -----------
Balance, March 31, 2005        5,577,639        16,729    21,764,788           --      11,307,642        842,823    33,931,982
                             -----------   -----------   -----------    -----------   -----------    -----------   -----------
Net income                          --            --            --             --         484,128           --         484,128
Dividends paid                      --            --            --             --        (557,764)          --        (557,764)
Foreign exchange
 ranslation adjustment              --            --            --             --            --          (56,053)      (56,053)
                             -----------   -----------   -----------    -----------   -----------    -----------   -----------
Balance, March 31, 2006        5,577,639        16,729    21,764,788           --      11,234,006        786,770    33,802,293
                             -----------   -----------   -----------    -----------   -----------    -----------   -----------

Net income                          --            --            --             --      (1,370,943)          --      (1,370,943)
Shares repurchase                   --            --            --       (1,328,560)         --             --      (1,328,560)
Dividends paid                      --            --            --             --        (278,882)          --        (278,882)
Foreign exchange
 translation adjustment             --            --            --             --            --          227,389       227,389
                             -----------   -----------   -----------    -----------   -----------    -----------   -----------
Balance, March 31, 2007        5,577,639        16,729    21,764,788     (1,328,560)    9,584,181      1,014,159    31,051,297
                             -----------   -----------   -----------    -----------   -----------    -----------   -----------

                                        See notes to these consolidated financial statements

                                                                    F-4


<PAGE>


                                                  Bonso Electronics International Inc.
                                                 Consolidated Statements of Cash Flows
                                                 (Expressed in United States Dollars)

                                                                                    Year Ended March 31,
                                                                       2005                 2006                  2007
                                                                     ---------------------------------------------------
                                                                             $                    $                    $

Cash flows from operating activities
  Net income / (loss)                                                3,349,612              484,128           (1,370,943)
    Adjustments to reconcile net income to net cash
   provided by operating activities :
   Depreciation                                                      2,436,428            2,379,919            2,347,569
   Amortization                                                        336,658              290,267              290,946
   Impairment of investment properties                                 148,198               69,077                5,414
   (Gain)/loss on disposal of property, plant and
    equipment                                                           35,392             (110,936)             (54,409)
   Minority interest                                                   (14,202)                --                   --
   Impairment of goodwill                                                 --                258,141                 --
   Others                                                               42,573              (19,903)              11,639

  Changes in assets and liabilities:
   Trade receivables                                                  (196,199)           3,845,739                  662
   Other receivables, deposits and prepayments                        (561,664)            (537,710)            (422,138)
   Inventories                                                        (280,013)          (3,686,505)             442,411
   Deposits                                                               --                (90,711)                --
   Tax (payable)/ recoverable                                         (428,154)             303,225               76,618
   Accounts payable                                                 (1,367,085)            (706,043)          (1,063,091)
   Accrued charges and deposits                                       (973,575)             456,772              (77,862)
   Notes payable                                                       500,532             (434,053)             425,853
   Income tax payable                                                 (279,485)                --                814,374
   Deferred tax                                                        (27,434)             (21,194)             (10,802)
                                                                   -----------          -----------          -----------
 Net cash generated from operating activities                        2,721,582            2,480,213            1,416,241
                                                                   -----------          -----------          -----------

Cash flows from investing activities
    Restricted cash deposits                                              (511)               4,848                 --
    Proceeds from disposal of property, plant and
   equipment                                                            22,256              579,896              173,583
    Acquisition of property, plant and equipment                      (684,398)          (1,340,134)            (342,110)
    Acquisition of investment                                         (500,000)                --               (200,000)
                                                                   -----------          -----------          -----------
  Net cash used in investing activities                             (1,162,653)            (755,390)            (368,527)
                                                                   -----------          -----------          -----------
Cash flows from financing activities
    Issue of shares on exercise of warrants and options                 99,137                 --                   --
    Repurchase of redeemable common stocks                          (1,445,808)                --                   --
    Repurchase of common stocks                                           --                   --             (1,328,560)
    Repayment of long-term borrowings                                 (146,667)            (208,421)             (48,329)
    Capital lease payments                                            (433,869)            (426,556)            (250,513)
    Net advance from (repayment of) banking facilities                (186,631)          (1,657,181)             340,945
    Payment of dividends to stockholders                              (557,763)            (557,764)            (278,882)
                                                                   -----------          -----------          -----------
Net cash used in financing activities                               (2,671,601)          (2,849,922)          (1,565,339)
                                                                   -----------          -----------          -----------

Net decrease in cash and cash equivalents                           (1,112,672)          (1,125,099)            (517,625)
Effect of exchange rate changes on cash and cash
  equivalents held in foreign currencies                                 4,981                 (232)              53,386
Cash and cash equivalents, beginning of year                        10,815,279            9,707,588            8,582,257
                                                                   -----------          -----------          -----------
Cash and cash equivalents, end of year                               9,707,588            8,582,257            8,118,018
                                                                   ===========          ===========          ===========

Supplemental disclosure of cash flow information
Cash paid during the year for:
    Interest paid                                                      416,774              494,310              614,269
    Income tax paid, net of refund                                     329,483              153,008               37,321

Non-cash investing and financing activities
    Other intangible assets reclassified from deposit                  544,267                 --                   --
   Property, plant and machinery acquired under
    capital leases                                                        --                188,718               98,462
    Interest income                                                     80,955              202,155              312,768


                                          See notes to these consolidated financial statements

                                                                    F-5

</TABLE>

<PAGE>


                      Bonso Electronics International Inc.
                   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 (collectively, the "Group") are engaged in the designing,
          manufacturing and selling of a comprehensive line of electronic scales
          and weighing instruments, electronic consumer products and
          telecommunication 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 receivable, and the valuation of
          long-lived assets. 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
          Group. All significant inter-company accounts and transactions are
          eliminated in consolidation.

          Acquisitions of companies have been consolidated from the date on
          which control of the net assets and operations was transferred to the
          Group.

          Acquisitions of companies are accounted for using the purchase method
          of accounting. Goodwill represents the excess of the purchase cost
          over the fair value of assets acquired less liabilities assumed of
          acquired companies.

 (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.

                                      F-6

<PAGE>


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

1         Description of business and significant accounting policies
          (Continued)

(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. The company continuously reviews slow-moving and obsolete
          inventory and assesses any inventory obsolescence based on inventory
          levels, material composition and expected usage as of that date.

(d)       Trade receivables

          Provision is made against trade receivables to the extent that
          collection is considered to be doubtful.

(e)       Investment

          Investment is related to a 7% zero coupon capital guaranteed fund with
          maturity on October 11, 2007 and an investment in a private company
          principally engaged in the biochemistry industry in the United States
          of America. The purpose of holding the investment is to generate
          higher income yield. The investment in the 7% zero coupon capital
          guaranteed fund is recorded at amortised cost and the investment in a
          private company is recorded at cost less accumulated impairment.

(f)       Deferred income taxes

          Amounts in the consolidated financial statements related to income
          taxes are calculated using the principles of 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 as deferred tax assets. Recognized deferred
          tax assets are reduced by a valuation allowance if, based on the
          weight of available evidence, it is more likely than not that some
          portion or all of the deferred tax asset will not be realized.

 (g)      Brand name

          Brand name acquired as part of the purchase of a business is
          capitalized based on the estimated fair value as at the date of
          acquisition and amortized using the straight-line method over the
          related estimated useful life of 15 years. Brand name is assessed for
          impairment according to the policy described in note 1(j).

 (h)      Other intangible Assets

          Other intangible assets represent taxi licenses which are stated at
          cost and are amortized on a straight-line basis over the related
          granted useful life of 50 years, representing the shorter of their
          remaining term of the license period or the expected useful life to
          the Group. Taxi licenses entitled the Group to operate 5 taxis for 50
          years in Shenzhen, the People's Republic of China ("PRC"). The purpose
          of holding these licenses is to generate higher income yield.

          Taxi licenses are assessed for impairment according to the policy
          described in note 1(j).

                                      F-7
<PAGE>


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

 1       Description of business and significant accounting policies (Continued)

  (i)    Property, plant and equipment

         (i)      Property, plant and equipment are stated at cost less
                  accumulated depreciation. Leasehold land and buildings are
                  depreciated 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)     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%
                  Furniture, fixtures and equipment          - 20%
                  Motor vehicles                             - 20%

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

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


(j)       Long-Lived Assets Including Goodwill and Other Acquired Intangible
          Assets

          Long-lived assets held and used by the Group and intangible assets,
          excluding goodwill, are reviewed for impairment whenever events or
          changes in circumstances indicate that the carrying amount of such
          assets may not be recoverable. The Group evaluates recoverability of
          assets to be held and used by comparing the carrying amount of an
          asset to future net undiscounted cash flows to be generated by the
          asset. If such assets are considered to be impaired, the impairment
          loss is measured by the amount by which the carrying amount of the
          assets exceeds the fair value of the assets calculated using a
          discounted future cash flows analysis. For the year ended March 31,
          2007, the Group made a provision for impairment of approximately
          $5,414 (2006: $69,077, 2005: $148,198), on investment properties due
          to the decline in market value.

          Goodwill is subject to an annual impairment review. The evaluation of
          goodwill for impairment involves two steps: (1) the identification of
          potential impairment by comparing the fair value of a reporting unit
          with its carrying amount, including goodwill and (2) the measurement
          of the amount of goodwill loss by comparing the implied fair value of
          the reporting unit goodwill with the carrying amount of that goodwill
          and recognizing a loss by the excess of the latter over the former.
          The company measures fair value based upon a discounted future cash
          flows analysis. Based on the assessment for the year ended March 31,
          2007, no provision was made by the Group on impairment of goodwill
          (2006: $258,141, 2005: nil).


                                      F-8

<PAGE>


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

1         Description of business and significant accounting policies
          (Continued)

(k)       Revenue recognition

          No revenue is recognized unless there is persuasive evidence of an
          arrangement, the price to the buyer is fixed or determinable, delivery
          has occurred and collectibility of the sales price is reasonably
          assured. Revenue is recognized when title and risk of loss transfers
          to the customer, which is generally when the product is shipped to the
          customer from our facility. Shipping costs billed to our customers are
          included within revenue. Associated costs are classified in cost of
          goods sold.

          The company provides to certain customers an additional two percent of
          certain products ordered in lieu of a warranty, which are recognized
          as cost of sales when these products are shipped to customers from our
          facility. In addition, certain products sold by the company are
          subject to a limited product quality warranty. The company accrues for
          estimated incurred but unidentified quality issues based upon
          historical activity and known quality issues if a loss is probable and
          can be reasonably estimated. The standard limited warranty period is
          one to three years. Quality returns, refunds, rebates and discounts
          are recorded net of sales at the time of sale to three years and
          estimated based on past history. All sales are based upon firm orders
          with fixed terms and conditions, which generally cannot be modified.
          Historically, we have not experienced material differences between our
          estimated amounts of quality returns, refunds, rebates and discounts
          and the actual results. In all contracts, there is no price protection
          or similar privilege in relation to the sale of goods.

(l)       Research and development costs

          Research and development costs include salaries, utilities, and
          contractor fees that is directly attributable to the conduct of
          research and development progress primarily related to the development
          of new design of products. Research and development costs are expensed
          in the financial period during which they are incurred.

(m)       Advertising

          Advertising costs are expensed as incurred and are included within
          selling expenses. (2007: $142,642, 2006: $255,006, 2005: $246,193)

(n)       Foreign currency translations

         (i)      The Group's functional currency is United States dollar. The
                  financial statements of foreign subsidiaries where United
                  States dollar is the functional currency and which have
                  certain transactions denominated in non-United States dollar
                  currencies are translated into United States dollar at the
                  exchange rates existing on that date. The translation of local
                  currencies into United States dollars creates transaction
                  adjustments which are included in net income (loss). Exchange
                  differences are recorded in the Statements of Income (Loss)
                  and Comprehensive Income (Loss).

        (ii)      The financial statements of foreign subsidiaries, where the
                  non-United States dollar currencies are the functional
                  currencies, are translated into United States 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 these financial statements are reflected as a
                  separate component of shareholders' equity in accumulated
                  other comprehensive income.

                                      F-9
<PAGE>


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

1         Description of business and significant accounting policies
          (Continued)

 (o)      Stock options and warrants

          Stock options have been granted to employees, directors and
          non-employee directors. Upon exercise of the options, the holder can
          acquire share of common stock of the Group at an exercise price
          determined by the board of directors. The options are exercisable
          based on the vesting terms stipulated in the option agreements or
          plan. The Group follows the intrinsic method of accounting for these
          options.

          Prior to 1 April 2006, 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, as the exercise price of all the options
          issued by the Company was equal to or higher than the market price of
          the underlying stock on the date of grant, no compensation expense has
          been recognized for the years ended March 31, 2005 and 2006.

          Effective April 1, 2006, the Company adopted the SFAS No. 123(R) in
          accounting for its employee stock option. Under the provisions of SFAS
          No. 123(R), the Company is required to measure the cost of employee
          services received in exchange for stock-based compensation measured at
          the fair value of the award as of the grant date. According to the
          modified prospective application method, the Company applies SFAS No.
          123(R) for: (1) new awards granted after April 1, 2006, and (2) any
          portion of awards that were granted after April 1, 1995 and have not
          vested by April 1, 2006. As the Company did not have any unvested
          stock-based compensation as of April 1, 2006, the adoption of SFAS No.
          123(R) did not have impact on the Company's financial statements.

                                      F-10

<PAGE>


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

1         Description of business and significant accounting policies
          (Continued)

 (p)      Recent accounting pronouncements

          Accounting for Income Taxes

          In July 2006, the FASB released FIN 48, Accounting for Uncertainty in
          Income Taxes - an interpretation of FASB Statement 109 ("FIN 48"). FIN
          48 prescribes a comprehensive model for how a company should
          recognize, measure, present, and disclose in its financial statements
          uncertain tax positions that the company has taken or expects to take
          on a tax return (including a decision whether to file or not to file a
          return in a particular jurisdiction). Under FIN 48, the financial
          statements will reflect expected future tax consequences of such
          positions presuming the taxing authorities' full knowledge of the
          position and all relevant facts, but without considering time values.
          FIN 48 is effective for annual periods beginning after December 15,
          2006. The Company is in the process of assessing the impact of the
          recent accounting pronouncement.

          Fair Value Measurements

          In September 2006, the FASB issued FAS 157, Fair Value Measurements.
          FAS 157 provides guidance on the measurement of fair value in US GAAP
          and expands fair value measurement disclosures. FAS 157 is applicable
          whenever other accounting pronouncements require or permit fair value
          measurements and does not expand the use of fair value in any new
          circumstances. FAS 157 is effective for financial statements issued
          for fiscal years beginning after November 15, 2007. The Company is in
          the process of assessing the impact of the recent accounting
          pronouncement.

          The Fair Value Option for Financial Assets and Financial Liabilities

          In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
          for Financial Assets and Financial Liabilities-Including an amendment
          of FASB Statement No. 115" ("SFAS 159"). SFAS 159 provides companies
          with an option to report selected financial assets and liabilities at
          fair value. Unrealized gains and losses on items for which the fair
          value option has been elected will be recognized in earnings. SFAS 159
          is effective for fiscal years beginning after November 15, 2007. The
          Company is in the process of assessing the impact of the recent
          accounting pronouncement.

 (q)      Comparatives

          Certain of the comparative figures, mainly the classifications of the
          various cash receipts and cash payments within the consolidated
          statements of cash flows, have been reclassified to conform to the
          current year's presentation.

                                      F-11
<PAGE>



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

2        Allowance for doubtful accounts

         Changes in the allowance for doubtful accounts comprises:
<TABLE>
<CAPTION>

                                                          2005                    2006                   2007
                                                             $                       $                       $

<S>                       <C>                          <C>                     <C>                     <C>
           Balance, April 1                            383,770                 399,006                 227,001

           Exchange adjustment                          18,744                 (21,415)                  9,268
           Additions charged to expense                197,310                 223,388                 134,931
           Write-off                                  (200,818)               (373,978)               (263,049)
                                                   -----------             -----------             -----------
           Balance, March 31                           399,006                 227,001                 108,151
                                                   -----------             -----------             -----------

3          Inventories

 (a)       The components of inventories are as follows:


                                                                                  2006                    2007
                                                                                     $                       $

           Raw materials                                                     6,005,337               5,951,366
           Work in progress                                                  3,423,775               4,232,035
           Finished goods                                                    5,606,104               4,814,387
                                                                           -----------             -----------
                                                                            15,035,216              14,997,788
                                                                           -----------             -----------

          During the years ended March 31, 2005, 2006 and 2007, provision for
          obsolete inventories recognised in the consolidated statement of
          income (loss) was $74,954, $170,592 and $261,242, respectively.

                                      F-12
<PAGE>


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

4         Long-term debt

          Long-term debt comprises:
                                                                                                   March 31
                                                                                         --------------------------
                                                                                           2006                2007
                                                                                              $                   $

           Long term bank loan at bank's floating base rate + 4%,
            denominated in Canadian dollars                                               7,197                   -
           Mortgage loan at bank's prime interest rate + 1.15%, denominated
            in Canadian dollars                                                          41,132                   -
                                                                                          -----               -----
           Long term debt                                                                48,329                   -
           Less: current portion                                                        (48,329)                  -
                                                                                         ------               -----
           Long-term debt, less current maturities                                            -                   -
                                                                                         ------               -----


5         Taxation

(a)       The companies comprising the Group are subject to tax on an entity
          basis on income arising in or derived from Hong Kong, the PRC,
          Germany, the United States and Canada. The current rates of taxation
          of the subsidiaries operating in Hong Kong is 17.5%. The subsidiary of
          the Group in Germany is registered as a partnership in Germany which
          is subject to a statutory tax rate of 14.17%. The Group is not subject
          to income taxes in the British Virgin Islands. The statutory tax rates
          in the United States and Canada are 15% and 36%, respectively.

(b)       Pursuant to the relevant income tax laws in the PRC, Bonso
          Electronics (Shenzhen) Co., Ltd, a wholly owned subsidiary of the
          Company, was 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. The first profit-making year of Bonso
          Electronics (Shenzhen) Co., Ltd. was deemed to be the financial year
          ended December 31, 1998 and the last year it was entitled to this
          benefit was December 31, 2002. In 2003, Bonso Electronics (Shenzhen)
          Co., Ltd was accredited as an "Advanced Corporation". A further 50%
          tax reduction was granted for another three years and the last year it
          was entitled to this benefit is December 31, 2005. Under the
          Implementation Rules of the Foreign Enterprise Income Tax Law, Bonso
          Electronics (Shenzhen) Co. Ltd. is entitled to a further tax rate
          reduction to 10% for the year ended 31 December 2006, as its export
          sale exceed 70% of its revenue.

(c)       Income is subject to taxation in the various countries in which the
          Company and its subsidiaries operate. The (loss) income before income
          taxes by geographical location was as follows:

                                               2005               2006                2007
                                                  $                  $                   $

           Hong Kong                      2,088,341          1,055,120             854,807
           PRC                             (441,753)         1,194,690           1,303,303
           Others                         1,954,881         (1,634,208)         (2,611,542)
                                          ---------          ---------           ---------
           Total                          3,601,469            615,602            (453,432)
                                          =========          =========           =========

          Others mainly include the profit (loss) from BVI, Germany and Canada.

                                      F-13
<PAGE>


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

5        Taxation (Continued)

 (d)

                                                                        2005                2006              2007
                                                                           $                   $                 $

           Deferred income tax                                        27,434              21,194            10,802
           Current income tax                                       (293,493)           (152,668)         (928,313)
                                                                     -------             -------           -------
           Total income tax expense                                 (266,059)           (131,474)         (917,511)
                                                                     =======             =======           =======

          The components of the income tax expense by geographical location are as follows:

                                                                        2005                2006              2007
                                                                           $                   $                 $

           Hong Kong                                                (214,045)            (89,035)         (797,225)
           PRC                                                       (26,241)            (36,842)         (126,617)
           Others                                                    (25,773)             (5,597)            6,331
                                                                     -------             -------           -------
           Total:                                                   (266,059)           (131,474)         (917,511)
                                                                     =======             =======           =======

(e)

                                                                                           2006                2007
                                                                                              $                   $


           Deferred income tax assets                                                    82,529              87,369
           Deferred income tax liabilities                                               19,863              13,901

           Deferred tax assets comprised the following:
                                                                                           2006                2007
                                                                                              $                   $

           Tax loss carry forwards                                                      700,966           1,167,987
           Others                                                                        82,529              87,369
           Less: Valuation allowance                                                   (700,966)         (1,167,987)
                                                                                        -------           ---------
                                                                                         82,529              87,369
           Less: current portion                                                              -                   -
                                                                                        -------           ---------
           Non-current portion                                                           82,529              87,369
                                                                                        =======           =========

          As of March 31, 2007 and 2006, the Group had accumulated tax losses
          amounting to $5,845,998 and $4,340,661 (the tax effect thereon is
          $1,167,987 and $700,966) respectively, which may be carried forward
          and applied to reduce future taxable income which is earned in or
          derived from Hong Kong, Germany and Canada. 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 not
          be utilized. As of March 31, 2007, the Group's accumulated tax losses
          have no definite period of expiration.

                                      F-14
<PAGE>


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

5         Taxation (Continued)

 f)       Changes in the valuation allowance consist of:

                                                                                           2006                2007
                                                                                              $                   $

           Balance, April 1                                                             479,341             700,966

           Charged to income tax expense                                                221,625             467,021
                                                                                        -------            --------
           Balance, March 31                                                            700,966            1,167,987
                                                                                        =======            ========

 (g)      The actual income tax expense attributable to earnings for the years
          ended March 31, 2005, 2006 and 2007 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:

                                                                                  2005            2006           2007
                                                                                     $               $              $

           Income tax credit/(expense) calculated at domestic tax
            rates applicable to loss/ profit in the respective
            countries                                                          (26,041)        (52,128)       205,583
           Profit not subject to income tax                                    313,964         183,211        154,349
           Expenses not deductible for income tax purposes
                                                                              (210,737)        (52,648)       (73,283)
           (Under)/over provision for income tax in prior years
                                                                               (69,389)          6,623              -
           Tax losses utilized
                                                                                 5,166           5,093              -
           Increase in valuation allowance                                    (279,022)       (221,625)      (467,021)
           Additional provision made as a result of  development of
            tax rules (h)                                                            -               -       (737,139)
                                                                               -------         -------        -------
           Total income tax expense                                           (266,059)       (131,474)      (917,511)
                                                                               =======         =======        =======


(h)       The provision was made as a result of assessing the impact of the
          new developments of tax rules in the various tax jurisdictions that
          the Group's subsidiaries are operating. Management have performed
          an assessment in pursuant to FASB No. 5 "Accounting for
          Contingencies" and made a provision of $737,000 in relation to this
          contingent liability.

                                      F-15
<PAGE>



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

6         Leases

 (a)      Capital leases

          Plant and machinery include the following amounts for capitalized
          leases:

                                                          Plant and machinery
                                                          -------------------
                                                                March 31
                                                                --------
                                                           2006            2007
                                                              $               $

           Cost                                       1,731,894       1,830,356
           Less: accumulated depreciation              (388,894)       (594,052)
                                                     ----------      ----------
                                                      1,343,000       1,236,304
                                                     ==========      ==========

          During the years ended March 31, 2005, 2006 and 2007, the Group
          entered into additional capital lease obligations amounting to $Nil,
          $188,718 and $98,462 respectively.

          Future minimum payments under capital leases as of March 31, 2007 with
          an initial term of more than one year are as follows:

                                                                              $

           Total minimum lease payments                                 183,113

           Less: amount representing interest                           (28,130)
                                                                        -------
           Present value of net minimum lease
            payments (including current portion of
            $95,725 as of March 31, 2007)                               154,983
                                                                        -------

           Future minimum payments under capital leases
           2008                                                          95,725
           2009                                                          53,788
           2010                                                           5,470
           Thereafter                                                         -
                                                                        -------
                                                                        154,983
                                                                        =======


                                      F-16
<PAGE>


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

6         Leases (Continued)

 (b)      Operating leases

          As of March 31, 2007, future minimum lease payments in respect of
          non-cancellable operating leases for factory, office premises and
          staff quarters in Hong Kong, the PRC, Germany, the United States, the
          United Kingdom and Canada are as follows:

                                                                          $

           2008                                                   1,065,588
           2009                                                     932,850
           2010                                                     928,870
           2011                                                     648,760
           Thereafter                                               271,589
                                                                  ---------
                                                                  3,847,657
                                                                  =========

          Rental expense for all operating leases amounted to $521,819, $688,469
          and $1,239,366 for the years ended March 31, 2005, 2006 and 2007,
          respectively.

                                      F-17

<PAGE>


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

7         Banking facilities

          As of March 31, 2007, the Group had general banking facilities for
          bank overdrafts, letters of credit, notes payable, short-term loans
          and long-term loans. The facilities are interchangeable with total
          amounts available of $30,017,128 (2006: $36,018,301). The general
          banking facilities utilized by the Group are denominated in United
          States dollars, Hong Kong dollars, European dollars and Canadian
          dollars.

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

                                                                                      Terms of banking facilities as
                                                                                                    of
                                     Amount available                Amount utilized          March 31, 2007
                                  --------------------------    -----------------------       --------------
                                          March 31                       March 31
                                  --------------------------    ----------------------
                                        2006            2007         2006         2007             Interest       Repayment
                                           $               $            $            $                 rate           terms
           Import and export
            Facilities

           Letters of credit      26,602,564      18,589,744    3,310,673    3,736,526

           Including
           sub-limit
           of:
           Notes payable          20,846,154      17,564,103    3,310,673    3,736,526          HIBOR +1.5%       Repayable in
                                                                                                                  full within
                                                                                                                  four months


           Short-term loans        7,246,526       4,745,640    2,936,467    3,576,366      *Eonia+1.15% to       Repayable in
                                                                                                 +1.95%           full within
                                                                                                                  twelve months


           Other facilities

           Factoring                      --       4,964,102           --           --          HIBOR +1.5%


           Bank overdrafts         1,912,461       1,717,642      471,254      459,710          Prime rate        Repayable
                                                                                                  +0.5% to        on demand
                                                                                                       +1%
                                                                                            Or HIBOR+2.25%


           Long-term debts           256,750             --        48,329           --    Prime rate + 1% to      Repayable in
            (Note 4)                                                                                   +1.15%     full within
                                                                                                                  thirty-six months
                                  ----------     ----------     ---------    ---------
                                  36,018,301     30,017,128     6,766,723    7,772,602
                                  ==========     ==========     =========    =========

* EONIA stands for Euro Overnight Index Average.

                                      F-18
<PAGE>


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

7         Banking facilities (Continued)

          The amounts of banking facilities utilized by the Group are
          denominated in the following currencies:

                                                       Amount utilized
                                                          March 31
                                                  ------------------------------
                                                       2006                 2007
                                                          $                    $

           Euro                                   2,936,467           3,576,366
           Hong Kong dollars                      2,261,593           2,957,631
           United States dollars                  1,041,883             778,895
           Canadian dollars                         526,780             459,710
                                                  ---------           ---------
                                                  6,766,723           7,772,602
                                                  =========           =========


          The Prime Rate, HIBOR rate and EONIA were 7.75%, 4.218% and 3.9% per
          annum, respectively, as of March 31, 2007. The Prime Rate is
          determined by the Hong Kong Bankers Association and is subject to
          revision from time to time.

          The banking facilities are collateralized by the following:

          (a)  guarantee of $4,276,218 (2006: $6,618,333) by a third party bank;
               and


          (b)  a personal guarantee of $102,000 (2006: $102,000) by a director
               of one of the Group's subsidiaries.

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

                                                       Year ended March 31
                                                     -------------------------
                                                      2006                2007

           Bank overdrafts                           6.01%               6.48%
           Notes payable                             4.83%               5.62%
           Short-term loans                          4.35%               4.88%

                                      F-19

<PAGE>


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

8         Related party transactions

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

           Year ended                                    Mr. So Hung Gun,          Ms. Pang Kit          Mr. Chung Kim
           March 31                                               Anthony           Teng, Cathy                    Wah
           --------                                      ----------------          ------------          -------------

           2005                                             $700,000 (iii)           $111,912             $134,350 (ii)
           2006                                             $583,215 (iii)           $113,913             $137,990 (ii)
           2007                                             $741,947                  $68,222 (v)         $151,095

                                       Mr. Fok Woo                Mr. George    Mr. J Stewart                  Mr.Henry
                                              Ping                   O'Leary          Jackson                 Schlueter
                                       -----------                ----------    -------------                 ---------

           2005                                Nil          $158,766 (i)                  Nil             $119,201 (iv)
           2006                                Nil          $240,000 (i)                  Nil              $23,519 (iv)
           2007                                Nil          $180,000(i), (v)              Nil              $14,571 (iv)

          (i)  This represented consultancy fee paid to Mr. George O'Leary.
               Since April 1, 2001, a monthly consultancy fee was paid to Mr.
               O'Leary for provision of support and marketing services in the
               United States. No such consultancy fees were paid after March 31,
               2005. Also included in the emoluments is a monthly consultancy
               fee to Mr. O'Leary for provision of support and marketing
               services in the United States and director fee since January 17,
               2005.

          (ii) Included in the emoluments is a housing allowance for $38,462 for
               each of the two years ended March 31, 2005 and 2006 payable to a
               company in which Mr. Chung Kim Wah has a beneficial interest.

          (iii) Apart from the emoluments paid by the Group as shown above, one
               of the properties of the Group in Hong Kong is also provided to
               Mr. So Hung Gun, Anthony as part of his compensation.

          (iv) Mr. Henry Schlueter was appointed as a director of the Company on
               October 10, 2001. The amount for the years ended March 31, 2005,
               2006 and 2007 represented professional fees paid to Schlueter &
               Associates, P.C., and the Group's SEC counsel in which Mr Henry
               Schlueter is one of the principals.

          (v)  Ms. Pang Kit Teng, Cathy and Mr. George O'Leary resigned from
               their positions as directors of the Company on November 16, 2006.

(b)      As of March 31, 2007, Bonso Electronics Limited ("BEL"), a wholly-owned
         foreign subsidiary of the Company, had paid a deposit of approximately
         US$799,000 with regard to a potential investment in a hotel in the PRC.
         Subsequent to this fiscal year end, Mr. Anthony So, Chairman of Bonso
         decided to take up BEL's potential investment and paid BEL the full
         amount of approximately US$799,000 in July 2007. The carrying amount of
         the deposit approximates its fair value due to its short maturities.
         This hotel is now held by Mr. Anthony So and three third parties.

(c)      For the year ended March 31, 2005, the Group sold scales to Tantric
         Europe Ltd. ("Tantric") amounting to $99,410. There was no such
         transaction in the years ended March 31, 2006 and 2007. Tantric is 100%
         owned by Mohan Thadani, the Chief Executive Officer and minority
         shareholder of one of the subsidiaries of the Company.

                                      F-20

<PAGE>


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

9        Provident fund plan

(a)      With effect from January 1, 1988, BEL, a wholly-owned foreign
         subsidiary of the Company, implemented a defined contribution plan (the
         "Plan") with a major international assurance company to provide life
         insurance and retirement benefits for its employees. All permanent full
         time employees who joined BEL before December 2000, excluding factory
         workers, are eligible to join the provident fund plan.

         The Mandatory Provident Fund (the "MPF") was introduced by the Hong
         Kong Government, and commenced in December 2000. BEL joined the MPF by
         implementing a plan with a major international assurance company. All
         permanent Hong Kong full time employees who joined BEL in or after
         December 2000, excluding factory workers, are eligible to join the MPF.

 (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%

         Members' and employers' contributions to the MPF are both at 5% of the
         members' monthly salaries and are subject to a maximum contribution of
         HK$1,000 monthly.

 (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 the 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.

         On resignation or at normal retirement age, death or ill health, the
         member of the MPF shall be entitled to a lump sum equal to the total of
         the member's and BEL's contributions plus the return on their
         investment.

         The contributions are recognised as employee benefit expense when they
         are due and are reduced by contributions forfeited by those employees
         who leave the scheme prior to vesting fully in the contributions.

 (d)     BEL's total contributions to the Plan and the MPF for the years
         ended March 31, 2005, 2006 and 2007 amounted to $83,277, $95,339 and
         $86,530, respectively.

                                      F-21
<PAGE>


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

10        Goodwill, Brand name and other intangible assets

          Goodwill, brand name and other intangible assets are analysed as
          follows:

                                                        Goodwill                Brand name           Other intangible asset
                                                        --------                ----------           ----------------------
                                                        March 31                  March 31                   March 31
                                                        --------                  --------                   --------
                                                  2006          2007         2006          2007          2006          2007
                                                     $             $            $             $             $             $

           Cost                              1,100,962       842,821    3,000,000     3,000,000       544,267       544,267
           Less: accumulated
            amortization                          --            --     (1,002,608)   (1,202,608)      (14,677)      (28,225)
           Less: impairment loss for
            the year                          (258,141)         --           --            --            --
                                            ----------    ----------   ----------    ----------    ----------    ----------
                                               842,821       842,821    1,997,392     1,797,392       529,590       516,042
                                            ==========    ==========   ==========    ==========    ==========    ==========

          Goodwill of the Group of $842,821 as at March 31, 2007 (2006:
          $842,821) was not subject to amortization. Amortization expense in
          relation to brand name was $200,000 for each of the years ended March
          31, 2005, 2006 and 2007. Amortization expense in relation to other
          intangible assets was $1,129, $13,548, $13,548 for each of the years
          ended March 31, 2005, 2006 and 2007.

          As of March 31, 2007, future minimum amortization expenses in respect
          of brand name and other intangible assets are as follows:

                                                                         Other
                                                                    intangible
                                                     Brand name         assets
                                                              $              $

           2008                                         200,000         13,548
           2009                                         200,000         13,548
           2010                                         200,000         13,548
           2011                                         200,000         13,548
           2012                                         200,000         13,548
           Thereafter                                   797,392        448,302
                                                      ---------       --------
           Total                                      1,797,392       $516,042
                                                      =========       ========

                                      F-22
<PAGE>


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

11       Loss from water damage

         In September 2006, a heavy rain caused overflow of a river which is
         near a logistic warehouse of the Group in Germany. A loss of
         approximately $700,950, mainly represent write-off of equipment and
         inventories, was recognised as a result of the heavy rain. As of the
         date of this report, the Company is in the process of negotiating with
         the insurance carrier for compensation of the loss incurred. Since the
         negotiation is still in a preliminary stage, management considers it is
         not in a position to assess the likelihood of the outcome given the
         evidence prevailing at the moment.

12       Commitments and contingencies

(a)      Commitment


         Capital expenditure contracted at the balance sheet but not yet
provided for is as follows:

                                                   2006                2007
                                                      $                   $

           Plant and machineries                 65,692                   -

           Land use right (i)                         -           1,472,325


         (i) In November, 2006, Bonso entered into a land use right purchase
         agreement with Xincheng Hi- Tech Industrial Estate to acquire the right
         to use a piece of land of approximately 146,673 square meters for
         future expansion of production capacity in XinXing of GuangDong, PRC.
         The total consideration is $1,472,325. In July 2007, a deposit of
         approximately $610,000 was paid.

(b)      Contingencies

         Certain subsidiaries of the Company received on-going enquiries from
         the local tax authorities during the year. The Company made an
         assessment under SFAS 5 "Accounting for Contingencies" and believed
         that no additional income tax expense was necessary as of March 31,
         2007, as the relevant tax authority was still in the information
         gathering stage on their enquiries and it was practically difficult to
         have a reasonable estimate of the possible outcome of these enquiries
         at this stage. The Company believes it has a reasonable likelihood of
         success with respect to these enquiries. Nevertheless, if the
         subsidiaries were finally held liable for such additional taxation, the
         range of possible outcome of this potential liability can be up to
         $2,000,000.

         Contractual arrangements entered into among us and our subsidiaries in
         different locations may be subject to scrutiny by respective tax
         authorities and a finding against Bonso and its subsidiaries may result
         in additional tax liabilities that could substantially reduce our
         consolidated net income. We could face material and advance tax
         consequences if respective tax authorities determine that the
         contractual arrangements among our subsidiaries and Bonso do not
         represent an arm's length price and adjust Bonso or its subsidiaries'
         income. Our consolidated net income may be materially and adversely
         affected if or affiliated entities' tax liabilities increase.

                                      F-23
<PAGE>


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

13       Earnings per share
                                                                                   Year ended March 31
                                                                  -------------------------------------------------
                                                                        2005               2006                2007
                                                                           $                  $                   $

           Net income available to common
            shareholders                                           3,349,612            484,128          (1,370,943)

           Weighted average shares outstanding                     5,646,676          5,577,639           5,577,639
           Incremental shares from assumed
            exercise of:
           Stock options                                             407,627            360,005             305,009
                                                                   ---------          ---------           ---------
           Dilutive potential common shares                          407,627            360,005             305,009
                                                                   ---------          ---------           ---------
           Dilutive weighted average shares                        6,054,303          5,937,644           5,882,648
                                                                   =========          =========           =========

           Basic earnings per share                                     0.59               0.09               (0.25)
           Diluted earnings per share                                   0.55               0.08               (0.25)


         Basic earnings per share is computed by dividing net (loss)/ income
         available to common shareholders by the weighted average number of
         shares of common stock issued and outstanding. Diluted earnings per
         share is computed in a manner consistent with that of basic earnings
         per share while giving effect to all potentially dilutive shares of
         common stock that were outstanding during the period, including stock
         options.

         Diluted net loss per share is computed by dividing net loss for each
         year by the weighted average number of shares of common stock and
         ordinary share equivalents issued and outstanding. The weighted average
         number of shares used to compute diluted net loss per share include the
         incremental shares of ordinary shares relating to outstanding options,
         to the extent such incremental shares are dilutive

         The diluted net loss per share was the same as the basic net loss per
         share for the year ended March 31, 2007 as all 305,009 potential
         ordinary shares from the exercise of stock options, are anti-dilutive
         and are therefore excluded from the computation of diluted net loss per
         share.

                                      F-24
<PAGE>


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

14       Shareholders' equity

(a)      Repurchase of common stock

         In August of 2001, the Company's Board of Directors authorized a
         program for the Company to repurchase up to $500,000 of its common
         stock. This repurchase program does not obligate the Company to acquire
         any specific number of shares or acquire shares over any specified
         period of time. No stocks had been repurchased since then up to
         November 16, 2006. The Board of Directors believed that the common
         stock was undervalued, and that the repurchase of common stock would be
         beneficial to the Company's shareholders. On November 16, 2006, the
         Company's Board of Directors authorized another $1,000,000 for the
         Company to repurchase its common stock under the same repurchase
         program. This authorization to repurchase shares increases the amount
         authorized for repurchase from $500,000 to $1,500,000. During the
         fiscal year ended March 31, 2007, 260,717 ($1,328,560) shares were
         purchased under this program. The Company may from time to time
         repurchase shares of its common stock under this program.

(b)      Preferred stock

         The Company had authorized share capital of $100,000 or 10,000,000
         shares of preferred stock, with par value of $0.01 each, divided into
         2,500,000 shares each of class A preferred stock, class B preferred
         stock, class C preferred stock and class D preferred stock. Shares may
         be issued within each class from time to time by the Company's Board of
         Directors in its sole discretion without the approval of the
         shareholders with such designations, power, preferences, rights,
         qualifications, limitation and restrictions as the Board of Directors
         shall fix and as have not been fixed in the Company's Memorandum of
         Association. The Company had not issued any shares of preferred stock
         as of March 31, 2007.

(c)      Dividends

         Dividends of $0.1, $0.05 and $0.05 per share were declared by the
         Company for the years ended March 31, 2005, 2006 and 2007 respectively.

                                      F-25
<PAGE>


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

15       Stock option and bonus plans

 (a)     On September 7, 2004, our stockholders adopted the 2004 Stock Bonus
         Plan (the "Stock Bonus Plan") which authorizes the issuance of up to
         five hundred thousand (500,000) shares of the Company's common stock in
         the form of stock bonus.

         The purpose of this Stock Bonus Plan is to (i) induce key employees to
         remain in the employment of the Company, or of any subsidiary of the
         Company; (ii) encourage such employees to secure or increase their
         stock ownership in the Company; and (iii) reward employees,
         non-employee directors, advisors and consultants for services rendered
         or to be rendered to or for the benefit of the Company, or any of its
         subsidiaries. The Company believes that Stock Bonus Plan will promote
         continuity of management and increased incentive and personal interest
         in the welfare of the Company.

         The Stock Bonus Plan shall be administered by a committee appointed by
         the Board of Directors which consists of at least two but not more than
         three members of the Board, one of who shall be a non-employee of the
         Company. The existing Committee members are Anthony So and Woo Ping
         Fok. The Committee has the authority, in its sole discretion:(i) to
         determine the parties to receive bonus stock, the times when they shall
         receive such awards, the number of shares to be issued, and the time,
         terms and conditions of the issuance of any such shares; (ii) to
         construe and interpret the terms of the Stock Bonus Plan; (iii) to
         establish, amend and rescind rules and regulations for the
         administration of the Stock Bonus Plan; and (iv) to make all other
         determinations necessary or advisable for administering the Stock Bonus
         Plan.

         On March 23, 2004, our stockholders adopted the 2004 Stock Option Plan
         (the "2004 Plan") which provides for the grant of up to six hundred
         thousand (600,000) shares of the Company's common stock in the form of
         stock options, subject to certain adjustments as described in the Plan.

         The purpose of the 2004 Plan is to secure key employees to remain in
         the employment of the Company and to encourage such employees to secure
         or increase on reasonable terms their common stock ownership in the
         Company. The Company believes that the 2004 Plan promotes continuity of
         management and increased incentive and personal interest in the welfare
         of the Company.

         The 2004 Plan is administered by a committee appointed by the Board of
         Directors which consists of at least two but not more than three
         members of the Board, one of who shall be a non-employee of the
         Company. The committee members currently are Anthony So and Woo Ping
         Fok. The committee determines the specific terms of the options
         granted, including the employees to be granted options under the plan,
         the number of shares subject to each option grant, 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 2004 Plan may
         be paid in cash, by the surrender of options, in common stock, in other
         property, including a promissory note from the optionee, or by a
         combination of the above, at the discretion of the Committee.

                                      F-26
<PAGE>


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

15       Stock option and bonus plans (Continued)

         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 900,000
         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.

         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 600,000 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 under certain
         conditions stipulated in the 1996 Non-Employee Directors' Stock Option
         Plan.

         In April 2003, the Company issued options to certain directors and
         non-employee directors of the Company to purchase an aggregate of
         372,500 shares of common stock of the Company at an exercise price of
         $1.61. The options shall expire on March 31, 2013 and can be exercised
         at any time after granting. The exercise prices of these options were
         equal to the fair market value at the time of grant. No such options
         have been exercised during the year ended March 31, 2007.

         In March 2004, the Company issued options to certain non-employee
         directors of the Company to purchase an aggregate of 40,000 shares of
         common stock of the Company at an exercise price of $6.12. The options
         shall expire on March 25, 2014 and can be exercised at any time after
         granting. The exercise prices of these options were equal to the fair
         market value at the time of grant. No such options have been exercised
         during the year ended March 31, 2007.

                                      F-27
<PAGE>


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

15       Stock option and bonus plans (Continued)

         In September 2004, the Company issued options to certain non-employee
         directors of the Company to purchase an aggregate of 40,000 shares of
         common stock of the Company at an exercise price of $6.20. The options
         shall expire on September 12, 2014 and can be exercised at any time
         after granting. The exercise prices of these options were equal to the
         fair market value at the time of grant. No such option was exercised
         during the year ended March 31, 2007.

         In December 2005, the Company issued options to certain non-employee
         directors of the Company to purchase an aggregate of 30,000 shares of
         common stock of the Company at an exercise price of $4.50. The options
         shall expire on December 4, 2015 and can be exercised at any time after
         granting. The exercise prices of these options were equal to the fair
         market value at the time of grant. No such options had been exercised
         during the year ended March 31, 2007.

         On November 16, 2006, the Board of Directors of the Company voted to
         rescind the Company's 1996 Non-Employee Directors' Stock Option Plan
         (the "Non-Employee Directors' Plan"). All options previously granted
         under the Non-Employee Directors' Plan continue in full force and
         effect pursuant to their terms of grant.

         During the year ended 31 March 2007, no shares or share options were
         granted.

 (b)     The stock options summary as of March 31, 2007 is as follows:


                                                                       Weighted
                                                                        average
                                                          Number       exercise
                                                      of options         price

           Balance, March 31, 2004                     1,084,500         $3.95

           Exercised                                     (50,000)       ($1.99)

           Granted                                        40,000         $6.20
                                                       ---------         -----
           Balance, March 31, 2005                     1,074,500         $4.13

           Granted                                        30,000         $4.50
                                                       ---------         -----
           Balance, March 31, 2006                     1,104,500         $4.13

           Granted                                             -             -
                                                       ---------         -----
           Balance, March 31, 2007                     1,104,500         $4.13
                                                       =========         =====

                                      F-28

<PAGE>


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

15       Stock option and bonus plans (Continued)

(c)      The following table summarizes the information about all stock options
         of the Company outstanding as at March 31, 2007:

                                                                       Weighted
                                                        Number           average           Exercisable
           Weighted average                     outstanding at    remaining life             shares at
           exercise price                       March 31, 2007            (years)       March 31, 2007
           --------------                       --------------            -------       --------------

           $1.61                                       342,500                6.0             342,500
           $2.50                                       168,000                4.9             168,000
           $2.55                                        10,000                4.5              10,000
           $3.65                                       196,000                4.0             196,000
           $4.50                                        30,000               8.75              30,000
           $6.12                                        40,000                7.0              40,000
           $6.20                                        40,000                7.5              40,000
           $7.875                                       30,000                3.8              30,000
           $8.00                                       228,000                2.8             228,000
           $8.125                                       20,000                2.8              20,000
                                                     ---------                              ---------
           $4.131                                    1,104,500               4.85           1,104,500
                                                     =========                              ==========


         The intrinsic value of options outstanding and exercisable was
         $1,354,295, $1,967,290 and $1,218,160 on March 31, 2005, 2006 and 2007.
         The intrinsic value represents the pre-tax intrinsic value (the
         difference between the closing stock price of the Company's common
         stock on balance sheet date and the exercise price for both the
         outstanding and exercisable options) that would have been received by
         the option holders if all options had been exercised on March 31, 2005,
         2006 and 2007.

         For the options exercised in the year ended March 31, 2005, the
         intrinsic value is $221,700.

         New shares will be issued by the Company upon future exercise of stock
         options.

                                      F-29
<PAGE>


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

15       Stock option and bonus plans (Continued)

(d)      Prior to 1 April 2006, 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, as the exercise price of all the options
         issued by the Company was equal to or higher than the market price of
         the underlying stock on the date of grant, no compensation expense has
         been recognized for the years ended March 31, 2005 and 2006.

         Effective April 1, 2006, the Company adopted the SFAS No. 123(R) in
         accounting for its employee stock option. Under the provisions of SFAS
         No. 123(R), the Company is required to measure the cost of employee
         services received in exchange for stock-based compensation measured at
         the fair value of the award as of the grant date. According to the
         modified prospective application method, the Company applies SFAS No.
         123(R) for: (1) new awards granted after April 1, 2006 and (2) any
         portion of awards that were granted after April 1, 1995 and have not
         vested by April 1, 2006. As the Company did not have any unvested
         stock-based compensation as of April 1, 2006, the adoption of SFAS No.
         123(R) did not have impact on the Company's financial statement. The
         weighted average fair value of options granted during the years ended
         March 31, 2005, 2006 and 2007 amounted to $191,712, $83,605 and $nil
         respectively.

                                                                                           2005                2006
                                                                                              $                   $

           Net income as reported                                                     3,349,612             484,128

           Deduct:
           Total stock-based employee
             compensation expense determined under fair
             value based method for all stock options, net of
             related tax effects                                                       (191,712)            (83,605)
                                                                                      ---------             -------
           Pro forma net income                                                       3,157,900             400,523

           Basic earnings per share
           As reported                                                                    $0.59                $0.09
           Pro forma                                                                      $0.56                $0.07

           Diluted earnings per share
           As reported                                                                    $0.55                $0.08
           Pro forma                                                                      $0.52                $0.07

         The fair value for these options was estimated at the date of grant
         using a Black-Scholes Option Valuation model. As there was no option
         granted during the year ended March 31, 2007, the following table only
         indicates the weighted-average assumptions for the years ended March
         31, 2005 and 2006:

                                                                                           2005                2006
                                                                                              $                   $

           Weighted risk-free interest rate                                               4.46%               4.29%
           Dividend yield                                                                 1.80%                  2%
           Weighted volatility factor of the expected
            market price of the Company's common share                                     110%              69.14%
           Weighted average expected life of the option                               7.2 years            10 years

         The weighted volatility factor of the expected market price of the
         Company's common share is calculated by annualising the standard
         deviation of daily changes in price of the Company's common shares
         based on a period of 360 days. As the market price of the Company's
         common share fluctuated at lesser extent in the past 360 days before
         the day of grant of the option in 2006 than the corresponding period
         before the date of grant in 2005, the weighted volatility factor
         dropped in 2006.

         The calculation of weighted average expected life of the option is
         based on the historical performance and the anticipated performance of
         the Company's common share price.

                                      F-30
<PAGE>


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

16       Business segment information

 (a)     The Group is organized based on the products it offers. Under this
         organizational structure, the Group's operation can be classified into
         3 business segments, Scales, Telecommunications products and Other.

         Scales operations principally involves production and marketing of
         sensor based scales products. These include bathroom, kitchen, office,
         jewelry, laboratory, postal and industrial scales that are used in
         consumer, commercial and industrial applications.

         Telecommunication products operations principally involve production
         and modification of two-way radios and cordless telephones that are
         used in consumer and commercial applications.

         The Group established the "Other" segment which principally includes
         the activities of (i) tooling and mould charges for scales and
         telecommunication products, and (ii) sales of scrap materials.

         The accounting policies of the Group's reportable segments are the same
         as those described in the description of business and significant
         accounting policies.

                                      F-31
<PAGE>


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

16       Business segment information (Continued)

 (a)     Summarized financial information by business segment for 2005, 2006 and
         2007 is as follows:

                                                                       Identifiable     Depreciation
                                                           Operating   assets as of              and        Capital
                                             Net sales   profit/(loss)     March 31     amortization    expenditure
                                             ---------   -------------  -----------    -------------    -----------
                                                     $             $              $                $              $

            2007

            Scales                          49,904,959     3,971,549     20,543,345          749,466         84,687
            Telecommunication products      16,248,261    (1,392,106)     9,107,007        1,037,083        127,031
            Other                              338,160        60,869              -                -              -
                                            ----------     ---------     ----------        ---------      ---------
            Total operating segments        66,491,380     2,640,312     29,650,352        1,786,549        211,718
            Corporate                                -    (2,898,638)    17,868,263          851,966        130,392
                                            ----------     ---------     ----------        ---------      ---------
            Group                           66,491,380      (258,326)    47,518,615        2,638,515        342,110
                                            ==========     =========     ==========        =========      =========

            2006

            Scales                          43,553,161     5,545,751     25,951,769         798,653        339,449
            Telecommunication products      20,750,920      (959,436)     9,084,368       1,110,862        509,173
            Other                              238,882        42,999              -               -              -
                                            ----------     ---------     ----------        ---------      ---------
            Total operating segments        64,542,963     4,629,314     35,036,137       1,909,515        848,622
            Corporate                                -    (3,718,271)    14,442,751         760,671        491,512
                                            ----------     ---------     ----------        ---------      ---------
            Group                           64,542,963       911,043     49,478,888       2,670,186      1,340,134
                                            ==========     =========     ==========        =========      =========

                                                                F-32
<PAGE>


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

16       Business segment information (Continued)

 (a)     (Continued)

                                                                         Identifiable   Depreciation
                                                             Operating   assets as of            and       Capital
                                              Net sales    profit/(loss)     March 31    amortization  expenditure
                                              ---------    -------------  -----------   -------------  -----------
                                                      $              $              $              $             $

            2005
            ----

            Scales                           47,256,574      9,047,028     28,455,668        501,818       169,357
            Telecommunication products       20,656,491     (1,508,617)     8,461,183        793,796       113,524
            Other                             1,689,127        304,595              -              -             -
                                             ----------      ---------     ----------      ---------       -------
            Total operating segments         69,602,192      7,843,006     36,916,851      1,295,614       282,881
            Corporate                                 -     (4,179,800)    15,545,905      1,477,472       401,517
                                             ----------      ---------     ----------      ---------       -------
            Group                            69,602,192      3,663,206     52,462,756      2,773,086       684,398
                                             ==========      =========     ==========      =========      ========

         Operating profit by segment equals total operating revenues less
         expenses which are related to the segment's operating revenues.
         Operating loss of the corporate segment consists principally of
         salaries and related costs of administrative staff, and administration
         and general expenses of the Group. 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, deferred
         income tax assets and other identifiable assets not related
         specifically to individual segments. Goodwill of $1,100,962, $842,821
         and $842,821 arising from the purchase of Korona and Gram, is allocated
         to scales segment as of March 31, 2005, 2006 and 2007 respectively.

 (b)     The Group primarily operates in Hong Kong, the PRC, Germany, Canada,
         the United States and the United Kingdom. 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.
         Subsidiaries in Germany, Canada, the United States and the United
         Kingdom are responsible for the distribution of electronics scales and
         telecommunication products in Europe and North America. As the
         operations are integrated, it is not practicable to distinguish the net
         income derived among the activities in Hong Kong, the PRC, Germany,
         Canada, the United States and the United Kingdom.

         Total property, plant and equipment, net by geographical areas are as
         follows:

                                                       2006                2007
                                                          $                   $

           Hong Kong                              3,685,511           3,585,124
           The PRC                                8,674,403           7,048,045
           Germany                                  136,495             115,655
           Canada                                   270,194             239,497
           United States of America                  66,474              50,281
           Poland                                       852                 571
                                                 ----------          ----------
           Total assets                          12,833,929          11,039,173
                                                 ==========          ==========

                                      F-33

<PAGE>


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

16       Business segment information (Continued)

 (c)     The following is a summary of net export sales by geographical areas,
         which are defined by the final shipment destination, constituting 10%
         or more of total sales of the Group for the years ended March 31, 2005,
         2006 and 2007:

                                                                       Year ended March 31
                                         --------------------------------------------------------------------------
                                               2005          %           2006           %          2007           %
                                                  $                         $                         $

           United States of America      38,638,906         55     37,352,618          58    36,432,384          55
           Germany                       15,025,103         22     13,302,506          21    17,545,242          26
           Canada                         2,686,951          4      1,637,447           3     2,239,419           3
           United Kingdom                 2,769,900          4      2,262,160           3     1,480,464           2
           Other EC countries             7,948,970         11      7,997,740          12     5,739,117           9
           Asia and others                2,532,362          4      1,990,492           3     3,054,754           5
                                         -- -------        ---     ----------         ---    ----------         ---
                                         69,602,192        100     64,542,963         100    66,491,380         100
                                         ==========        ===     ==========         ===    ==========         ===

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

                                                                                    Year ended March 31
                                                                --------------------------------------------------------------
                                                                     2005       %         2006        %         2007         %
                                                                        $                    $                     $

           Sunbeam Products, Inc.             Business
           (USA)                        segment scales         11,708,143      17   10,269,375       16   15,387,967       23

           TTI Tech Co., Ltd.       Tele-communication
                                              products          7,309,546      11   10,264,500       16    7,752,573       12

           Global Link                           Tele-
           Corporation Ltd.              communication
                                               products        11,893,578      17   10,462,434       16    8,457,868       13
                                                               ----------     ---   ----------      ---   ---------       ---
                                                               30,911,267      45   30,996,309       48   31,598,408       48
                                                               ==========     ===   ==========      ===   ==========      ===

                                                              F-34
</TABLE>

<PAGE>


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

17       Fair value of financial instruments

         SFAS No. 107, "Disclosures About Fair Value of Financial Instruments"
         defines the fair value of a financial instrument at which the
         instrument could be exchanged in a current transaction between willing
         parties.

         The carrying value of all of the Group's financial instruments
         classified as current assets or current liabilities are deemed to
         approximate fair value because of the short maturities of these
         instruments. These would include cash and cash equivalents, accounts
         receivable, accounts payable and accrued and other liabilities, which
         are reflected on the consolidated balance sheets.

         In the opinion of management, the carrying amount of the Group's
         long-term debt approximates fair values as the interest rate applicable
         is believed to approximate the market rates that would be offered to
         the Group for debts with the same remaining maturities.

18       Subsequent events

         In April 2007, the Group set up a new wholly-owned subsidiary, namely
         Bonso USA, incorporated in the State of Nevada, US. The new subsidiary
         will focus on the sales of industrial scales in the US market. The set
         up of this new subsidiary will allow Bonso to further streamline its
         business and to tailor market strategies in the targeted market.

                                      F-35