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 1915-1916, 19/F, Delta House
                           3 On Yiu Street, Shek Mun,
                                Shatin, 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, 2008

     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 basis of accounting the Registrant has used to
prepare the financial statements included in this filing:

U.S. GAAP [X]          International Financial Reporting Standards as issued
                       By the International Accounting Standards Board [ ]
Other [ ]

If "Other" has been checked in response to the previous question, indicate by
check mark which financial statement item the Registrant has elected to follow:

                             Item 17 [ ] Item 18 [ ]

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 4A. Unresolved Staff Comments.........................................  29
Item 5. Operating and Financial Review and Prospects.......................  29
Item 6. Directors, Senior Management and Employees.........................  47
Item 7. Major Shareholders and Related Party Transactions..................  56
Item 8. Financial Information..............................................  57
Item 9. The Offer and Listing..............................................  57
Item 10. Additional Information.................. .........................  58
Item 11. Quantitative and Qualitative Disclosures about Market Risk........  63
Item 12. Description of Securities Other Than Equity Securities............  64


                                    PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies...................  64
Item 14. Material Modifications to the Rights of Security Holders
           and Use of Proceeds ............................................  64
Item 15. Controls and Procedures...........................................  64
Item 16. Reserved..........................................................  67
Item 16A. Audit Committee Financial Expert.................................  67
Item 16B. Code of Ethics...................................................  67
Item 16C. Principal Accountant Fees and Services...........................  68
Item 16D. Exemptions from the Listing Standards for Audit Committees.......  69
Item 16E. Purchases of Equity Securities by the Issuer
             and Affiliates Purchasers ....................................  69


                                    PART III

Item 17. Financial Statements..............................................  70
Item 18. Financial Statements......................................  F-1 to F-35
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 Annual Report, 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, 2007 and 2008 and
for each of the three fiscal years ended March 31, 2008 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, 2004, 2005 and 2006, and for each of the two fiscal
years in the period ended March 31, 2005 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


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<S>     <C>    <C>    <C>    <C>    <C>    <C>


                                              SELECTED CONSOLIDATED FINANCIAL DATA

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

                                                                          Year Ended March 31,
                                           -------------------------------------------------------------------------------
                                               2004            2005             2006            2007(1)          2008 (1)
                                           -----------      -----------      -----------      ----------       -----------

Net sales                                  $    74,964      $    69,602      $    64,543      $    66,491      $    62,687

Cost of sales                                  (57,481)         (53,138)         (51,114)         (53,946)         (57,683)

Gross margin                                    17,483           16,464           13,429           12,545            5,004

Selling expenses                                (3,122)          (2,595)          (2,111)          (2,477)          (2,480)

Salaries and related costs                      (5,150)          (5,216)          (5,681)          (5,438)          (5,781)

Research and development expenses                 (740)            (710)            (847)            (983)            (883)

Administration and general expenses             (5,439)          (4,079)          (3,421)          (3,004)          (4,638)

Amortization of brand name                        (200)            (200)            (200)            (200)            (200)

Impairment of goodwill                            --               --               (258)            --               (843)

Impairment of brand name                          --               --               --               --             (1,597)

Impairment on share investment                    --               --               --               --               (200)

Loss from water damage                            --               --               --               (701)            --

Income (Loss) from operations                    2,832            3,664              911             (258)         (11,618)

Interest income                                     57               81              202              313              203

Interest expense                                  (500)            (417)            (504)            (626)            (693)

Foreign exchange gain (loss)                        15              (98)            (184)            (184)            (216)

Other income                                       225              372              190              302            3,440

Income (Loss) before income                      2,629            3,602              615             (453)          (8,884)
taxes and minority interest

Income tax (expense) benefit                      (402)            (266)            (131)            (918)             334

Net (loss) income before                         2,227            3,336              484           (1,371)          (8,550)
minority interest

Minority interest                                   41               14             --               --               --

Net (loss) income                                2,268            3,350              484           (1,371)          (8,550)

(Loss) earnings per share
   -  Basic                                $      0.40      $      0.59      $      0.09      ($     0.25)     ($     1.53)
   -  Diluted                              $      0.37      $      0.55      $      0.08      ($     0.25)     ($     1.53)

Weighted average shares                      5,702,015        5,646,676        5,577,639        5,577,639        5,577,639

Diluted weighted average shares              6,060,264        6,054,303        5,937,644        5,577,639        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, 2008 and 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,
                                        ---------------------------------------------------------------------------
                                          2004             2005           2006 (1)           2007             2008
                                        -------          -------          -------          -------          -------

Cash and cash equivalents               $10,815          $ 9,708          $ 8,582          $ 8,118          $10,195

Working capital                         $12,901          $15,345          $16,945          $16,842          $12,900

Total assets                            $53,598          $52,463          $49,479          $47,519          $41,786

Current liabilities                     $20,190          $18,319          $15,657          $16,394          $18,098

Long-term debts and capital             $ 1,158          $   168          $     0          $    59          $   184
leases

Deferred income tax assets              $    67          $    99          $    83          $    87          $   192

Common stock                            $    17          $    17          $    17          $    17          $    17

Shareholders' equity                    $30,750          $33,932          $33,802          $31,051          $20,905

Dividends declared per share            $  0.05          $  0.10          $  0.05          $  0.05          $     0


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

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. From 1994 until July 2005, the Chinese
Renminbi had remained stable against the U.S. Dollar at approximately 8.28 to
1.00 U.S. Dollar. On July 21, 2005, the Chinese currency regime was altered to
link the RMB to a "basket of currencies," which includes the US dollar, Euro,
Japanese Yen and Korean Won. Under the rules, the RMB is allowed to move 0.3% on
a daily basis against the U.S. Dollar. The People's Bank of China, on May 21
2007, widened the RMB trading band from 0.3% daily movement against the U.S.
Dollar to 0.5%. As of October 13, 2008, the RMB was valued at 6.83 per US
Dollar. 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. 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 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.


                                       7
<PAGE>


     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.

     Our Results Will Likely Be Affected By The Recent Global Economic Downturn.
In 2008, global economic conditions have experienced a downswing from the
effects of the subprime mortgage crisis, general credit crisis, collateral
effects on the finance and banking industries, volatile energy costs, slower
economic activity, decreased consumer confidence, reduced corporate profits and
adverse business conditions. These conditions make it difficult for our
customers, our vendors and us to forecast and plan future business activities or
expansion accurately. They appear to have caused and may continue to cause
companies worldwide to slow spending generally, and our customers to slow
ordering and spending on our products specifically. If orders from our customers
continue to shrink because of these macroeconomic effects, our business,
financial condition and results of operations will in turn likely be materially
and adversely affected.

     We cannot predict the timing or duration of the economic slowdown in the
electronics manufacturing industry in which we serve. Therefore, management has
focused on our strategy to improve production efficiencies, broaden our product
range, and penetrate into new markets. We plan to concentrate on reducing
overhead costs and improving resources utilization. These actions will increase
our profitability and new products development to meet new requirements from
customers.

     The economy of China has been experiencing significant growth, leading to
some inflation. If the government tries to control inflation by traditional
means of monetary policy or returns to planned economic techniques, our business
will suffer a reduction in sales growth and expansion opportunities. The rapid
growth of the PRC economy has historically resulted in high levels of inflation.


                                       8
<PAGE>


If the government tries to control inflation, it may have an adverse effect on
the business climate and growth of private enterprise in the PRC. An economic
slowdown may reduce our revenues. If inflation is allowed to proceed unchecked,
our costs would likely increase, and there can be no assurance that we would be
able to increase our prices to an extent that would offset the increase in our
expenses.

     Changes to PRC tax laws and heightened efforts by the China's tax
authorities to increase revenues are expected to subject us to greater taxes.
Under prior PRC law, we have been afforded a number of tax concessions by, and
tax refunds from, China's tax authorities on a substantial portion of our
operations in China by reinvesting all or part of the profits attributable to
our PRC manufacturing operations. On March 16, 2008, 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, 2009, which
would likely increase our tax burden in the future. The new CIT Law provides
that further detailed measures and regulations on the determination of taxable
profit, tax incentives and grandfathering 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. Under the new income tax law,
apart from those qualified as high-tech enterprises, most domestic enterprises
and foreign invested enterprises would be subject to a single PRC enterprise
income tax rate and gradually transition to the new tax rate of 25% within five
years. We base our tax position upon the anticipated nature and conduct of our
business and upon our understanding of the tax laws of the various countries in
which we have assets or conduct activities. However, our tax position is subject
to review and possible challenge by taxing authorities and to possible changes
in law, which may have retroactive effect. We cannot determine in advance the
extent to which some jurisdictions may require us to pay taxes or make payments
in lieu of taxes.

     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
have little precedential 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 30 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. Further, various disputes may be subject to
the exercise of considerable discretion by agencies of the Chinese government,
and forces and factors unrelated to the legal merits of a particular matter or
dispute may influence their determination. Continued uncertainty relating to the
laws in China and the application of the laws could have a material adverse
effect upon us and our operations in China.


                                       9
<PAGE>


     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 Guangdong
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 The Shenzhen Special Economy
Zone 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 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. We
currently maintain property damage insurance aggregating approximately $23.14
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.

     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 years ended March 31, 2007 and 2008,
we experienced an increase in the cost of labor caused by the increase in the


                                       10
<PAGE>


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.

     If we were to lose our existing banking facilities or those facilities were
substantially decreased or less favorable terms were imposed upon us, the
Company could be materially and adversely affected. We maintain banking
facilities with a number of different banks, which are typically subject to
renewal on an annual basis. Certain of our short-term bank loans (i.e.,
aggregating approximately US$20.9 million) were renewed subsequent to our fiscal
year end. We have other banking facilities aggregating approximately US$6.0
million that we expect to renew in the coming months.

     We use our banking facilities to fund our working capital requirements. In
recent months, the credit markets in Hong Kong and throughout the world have
tightened and experienced extraordinary volatility and uncertainty. We have had
discussion with several of our banks and believe that the availability of our
banking facilities will continue on terms that are acceptable to us. However, as
a result of changes in the capital or other legal requirements applicable to the
banks that provide our banking facilities or if our financial position and
operations were to deteriorate further, our costs of borrowing could increase or
the terms of our banking facilities could be changed so as to impact our
liquidity. If we are unable to obtain needed capital on terms acceptable to us,
our business, financial condition, results of operations and cash flows could be
materially adversely affected.

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 years ended March 31, 2006 and March 31, 2007, the same three
customers accounted for approximately 48% of our sales for both years. During
the fiscal year ended March 31, 2008, they accounted for 50% of our sales. 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.


                                       11
<PAGE>


     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.

     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, $13,484,460 during
the fiscal year ended March 31, 2008 is the result of sales of bathroom and
kitchen scales to retail merchants in Europe by Korona Haushaltswaren GmbH & Co.
KG ("Korona"), a subsidiary of the Company. 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.


                                       12
<PAGE>


     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
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 years ended
March 31, 2008 and 2007, certain of our subsidiaries were and continue to be
subject to enquiries from the local tax authorities. Upon the adoption of FIN
48, "Accounting for Uncertainty in Income Taxes -- An Interpretation of FASB
Statement No. 109", or FIN 48, the Company recorded a provision of approximately
$2,164,000 in relation to uncertain tax positions as of April 1, 2007. The
assessment is subject to final determination by the local tax authorities and
may be different from what we have recorded as a provision. As such, 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
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. Bonso did not consider the need to make


                                       13
<PAGE>


a tax provision in this respect. However, there can be no assurance that the
assessment performed by the local tax authorities will result in the same
position. 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 affected if our affiliated entities' tax liabilities
increase or if they are found to be subject to late payment fees or other
penalties.

     Increased Prices For Raw Materials May Have A Negative Impact Upon Us.
During the fiscal years ended March 31, 2006, 2007 and 2008, 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, 2006, March 31, 2007 and March 31, 2008, 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 at
our cost 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. We will reduce the labor requirements by
sub-contracting out some production processes that our sub-contractor has a
competitive advantage in the cost of production for the fiscal year ended March
31, 2009. We will benefit from the lower cost of production and higher business
flexibility. We intend to monitor the quality from outsourcing through our
incoming quality control process; however, we cannot guarantee the ability of
our sub-contractors to deliver goods on time.

     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
scale and 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. As of October 7, 2008, Mr. Anthony So, our founder
and Chairman, beneficially owns approximately 36.41% of the outstanding shares


                                       14
<PAGE>


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
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.

     We have identified Material Weaknesses in our Internal Controls over
Financial Reporting. We became subject to Section 404 of the Sarbanes-Oxley Act
of 2002 during the fiscal year ended March 31, 2008, which requires us to
include a report on the effectiveness of our internal controls over financial
reporting. In connection with the preparation of this Annual Report, management
of the Company identified material weaknesses in the Company's internal controls
over financial reporting. Because of these material weaknesses, there is
heightened risk that a material misstatement of our financial statements will
not be prevented or detected. We intend to take steps to remediate our material
weaknesses, including hiring additional accounting and finance personnel and
engaging consultants, but we cannot assure you that our efforts to remediate
these internal control weaknesses will be successful, that similar material
weaknesses will not recur or that we will not identify new material weaknesses.
In the event that we do not adequately remedied these material weaknesses, and
if we fail to maintain proper and effective internal controls in future periods,
we could become subject to potential review by the NASDAQ, the Securities and
Exchange Commission or other regulatory authorities, which could (i) require
additional financial and management resources, (ii) compromise our ability to
run our business effectively, (iii) cause investors to lose confidence in our
financial reporting, and (iv) result in a reduction in the price of our Common
Stock.

     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 rules as well as the Sarbanes-Oxley
Act of 2002, including but not limited to compliance with Section 404 that
requires management to assess the effectiveness of its internal control over
financial reporting, has increased our legal, financial and accounting costs,
and we expect the cost of compliance with these new rules 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.


                                       15
<PAGE>


     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, 2006, 2007 and 2008, our financial results were
affected by currency fluctuations, resulting in a total foreign exchange loss of
approximately $184,000, $184,000 and $216,000 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.

     Protection And Infringement Of Intellectual Property. Except for three
patents held by Gram Precision Scales Inc. ("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 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.


                                       16
<PAGE>


     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 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 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.


                                       17
<PAGE>


     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.

     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 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.


                                       18
<PAGE>


     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.

     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.
Bonso USA Inc. focuses on the sales of industrial scales in the US market. We
intend to dissolve Bonso USA, Inc.

     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 1915-1916, 19/F,
Delta House, 3 On Yiu Street, Shek Mun, Shatin, 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:

                                        2006               2007              2008
                                     -----------         --------         ----------

Property Plant & Equipment           $1,340,134          $342,110         $2,683,440


     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 (RMB 11,145,500). In July 2007, the Company paid a
deposit of approximately $610,000 (RMB 4,617,900), and the remaining balance was
paid in October 2007. During the year ended March 31, 2008, the Group prepaid
$150,325 (RMB 1,050,000) for the acquisition of the right to use another piece
of land in XinXing, the total consideration for which will be $501,083 (RMB
3,500,000).

     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 2009 and the first phase of
construction of the new manufacturing facilities will commence in 2011.


                                       19
<PAGE>

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 "OEM's"), Original
Brand Manufacturers (individually "OBM" or collectively "OBM's") and Original
Design Manufacturers (individually "ODM" or collectively "ODM's").

     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 ports 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 67% of
revenue for the fiscal year ended March 31, 2006, 75% for 2007 and 70% for 2008.
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.

     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 32% of revenue for the fiscal year
ended March 31, 2006, 24% for 2007 and 29% for 2008. We believe that sales of
our telecommunications products will remain stable.

     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 scrape materials. These revenues
accounted for approximately 1% of net sales for the fiscal years ended March 31,
2006, 2007 and 2008.

     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, 2006, 2007,
and 2008:


                                                      Year ended March 31,
                                         -----------------------------------------
Product Line                             2006               2007              2008
Scales                                    67%                75%               70%
Telecommunications Products               32%                24%               29%
Others                                     1%                 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


                                       20
<PAGE>


increasing sales of our products to existing customers. Our continued growth and
our ability to become profitable are 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 is currently working on a variety of projects to enhance
our existing scale products and products for the telecommunications industry and
the postal scale/meter market. See "Products, Research and Development /
Competition" below.

     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 ODM's and OEM's 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.


                                       21
<PAGE>


Customers and Marketing

     We sell our products primarily in the United States and Europe. Customers
for our products are primarily OEM's, OBM's and ODM's, 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.

     Net export sales to customers by geographic area consisted of the following
for each of the three years ended March 31, 2006, 2007 and 2008.

                                                         Year ended March 31:
                             --------------------------------------------------------------------------------
                                     2006                        2007                          2008
                             ---------------------       --------------------          ----------------------
United States                $37,352,618        58%      $36,432,384       55%         $31,810,515         51%
of America

Germany                      $13,302,506        21%      $17,545,242       26%         $17,283,135         27%

Other EC                     $10,259,900        15%       $7,219,581       11%          $8,412,168         13%
Countries

Asia and Others               $3,627,939         6%       $5,294,173        8%          $5,180,683          9%


Total                        $64,542,963       100%      $66,491,380      100%         $62,686,501        100%


     We maintain a marketing and sales team of 12 people in China, a marketing
team of 3 people in Canada for Gram Precision and a sales team of 10 people at
Korona in Germany (including 6 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, 2006, 2007 and 2008 we recorded total
commission payments of $379,162, $543,349 and $626,116, respectively. In
addition, our marketing teams contact existing and potential customers by
telephone, mail, facsimile, and in person.


                                       22
<PAGE>


     Our major electronics sensor customer and the percent of sales for the
prior three fiscal years are below:

                                                      Percent of Sales - Year ended March 31:
                                                 ----------------------------------------------------

   Electronics Sensor Customers                  2006                     2007                   2008

Sunbeam Products, Inc.                            16%                      23%                    21%


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

                                                      Percent of Sales - Year ended March 31:
                                                 -----------------------------------------------------

          Telecommunications                     2006                     2007                    2008
               Customer

          TTI Tech Co., Ltd.                      16%                      12%                    15%

     Global Link Corporation Ltd.                 16%                      13%                    14%


     Sales of our products to OEM's and ODM's accounted for approximately 70% of
our total net sales in the years ended March 31, 2006 and 2007 and 77% for the
year ended March 31, 2008. Korona contributed $13,672,447 or 21% of total net
sales for the year ended March 31, 2006, $13,437,337 or 20% of total net sales
for the year ended March 31, 2007 and $13,484,460 or 21% of total net sales for
the year ended March 31, 2008. Gram Precision contributed $5,571,132 or 9% of
total net sales for the year ended March 31, 2006, $4,767,667 or 7% of total net
sales for the year ended March 31, 2007 and $3,706,420 or 6% of total net sales
for the year ended March 31, 2008.

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, 2006, March 31, 2007 and March 31,
2008, 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.

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.


                                       23
<PAGE>


     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. We believe that we are in compliance with RoHS and have 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 3 patents for
scales and 12 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.

     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.


                                       24
<PAGE>


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 OEM's, OBM's and ODM's. 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, 2008, we employed 65 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
ODM's and OEM's. We anticipate hiring additional research and development
personnel to meet the increased demand for scale 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 $847,401 during the fiscal year ended March 31, 2006,
$983,172 during the fiscal year ended March 31, 2007 and $883,304 during the
fiscal year ended March 31, 2008.

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
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.


                                       25
<PAGE>


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
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.


                                       26
<PAGE>


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 wholly-owned subsidiary, Bonso USA, Inc., a
Nevada corporation. In August 2008, management made the decision to dissolve
Bonso USA, Inc. because of poor performance. The Group will handle all of the
business previously handled by Bonso USA, Inc., through its other subsidiaries.

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.

     Hong Kong

     We lease approximately 2,045 square feet of office space located at Unit
1915-1916, 19/F, Delta House, 3 On Yiu Street, Shek Mun, Shatin, Hong Kong as
our principal executive office. The monthly lease payment is $3,933, and the
lease expires on January 28, 2011.

     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 Mr.
Anthony So, the Chairman, Chief Executive Officer and Chief Financial Officer of
the Company.


                                       27
<PAGE>


     On March 31, 2008, we sold our office that was located at Unit 1106 - 1110,
11/F, Star House, 3 Salisbury Road, Tsimshatsui, Kowloon, Hong Kong. The total
sales price was $4,875,513, and Bonso realized a gain on the sale of $3,123,983.

     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 $2,635
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 RMB 9,692, or
approximately $1,419.

     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 (RMB 11,145,500). In July 2007, the Company paid a
deposit of approximately $610,000 (RMB 4,617,900). During the year ended March
31, 2008, the Group prepaid $150,325 (RMB 1,050,000) for the acquisition of the
right to use another piece of land in XinXing. The total consideration for the
land will be $501,083 (RMB 3,500,000).


                                       28
<PAGE>


     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 Euros 6,567.74. Korona has an agreement with a logistic company that
the logistic company handles the storage, receipt and shipping of all goods, the
monthly rent is Euros 31,390, and the lease expires on June 30, 2010.

     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 Euros 533. This lease expires on July 31,
2010.

     United States

     Bonso USA Inc. leased approximately 3,070 square feet of office and
warehouse space located at 11 Millpond Drive, Unit 4, Lafayette, NJ 07848. This
facility was used as office space and warehouse and the monthly rent for this
facility was $2,800. This lease expires on April 30, 2010.

     Canada

     Gram Precision leases approximately 10,800 square feet of office and
warehouse space located at 2855 Argentia Road, Unit 1, Mississauga, Ontario, L5N
8G6, Canada. The monthly rent for this facility is CDN 9,969. This lease expires
on April 30, 2010.

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 70% and 29% of total
sales for the fiscal year ended March 31, 2008, 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 a loss of orders from any of our largest customers. Further, the


                                       29
<PAGE>


pricing of our scales and telecommunication products are becoming increasingly
competitive, especially to our customers in the United States and Germany, who
contributed approximately 78% of our revenue during the fiscal year ended March
31, 2008.

     In the fiscal year ended March 31, 2006 net sales were approximately
$64,543,000 and net income was approximately $484,000. During the fiscal year
ended March 31, 2007 net sales were approximately $66,491,000 and net loss was
approximately $1,371,000. During the fiscal year ended March 31, 2008, net sales
were approximately $62,687,000 and net loss was approximately $8,550,000.

     Costs are increasing in China and our labor costs represented approximately
8.8% of our total production costs in the fiscal year ended March 31, 2008,
compared to 10.7% in the fiscal year ended March 31, 2007. Although labor costs
as a percentage of total production costs have decreased, the total labor costs
for fiscal 2008 have actually increased compared to fiscal 2007. This was due to
an increase in the minimum wage set by the PRC government, partly offset by the
decrease in the number of workers. 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. However, the prices for raw materials increased
significantly during the fiscal year ended March 31, 2008 as a result of the
increase in oil prices. There can be no assurance that raw material costs will
not further increase or that any additional increase in raw material costs will
not have a material adverse effect upon our results of operations.


                                       30
<PAGE>


Operating Results

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


                                                                 Fiscal Year Ended
                                               -------------------------------------------------
Income Statement Data                          2006                  2007                  2008
---------------------                          -----                 -----                 -----

Net sales                                      100.0                 100.0                 100.0
Cost of sales                                  (79.2)                (81.1)                (92.0)
Gross margin                                    20.8                  18.9                   8.0
Selling expenses                                (3.3)                 (3.7)                 (4.0)
Salaries and related costs                      (8.8)                 (8.2)                 (9.2)
Research and development expenses               (1.3)                 (1.5)                 (1.4)
Administration and general expenses             (5.3)                 (4.5)                 (7.4)
Amortization of brand name                      (0.3)                 (0.3)                 (0.3)
Impairment of goodwill                          (0.4)                   --                  (1.3)
Impairment of brand name                          --                    --                  (2.6)
Impairment of share investment                    --                    --                  (0.3)
Loss from water damage                            --                  (1.1)                  --
Income (loss) from operations                    1.4                  (0.4)                (18.5)
Interest income                                  0.3                   0.5                   0.3
Interest expense                                (0.8)                 (0.9)                 (1.1)
Foreign exchange loss                           (0.3)                 (0.3)                 (0.3)
Other income                                     0.3                   0.4                   5.5
Income before income taxes and                   1.0                  (0.7)                (14.1)
minority interest
Income tax expense                              (0.2)                 (1.3)                  0.5
Minority interest                                0.0                   0.0                   0.0
Net (loss) income                                0.8                  (2.0)                (13.6)


Fiscal year ended March 31, 2008 compared to fiscal year ended March 31, 2007

     Net Sales. Our sales decreased approximately $3,804,000 or 5.7% from
approximately $66,491,000 for the year ended March 31, 2007, to approximately
$62,687,000 for the year ended March 31, 2008. The decrease in sales was
primarily the result of decreased sales orders for scales products. Sales of our
scales and others business decreased 12.2% from approximately $50,243,000 for
the year ended March 31, 2007, to approximately $44,089,000 for the year ended
March 31, 2008, and sales for telecommunications products increased 14.5% from
approximately $16,248,000 for the year ended March 31, 2007, to approximately
$18,598,000 for the year ended March 31, 2008. The decrease in sales for scale
products was the result of a decline in orders from some of our customers. The
increase in sales for telecommunications products was caused by an increase in
orders from our major telecommunications customers.


                                       31
<PAGE>


     Gross Margin. Gross margin as a percentage of revenue declined to
approximately 8.0% during the year ended March 31, 2008 as compared to
approximately 18.9% during the year ended March 31, 2007. The Company was
confronted with a very difficult operating environment in this fiscal year.
Rising prices for some key raw materials like plastic resins and stainless steel
drove up the production costs for the Company. Rising labor costs also increased
our production costs. Furthermore, the Company paid more for the raw materials
because of the appreciation of Chinese Renminbi against US Dollars during the
year. Also, we wrote off $2,457,510 of obsolete inventories. In addition, the
Company was not able to reflect fully the increase in material and labor costs
in its selling prices. As a result of these factors, our gross profit margin
decreased by 10.9% when compared to the prior fiscal year.

     Selling Expenses. Selling expenses increased by approximately $3,000 or
0.1% from approximately $2,477,000 for the year ended March 31, 2007 to
approximately $2,480,000 for the year ended March 31, 2008. During fiscal 2008,
there was an increase in the proportion of sales made through external sales
agents relative to sales made through internal salespersons. This resulted in an
increase in commissions paid to external sales agents, offset by a decrease in
salaries to our internal salespersons.

     Salaries And Related Costs. Salaries and related costs increased by
approximately $343,000 or 6.3% from approximately $5,438,000 for the year ended
March 31, 2007 to approximately $5,781,000 for the year ended March 31, 2008.
This increase was primarily the result of increased salary to employees, and
appreciation of Chinese Renminbi, Euros and Canada Dollars against US Dollars.

     Research And Development. Research and development expenses decreased
approximately $100,000 or 10.2% from approximately $983,000 for the year ended
March 31, 2007 to approximately $883,000 for the year ended March 31, 2008. The
decrease in research and development was primarily the result of a reduction in
the number of engineers employed. Research and Development as a percentage of
revenue decreased to 1.40% during the year ended March 31, 2008 as compared to
1.48% during the year ended March 31, 2007.

     Administration And General Expenses. Administration and general expenses
increased by approximately $1,634,000 or 54.4% from approximately $3,004,000 for
the year ended March 31, 2007 to approximately $4,638,000 for the year ended
March 31, 2008. This increase was primarily the result of increased expenses in
professional fees for tax advisory services, audit fees, and operating expenses
for Bonso USA, Inc. An increase in bank charges of approximately $120,000 was
due to facilitating insurance coverage through factoring for open accounts to
customers. Furthermore, the company recognized a provision for $869,995 for bad
debts.

     Amortization Of Brand Names. During the years ended March 31, 2007 and 2008
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, 2008, the Group made a provision for impairment of approximately $843,000
for one of the subsidiaries, Gram Precision, due to deteriorating business


                                       32
<PAGE>


conditions, which we believe was primarily caused by the subprime credit crisis
and higher purchase costs as a result of the increase in oil prices during the
second half of fiscal 2008. The reporting unit's operating results for fiscal
2008 were used as a basis for management's discounted cash flow analysis in
determining the reporting unit's fair value. There was no impairment loss
recognized during the fiscal year ended March 31, 2007.

     Impairment Of Brandname. Management performed an impairment assessment of
the brand name of one of the subsidiaries, Korona, due to continuing losses
incurred by Korona and the diminishing price premium that Korona was able to
realize on its branded products since the last quarter of fiscal 2008. Based on
the assessment for the year ended March 31, 2008, the Group recorded an
impairment charge on the brand name of approximately $1,597,000. There was no
impairment loss recognized during the fiscal year ended March 31, 2007.

     Impairment Of Share Investment. Based on the assessment for the year ended
March 31, 2008, the Group made a provision for impairment of $200,000 for its
investment in a private company, since the value of the investment had become
uncertain during the fiscal year. 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. The loss was not covered according to the insurance agreement. There
was no such loss in the fiscal year ended March 31, 2008.

     (Loss)/Income From Operations. As a result of the factors described above,
(loss)/ income from operations increased by 4403.1% from a loss of approximately
$258,000 for the year ended March 31, 2007 to a loss of approximately
$11,618,000 for the year ended March 31, 2008.

     Interest Income. Interest income decreased by $110,000 or 35.1% from
approximately $313,000 for the year ended March 31, 2007 to approximately
$203,000 for the year ended March 31, 2008. The decreases were primarily the
result of fewer deposits in higher yield account and decrease in interest rates.

     Interest Expenses. Interest expenses increased approximately $67,000 or
10.7% from approximately $626,000 for the year ended March 31, 2007 to
approximately $693,000 for the year ended March 31, 2008. This increase was
primarily the result of increased in bank borrowings during the year ended March
31, 2008.

     Foreign Exchange Losses. Foreign exchange loss increased approximately
$32,000 or 17.4% from approximately $184,000 for the year ended March 31, 2007
to approximately $216,000 for the year ended March 31, 2008. This increase was
primarily the result of the appreciation of Chinese Renminbi against US Dollars
during the year ended March 31, 2008.

     Other Income. Other income increased approximately $3,138,000 or 1039.0%
from approximately $302,000 for the year ended March 31, 2007, to approximately
$3,440,000 for the year ended March 31, 2008. The increase was primarily the
result of the gain on the sale of an office suite in Hong Kong of approximately
$3,124,000 and disposal of fixed assets in Germany.


                                       33
<PAGE>


     Income Tax Expense. Income tax expense decreased approximately $1,252,000
from approximately $918,000 during the year ended March 31, 2007 to an income
tax benefit of $334,000 during the year ended March 31, 2008, representing
approximately 1.4% and approximately (0.5)% of net sales, respectively. For the
year ended March 31, 2008, the Company performed an assessment and made a
reversal of provision of approximately $306,000 in relation to uncertain tax
positions of prior years.

     Net (loss) income. As a result of the factors described above, net loss
increased from a loss of approximately $1,371,000 for the period ended March 31,
2007 to a loss of approximately $8,550,000 for the period ended March 31, 2008,
an increase of approximately $7,179,000, or 523.6%.

     Foreign currency translation adjustments. Foreign currency translation
adjustments, net of tax increased from a gain of $227,000 for the period ended
March 31, 2007 to a gain of approximately $567,000 for the period ended March
31, 2008, an increase of approximately $340,000, or 149.8%. The increased
foreign currency translation adjustments, net of tax was primarily the result of
appreciation of Chinese Renminbi, Canadian Dollars and Euro against United
States Dollars.

     Comprehensive income (loss). As a result of the factors described above,
comprehensive loss increased from a loss of approximately $1,144,000 for the
period ended March 31, 2007 to a loss of approximately $7,983,000 for the period
ended March 31, 2008, a increase of approximately $6,839,000, or 597.8%.

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 difficult 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%.


                                       34
<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 1.5% during the year ended
March 31, 2007 as compared to 1.3% during the year ended March 31, 2006.

     Administration And General Expenses. Administration and general expenses
decreased by approximately $416, 000 or 12.1 % from approximately $3,421,000 for
the year ended March 31, 2006 to approximately $3,004,000 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, 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 factors described above,
(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.


                                       35
<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 58.9% 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
600.8% 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 in which 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 factors described above, 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%.

Impact of Inflation

     We believe that inflation has had a material impact on our business during
the fiscal year ended March 31, 2008. We expect that inflation will continue to
have a material impact upon our business during the fiscal year ended March 31,
2009. 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 2007 of Hong Kong, PRC, Germany, United States
and Canada were 2.0%, 4.8%, 2.3%, 2.9% and 2.1% respectively. The inflation
rates for 2008 of Hong Kong and PRC will be higher than that of 2007. 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. During the fiscal years ended March 31, 2006, 2007
and 2008, the costs of component parts increased due to the increase in the


                                       36
<PAGE>


price of oil used in the production of components such as plastic resin, steel
and other raw materials. Oil prices have been volatile in recent years. If oil
prices 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 will have a
material adverse effect upon our business and results of operations. Further,
the increase in labor costs and operating costs due to inflation in the PRC had
a material impact on our profitability.

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 rate 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 exceeds 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.

     On March 16, 2008, 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, 2009. Under the new income tax law, apart
from those qualified as high-tech enterprises, most domestic enterprises and
foreign invested enterprises would be subject to a single PRC enterprise income
tax rate and gradually transfer to the new tax rate of 25% within five years.

     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.


                                       37
<PAGE>


     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.

     During the fiscal years ended March 31, 2008 and 2007, certain of our
subsidiaries were and continue to be subject to enquiries from the local tax
authorities. As result of the adoption of FIN 48, the Company recorded a
provision of $2,164,000 in relation to uncertain tax positions as of April 1,
2007. 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
our affiliated entities' tax liabilities increase.

     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


                                       38
<PAGE>


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.

     Gram Precision principally pays for its products in United States Dollars
and Canadian dollars and sells its products in Canadian, and United States
Dollars. 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,
2008, we experienced a foreign currency loss of $216,239. 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,
2008 which was subject to foreign currency risk is as below:

                                                        March 31, 2008

         Euro                                              3,894,159
         Hong Kong dollars                                 3,863,465
         United States Dollars                               300,192
         Canadian dollars                                    511,162
                                                           ---------
                                                           8,568,978
                                                           =========

     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. From 1994 until July 2005, the Chinese
Renminbi had remained stable against the U.S. Dollar at approximately 8.28 to
1.00 U.S. Dollar. On July 21, 2005, the Chinese currency regime was altered to
link the RMB to a "basket of currencies," which includes the US dollar, Euro,
Japanese Yen and Korean Won. Under the rules, the RMB is allowed to move 0.3% on
a daily basis against the U.S. Dollar. The People's Bank of China, on May 21
2007, widened the RMB trading band from 0.3% daily movement against the U.S.
Dollar to 0.5%. As of October 13, 2008, the RMB was valued at 6.83 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


                                       39
<PAGE>


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.

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 used $811,035 of net cash for the fiscal year ended
March 31, 2008, while operating activities provided $1,416,241 of net cash for
the fiscal year ended March 31, 2007. This decrease in the amount of cash
provided by operating activities was primarily attributable to our inability to
recover increased material and labor costs through increased selling prices for
our products.

     As of March 31, 2008, we had $10,195,362 in cash and cash equivalents as
compared to $8,118,018 as of March 31, 2007. Working capital at March 31, 2008,
was $12,899,791 compared to $16,841,659 at March 31, 2007. 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, 2008, we had $5,264,074 in trade receivables as compared to
$6,739,567 as of March 31, 2007. The decrease of $1,475,493 was primarily
attributable to timely collections from our customers, and a provision of
$869,995 recognized for bad debts.

     As of March 31, 2008, we had $11,391,318 in inventories as compared to
$14,997,788 as of March 31, 2007. The decrease of $3,606,470 was primarily
attributable to a decrease in work in progress, and a write-off of $2,457,510 in
obsolete inventories.

     As of March 31, 2008, we had a total of $9,848,868 in notes payable and
accounts payable as compared to $9,090,852 as of March 31, 2007. The increase of
$758,016 was primarily attributable to an increase in raw material purchased.

     As of March 31, 2008 we had in place general banking facilities with 4
financial institutions with amounts available aggregating $31,115,325. 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,
2008, we had utilized $8,568,978 from these general banking facilities. Interest
on this indebtedness fluctuates with the Prime Rate and the Hong Kong Interbank
Offer Rate 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. 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


                                       40
<PAGE>


that in the current year. Excluding the capital lease obligations, the amounts
of total short-term bank borrowings outstanding as of March 31, 2008 and 2007
were $3,894,159 and $3,576,366, respectively. During the fiscal years ended
March 31, 2008 and 2007, we paid a total of $692,232 and $516,272, respectively,
in interest on indebtedness.

     Our current ratio decreased from 2.03 as of March 31, 2007 to 1.71 as of
March 31, 2008. Our quick ratio decreased from 1.11 as of March 31, 2007 to 1.08
as of March 31, 2008.

     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 to 24 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.



                                       41
<PAGE>


Commitments

     The following table sets forth information with respect to our commitments
as of March 31, 2008:

                                                                  Payments due by Period
                                  ---------------------------------------------------------------------------------------
                                     Total           Within 1 year    Within 1 to 3        Within 3 to        More than 5
                                                                          years              5 years             years
                                  -----------        -------------    -------------        -----------        -----------

Notes payable                     $ 3,863,465        $ 3,863,465        $         0        $         0        $         0
Short-term loans                  $ 4,705,513        $ 4,705,513        $         0        $         0        $         0
Operating leases                  $ 2,949,257        $ 1,177,208        $ 1,726,986        $    45,063        $         0
Capital leases                    $   360,691        $   176,930        $   183,761        $         0        $         0
Acquisition of land               $   350,758        $   350,758        $         0        $         0        $         0
Interest on loans                 $   364,244        $   364,244        $         0        $         0        $         0

Interest on capital leases        $    13,309        $     6,529        $     6,780        $         0        $         0
Income tax liabilities            $ 2,602,023        $     6,888        $ 2,595,135        $         0        $         0
Total                             $15,209,260        $10,651,535        $ 4,512,662        $    45,063        $         0


     For a discussion of interest rates on our notes payable and short term
loans, see "Item 11. Qualitative and Quantitative Disclosures About Market Risk"
below.

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 Note 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.


                                       42
<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 years ended March 31, 2006 and 2007, the Group made
a provision of $69,077 and $5,414, respectively for impairment of investment
properties due to the decline in market value. No provision was made in fiscal
2008. On the other hand, the Group made a provision for impairment of $200,000
(2007: $0; 2006: $0) on its investment in a private company due to continuous
losses and net liabilities positions of the investee.

     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


                                       43
<PAGE>


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,
2008, a provision of $842,821 was made by the Group on impairment of goodwill,
because of Gram Precision's failure to meet the business objectives and achieve
profitability during the fiscal year ended March 31, 2008 (2007: $0, 2006:
$258,141).

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 are 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. Based on the assessment
for the year ended March 31, 2008, a provision of $1,597,392 was made by the
Group on impairment of brand name, because of Korona's the failure to meet its
business objectives and achieve profitability during the fiscal year ended March
31, 2008 (2007: $0, 2006: $0).

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

     On April 1, 2007, the Company adopted FIN 48. FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in financial statements in
accordance with FASB Statement No. 109, "Accounting for Income Taxes." FIN 48
prescribes a recognition threshold and measurement attributes for the financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. Only tax positions that meet the more-likely-than-not
recognition threshold at the effective date may be recognized or continue to be
recognized upon adoption of FIN 48. The Company's accounting policy is to treat
interest and penalties as a component of income taxes.


                                       44
<PAGE>


     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.

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 for a significant portion of our revenues, and the loss of any of
these customers could have a material adverse effect upon us and our results of
operations. As of March 31, 2008, our backlog of manufacturing orders was
$7,922,410 compared to $6,024,339 as of March 31, 2007. We expect that in the
fiscal year ended March 31, 2009, the trend of sales from telecommunications
products and scales will be more or less the same as the year ended March 31,
2008.

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:

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS 157"). SFAS 157 provides guidance on the measurement of fair value in US
GAAP and expands fair value measurement disclosures. SFAS 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.


                                       45
<PAGE>


SFAS 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. The
Company is in the process of assessing the impact of the recent accounting
pronouncement. In February 2008, the FASB issued FASB Staff Position ("FSP")
157-2, Effective Date of FASB Statement No. 157. FSP 157-2 provides a one-year
deferral of the effective date of SFAS 157 for nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed in
financial statements at fair value on a recurring basis. The deferral is not
available, however, to entities that issued interim or annual financial
statements reflecting the measurement and disclosure provisions of SFAS 157
before February 12, 2008.

     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. We do not expect the adoption of SFAS No. 159 to have a
material impact on our consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
combinations" ("SFAS No. 141(R)"). SFAS No. 141(R) requires an acquiring entity
in a business combination to recognize all (and only) the assets acquired and
liabilities assumed in the transaction; establishes the acquisition-date fair
value as the measurement objective for all assets acquired and liabilities
assumed; and requires the acquirer to disclose to investors and other users all
of the information they need to evaluate and understand the nature and financial
effect of the business combination. SFAS No. 141(R) is effective for fiscal
years beginning on or after December 15, 2008. We do not expect the adoption of
SFAS No. 141(R) to have a material impact on our consolidated financial
statements.

     In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests
in consolidated Financial Statements, an amendment of ARB No.51" ("SFAS No.
160"). SFAS No. 160 clarifies that a non-controlling or minority interest in a
subsidiary is considered an ownership interest and, accordingly, requires all
entities to report such interests in subsidiaries as equity in the consolidated
financial statements. SFAS No. 160 is effective for fiscal years beginning on or
after December 15, 2008. We do not expect the adoption of SFAS No. 160 to have a
material impact on our consolidated financial statements.

     In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110,
codified as SAB Topic 14, "Share-based payment." SAB No. 110 states that the SEC
staff will continue to accept, under certain circumstances, the use of the
simplified method in developing an estimate of expected term of "plain vanilla"
share options in accordance with Statement of Financial Accounting Standard No.
123 (revised 2004) and SAB No. 107 beyond December 31, 2007. The adoption of SAB
No. 110 did not require any adjustments to our consolidated financial statements
for the year ended March 31, 2008.

     In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities an amendment of FASB Statement No. 133"
("SFAS No. 161"). SFAS No. 161 requires disclosures of how and why an entity
uses derivative instruments, how derivative instruments and related hedged items


                                       46
<PAGE>


are accounted for and how derivative instruments and related hedged items affect
an entity's financial position, financial performance, and cash flows. SFAS No.
161 is effective for fiscal years beginning after November 15, 2008, with early
adoption permitted. We do not expect the adoption of SFAS No. 161 to have a
material impact on our consolidated financial statements.

     In April 2008, the FASB finalized Staff Position No. 142-3, "Determination
of the Useful Life of Intangible Assets" ("FSP 142-3"). The position amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142, "Goodwill and Other Intangible Assets". The position applies to
intangible assets that are acquired individually or with a group of other assets
and both intangible assets acquired in business combinations and asset
acquisitions. FSP 142-3 is effective for fiscal years beginning after December
15, 2008, and interim periods within those fiscal years. The Company is in the
process of assessing the impact of the recent accounting pronouncement.

     In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally
Accepted Accounting Principles" ("SFAS No. 162"). SFAS No. 162 defines the order
in which accounting principles that are generally accepted should be followed.
SFAS No. 162 is effective 60 days following the SEC's approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting Principles. We
do not expect the adoption of SFAS No. 162 to have a material impact on our
consolidated financial statements.

     In May 2008, the FASB finalized Staff Position No. APB 14-1, "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)" ("FSP APB 14-1"). The position clarifies
that convertible debt instruments that may be settled in cash upon conversion
(including partial cash settlement) are not addressed by APB Opinion No. 14
"Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.
FSP APB 14-1 further specifies that issuers of such instruments should
separately account for the liability and equity components in a manner that will
reflect the entity's nonconvertible debt borrowing rate when interest cost is
recognized in subsequent period. FSP APB 14-1 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. As of the date of this annual report,
we do not have any convertible debt instruments that may be settled in cash upon
conversion and FSP APB 14-1 does not have any impact on us.

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                          65            Chairman of the Board, Chief Executive
                                                  Officer and Director, President,
                                                  Chief Financial Officer, Secretary and Treasurer
Kim Wah Chung                       50            Director of Engineering and Research and
                                                  Development and Director
Albert So                           30            Financial Controller
Woo-Ping Fok                        59            Director
J. Stewart Jackson, IV              72            Director
Henry F. Schlueter                  57            Director and Assistant Secretary


                                       47
<PAGE>


     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 and as the Chief Financial Officer on
October 19, 2007. 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.

     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.

     ALBERT SO was appointed as the Financial Controller of the Company in
January 2008. Mr. So was first employed as a management trainee of the Company
in November 2004. Prior to his employment as a management trainee of the
Company, Mr. Albert So was a student. Mr. Albert So obtained a Bachelor's degree
in Mathematics from Simon Fraser University in Burnaby, BC, Canada.

     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.


                                       48
<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.

     Anthony So, the Company's President, Chief Executive Officer, Chief
Financial Officer and Chairman of the Board of Directors is the father of Albert
So, the Company's Financial Controller.

     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, 2008 to all directors and officers as a group for
services in all capacities was $952,473. Total compensation for the benefit of
Anthony So was $705,901, for the benefit of Kim Wah Chung was $150,479, for the
benefit of the Albert So was $36,100 and for the benefit of Henry F. Schlueter
was an aggregate of $59,365. The $59,365 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.

     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, 2008, other than contributions to our Provident Fund Plan which aggregated
$15,865 for officers and directors.

Employment Agreements

     We have employment agreements with Anthony So and Kim Wah Chung. Mr. So's
employment agreement provides for a yearly salary of approximately $700,000 per
year plus bonus, and Mr. Chung's employment agreement provides for a yearly
salary of approximately $150,000 per year plus bonus, as stated in their


                                       49
<PAGE>


respective employment agreements which expired on March 31, 2008. We have new
employment agreements with Mr. So and Mr. Chung which expires on March 31, 2013,
with approximately $800,000 and $200,000 as their respective yearly salary plus
bonus. The employment agreements contain provisions under which we will be
obligated to pay Mr. So all compensation for the remainder of his employment
agreement and five times his 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, 2008.

                                  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

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

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.


                                       50
<PAGE>


Employee retirement benefits

(a)  With effect from January 1, 1988, BEL, a wholly-owned foreign subsidiary of
     the Company in Hong Kong, 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 eligible
     employee of the Plan is required to contribute 5% of their monthly salary,
     while BEL is required to contribute from 5% to 10% based on the eligible
     employee's salary, depending on the number of years of the eligible
     employee's service.

     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. The eligible
     employee's and employer's contributions to the MPF are both at 5% of the
     eligible employee's monthly salary and are subject to a maximum
     contribution of HK$1,000 (US$128) monthly.

     Pursuant to the relevant PRC regulations, the Group is required to make
     contributions for each employee at rates based upon the employee's standard
     salary base as determined by the local Social Security Bureau, to a defined
     contribution retirement scheme organized by the local Social Security
     Bureau in respect of the retirement benefits for the Group's employees in
     the PRC.

(b)  The contributions to each of the above schemes are recognized as employee
     benefit expense when they are due and are charged to the consolidated
     statement of income (loss). The Group's total contributions to the above
     schemes for the years ended March 31, 2006, 2007 and 2008 amounted to
     $145,719, $164,348 and $251,538, respectively. The Group has no other
     obligation to make payments in respect of retirement benefits of the
     employees.

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.


                                       51
<PAGE>


     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 is required to have only one member.

Audit Committee

     Mr. Woo Ping Fok and Mr. Henry F. Schlueter are the members of the Audit
Committee. Mr. Fok and Mr. Schlueter are "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, 2008, we employed a total of 2,781 persons, compared with
3,366 persons at March 31, 2007 and 3,460 persons at March 31, 2006; 31
employees in Hong Kong (45 in 2007 and 2006), 2,724 employees in China (3,289 in
2007 and 3,380 in 2006), 15 employees in Germany, (18 in 2007 and 20 in 2006), 2
employees in Poland (2 in 2007 and 2006), 2 employees in the United States (4 in
2007 and 2006) and 7 in Canada (8 in 2007 and 9 in 2006). Employees are not
covered by collective bargaining agreements. We consider our global labor
practices and employee relations to be good.


                                       52
<PAGE>


Share Ownership

         The following table shows the number of shares of common stock
beneficially owned by our directors and executive officers as of October 8,
2008:

                                                                                         Total
                                                                                       Number of
                                                                                       Shares of
                                         Shares of                                       Common
                                        Common Stock                                     Stock         Percent of
                                         Owned of                                     Beneficially     Beneficial
       Name                               Record                 Options Held            Owned          Ownership
       ----                             ------------             ------------         ------------     ----------

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%

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        2,280,877                901,500               3,182,377          49.12%
group (5 persons)

(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, 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.


                                       53
<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.

     During the fiscal year ended March 31, 2008, no options were granted under
the Employees Plan.

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.

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.


                                       54
<PAGE>


     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, 2008, 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
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.


                                       55
<PAGE>


     As of March 31, 2008, 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
October 13, 2008, beneficial ownership of our common stock by each person, to
the best of our knowledge, 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.

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

   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%
   CAS Corporation                        290,654                         0                            5.21%


(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, 2008 we paid Schlueter & Associates,
P.C. an aggregate of $59,365 for legal fees and expenses. Mr. Henry F.
Schlueter, a director, is the Managing Director of Schlueter & Associates, P.C.

     As of March 31, 2008, BEL had paid deposits of approximately US$1,528,000
with regard to potential investments in a commercial residential building and a
land use right in the PRC. Subsequent to this fiscal year end, Mr. Anthony So,
Chairman of Bonso decided to take up BEL's potential investments and paid BEL
the full amount of approximately US$1,528,000 in September 2008. The carrying
amount of the deposits approximates their fair value due to their short
maturities.


                                       56
<PAGE>


During the year ended March 31, 2007, BEL had paid certain deposits of
US$799,000 for a potential investment in a hotel. Such potential investment was
subsequently taken up by Mr. Anthony So and the full amount was paid to BEL in
July 2007.


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, 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
     April 1, 2007 to March 31, 2008                            $4.68                  $1.86

         The following table sets forth the high and low sale prices during each
of the quarters in the two-year period ended September 30, 2008.

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

     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
     July 1, 2007 to September 30, 2007                         $4.00                  $1.86
     October 1, 2008 to December 31, 2008                       $4.68                  $2.40
     January 1, 2008 to March 31, 2008                          $3.00                  $2.00
     April 1, 2008 to June 30, 2008                             $2.27                  $1.86
     July 1, 2008 to September 30, 2008                         $2.49                  $0.03


                                       57
<PAGE>


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

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

     April 2008                       $2.27             $2.01
     May 2008                         $2.27             $2.08
     June 2008                        $2.19             $1.86
     July 2008                        $2.23             $1.90
     August 2008                      $2.49             $2.04
     September 2008                   $2.41             $0.03

     On October 13, 2008, the closing price of our common stock was $1.03. Of
the 5,577,639 shares of common stock outstanding as of October 8, 2008,
3,817,452 were held in the United States by 205 holders of record. We have 212
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

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, 2006, 2007 and 2008 included herein in Item
18.


                                       58
<PAGE>


     At October 8, 2008, 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 October 8, 2008 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.
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


                                       59
<PAGE>


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.

     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).


                                       60
<PAGE>


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 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.

     We signed a Banking Facility Letter, dated October 14, 2008, amending our
Banking Facilities Letters dated June 4, 2008, and June 6, 2007 between Bonso
and Standard Chartered Bank for a HK $68,000,000 letter of credit, trust receipt
facility, export D/P bills, export trade loan, factoring and overdraft facility.

     We signed a Banking Facility Letter, dated October 2, 2008, amending our
Banking Facilities Letters dated September 12, 2008, and September 7, 2007
between Bonso and the Hong Kong and Shanghai Banking Corporation Limited for a
HK $27,500,000 letter of credit, trust receipt facility, export D/P bills,
export trade loan, factoring and overdraft facility.

     We signed a Banking Facility Letter dated February 12, 2008 amending our
Banking Facility Letters dated August 15, 2007 and March 2, 2007 between Bonso
and Hang Seng Bank for a HK $48,000,000 letter of credit, trust receipt
facility, export D/P bills, export trade loan, factoring and overdraft facility.

     We signed an employment agreement with Anthony So to serve as Chairman of
the Board of Directors, Chief Executive Officer and President of the Company
effective April 1, 2008 (the "So Employment Agreement"). Pursuant to the So
Employment Agreement, Mr. So's base salary is $800,000 per annum. Mr. So is also
entitled to such bonus as the board of directors shall determine. Mr. So is also
entitled to the use of a property located at Savanna Garden, House No. 27, Tai
Po, New Territories, Hong Kong without any charge or cost. Mr. So is entitled to
be reimbursed for all reasonable out of pocket expenses incurred in connection
with the performance of his duties. The So Employment Agreement expires on March
31, 2013. The So Employment Agreement contains provisions under which we will be
obligated to pay Mr. So all compensation for the remainder of his employment
agreement and five times his annual salary and bonus compensation if a change of
control as defined in the agreements occur.

     We signed an employment agreement with Kim Wah Chung to serve as the
Director of Engineering and Research and Development of the Company effective
April 1, 2008 (the "Chung Employment Agreement"). Pursuant to the Chung
Employment Agreement, Mr. Chung's base salary is $200,000 per annum. Mr. Chung
is also entitled to such bonus as the board of directors shall determine and to
be reimbursed for all reasonable out of pocket expenses incurred in connection
with the performance of his duties. The Chung Employment Agreement expires on
March 31, 2013.

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


                                       61
<PAGE>


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
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.


                                       62
<PAGE>


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.

     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, 2008, there was no long-term debt.
We had utilized $ 8,568,978 of our total banking facilities of $ 31,115,325.
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, 2008 which were subjected to
variable interest rates is as below:

                                     March 31,                  Interest
                                       2008                       rate
                                       ----                       ----

      Notes payable                 $3,863,465                HIBOR + 1.5%

      Short-term loans              $3,894,159              %ONIA +1.15% to 1.95%

      Bank overdrafts                 $811,354             Prime rate + 0.5% to 1%
                                                                     Or
                                                                HIBOR + 2.25%

     HIBOR:  Hong Kong Inter-bank Offered Rate
     EONIA:  Euro Over Night Index Average


                                       63
<PAGE>


     Interest rates are subject to change if the Company defaults on the amounts
     due under the facility or draws in excess of the facility amounts, or at
     the discretion of the banks, which ranges from 4% to 6% in addition to the
     US and Hong Kong Prime Rate, respectively.

     All the balances above are due within one year.

     A change in the interest rate by 1% will increase / decrease the interest
expense of the Group by $155,000.

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

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

     The Company's management, with the participation of its Chief Executive
Officer (being also the Chief Financial Officer), conducted an evaluation of our
disclosure controls and procedures as defined in paragraph (e) of Rule 13a-15 or
15d-15 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") as of March 31, 2008.


                                       64
<PAGE>


     Based on this evaluation and as a result of the material weaknesses
discussed below, Anthony So (the Chief Executive Officer and Chief Financial
Officer), has concluded that, as of March 31, 2008, the Company's disclosure
controls and procedures were not effective. The Company's disclosure controls
and procedures include without limitation controls and procedures that are
designed to ensure that information required to be disclosed in reports filed or
submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to the Company's management,
including the Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.

     Due to the material weaknesses identified in the evaluation of the
Company's internal control over financial reporting, the Company performed
additional analyses and other post-closing procedures, to ensure the Company's
consolidated financial statements are in accordance with GAAP. Accordingly,
Management has concluded that the consolidated financial statements included in
this Annual Report on Form 20-F fairly present, in all material respects,
Bonso's financial position, results of operations and cash flows for all periods
presented.

Management's Report on Internal Control over Financial Reporting

     Management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Exchange Act Rules 13a-15(f) and 15d-15(f). The Company's internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with applicable
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

     The Company's management has evaluated the effectiveness of the Company's
internal control over financial reporting as of March 31, 2008 based upon
criteria established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

                                       65
<PAGE>


     A material weakness is a deficiency, or combination of deficiencies, in
internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the company's annual financial
statements will not be prevented or detected on a timely basis.

     In connection with management's evaluation of the Company's internal
control over financial reporting, the following material weaknesses have been
identified as of March 31, 2008:

     The Company did not adequately maintain effective internal control over
     financial reporting for the financial close and reporting process.
     Specifically, we did not maintain a sufficient complement of people with an
     appropriate level of knowledge, experience and training in the application
     of GAAP and in internal control over financial reporting commensurate with
     our financial reporting requirements. In addition, this material weakness
     contributed to the following material weaknesses: we did not maintain
     effective controls over the accuracy, valuation and disclosure of inventory
     and income tax liabilities.

     The above material weaknesses resulted in audit adjustments to the
Company's consolidated financial statements and related disclosures for the year
ended March 31, 2008, including inventory and income tax expense. In addition,
there is a reasonable possibility that the material weaknesses described above
could result in misstatements of the aforementioned financial statement accounts
and disclosures that would result in a material misstatement to the Company's
annual consolidated financial statements that would not be prevented or detected
on a timely basis.

Because of the material weaknesses described above, management has concluded
that the Company did not maintain effective internal control over its financial
reporting as of March 31, 2008 based on the Internal Control Integrated
Framework issued by the COSO.

     This Annual Report does not include an audit report of the Company's
independent registered public accounting firm regarding internal controls over
financial reporting. Management's report was not subject to audit by the
Company's independent registered public accounting firm pursuant to rules of the
SEC that permit the Company to provide only management's report in this Annual
Report.

Management's Remediation Plan

     Our management has taken the following actions to begin remediating the
material weaknesses identified:

     o    In March 2008, we hired a qualified accountant with extensive
          experience in public company accounting operations. We are organizing
          training sessions to ensure that we have sufficient personnel with
          adequate accounting knowledge and experience. We have arrangements
          with an external accounting firm for regular consultation and review
          of our financial reporting.


                                       66
<PAGE>


     o    The inventory accounting and control process is currently being
          reviewed to ensure the accuracy and the valuation of the inventory. In
          addition, the internal audit department will perform reviews to ensure
          the effectiveness of the NRV calculation, based on current market
          conditions.

     o    We have commenced a review of our financial reporting for income
          taxes. We engaged an external consulting firm for ongoing consultation
          and review of our tax accounts and valuation. We are also actively
          seeking qualified personnel with appropriate expertise in taxation.

     Management will consider the design and operating effectiveness of these
actions and will make additional changes it determines are appropriate. We
cannot assure you that the measures we have taken, or will take, to remediate
these material weaknesses will be effective or that we will be successful in
implementing them before March 31, 2009, the date of management's next annual
assessment of internal control over financial reporting.

Changes in internal controls over financial reporting

     Other than as disclosed above, there were no changes in the Company's
internal controls over financial reporting during the year ended March 31, 2008
that has materially affected or is reasonably likely to materially affect our
internal control over financial reporting.

Item 16.  Reserved

Item 16A.  Audit Committee Financial Expert

     Henry F. Schlueter, a Director and the Company's outside securities counsel
is "independent" within the definition of "independence" published by the NASDAQ
Stock Market. Mr. Schlueter is deemed to be the 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 1915-1916, 19/F, Delta House
3 On Yiu Street, Shek Mun
Shatin, N. T.
Hong Kong


                                       67
<PAGE>


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.

     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.


                                       68
<PAGE>


     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, 2008 were $371,538 and
for the fiscal year ended March 31, 2007 were $261,282.

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, 2008 and for the fiscal year ended March 31, 2007.

Tax Fees

     The aggregate fees billed by PricewaterhouseCoopers for professional
services rendered for tax compliance for the fiscal year ended March 31, 2008
were $91,317 and for the fiscal year ended March 31, 2007 were $115,000.

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 two directors who are 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 audit committee consisting of
only one member 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 stock was repurchased
between August 2001 and March 31, 2006. On November 16, 2006, the Company's
Board of Directors authorized another $1,000,000 for the Company to repurchase
shares 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. No shares were
repurchased during the fiscal year ended March 31, 2008. The Company may from
time to time repurchase shares of its Common Stock under this program.


                                       69
<PAGE>


                                    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
      Consolidated Balance Sheets as of March 31, 2007 and 2008                        F-2
      Consolidated Statements of Income (Loss) and Comprehensive                       F-3
      Income (Loss) for the years ended March 31, 2006, 2007 and 2008
      Consolidated Statements of Changes in Shareholders' Equity for the               F-4
      years ended March 31, 2006, 2007 and 2008
      Consolidated Statements of Cash Flows for the years ended                        F-5
      March 31, 2006, 2007 and 2008

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


                                       70
<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 October 14, 2008 between Bonso and Standard Chartered Bank

    4.3     Banking Facility Letter, dated October 2, 2008 between Bonso and the Hong Kong and Shanghai Banking
            Corporation Limited

    4.4     Banking Facility Letter, dated February 12, 2008 between Bonso and Hang Seng Bank Limited

    4.5     Anthony So Employment Agreement dated March 27, 2008

    4.6     Kim Wah Chung Employment Agreement dated March 27, 2008

    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

    13.1    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


                                       71
<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 November 14, 2008                     /s/ Anthony So
                                            --------------
                                            Anthony So, Chairman of the Board,
                                            Chief Executive Officer,
                                            Chief Financial Officer and
                                            Director


Dated November 14, 2008                     /s/ Albert So
                                            -------------
                                            Albert So, Financial Controller




</TABLE>
                                       72
<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, 2008 and 2007, and the results of their operations and
their cash flows for each of the three years in the period ended March 31, 2008
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.

As discussed in Notes 1(n) and 9(h) to the consolidated financial statements,
effective from April 1, 2007, the Company adopted FASB Interpretation No. 48,
"Accounting for Uncertainty in Income Taxes -- An Interpretation of FASB
Statement No. 109".




PricewaterhouseCoopers

Hong Kong,
November 14, 2008


                                       F-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
                             Bonso Electronics International Inc.
                                  Consolidated Balance Sheets
                             (Expressed in United States Dollars)
                                                                               March 31
                                                                      --------------------------
                                                           Note              2007           2008
                                                                      -----------    -----------
                                                                                $              $
Assets
Current assets
  Cash and cash equivalents                                             8,118,018     10,195,362
  Trade receivables, net                                     2          6,739,567      5,264,074
  Inventories                                                3         14,997,788     11,391,318
  Tax recoverable                                                           2,117          2,117
  Other receivables, deposits and prepayments                           2,678,328      4,144,676
  Investments                                                4            700,000           --
                                                                      -----------    -----------
  Total current assets                                                 33,235,818     30,997,547
                                                                      -----------    -----------

Deferred income tax assets                                   9             87,369        191,618

Goodwill                                                     7            842,821           --

Brand name and other intangible assets, net                  7          2,313,434        502,494

Other non-current assets                                                     --          155,125

Property, plant and equipment
  Leasehold land                                                        2,996,595      4,749,938
  Buildings                                                            10,675,662      9,981,913
  Plant and machinery                                                  17,294,870     19,690,136
  Furniture, fixtures and equipment                                     4,805,189      4,793,245
  Motor vehicles                                                          459,721        514,035
                                                                      -----------    -----------
                                                                       36,232,037     39,729,267
  Less: accumulated depreciation and impairment                       (25,192,864)   (29,790,203)
                                                                      -----------    -----------
  Property, plant and equipment, net                         5         11,039,173      9,939,064
                                                                      -----------    -----------
  Total assets                                                         47,518,615     41,785,848
                                                                      ===========    ===========
Liabilities and shareholders' equity
Current liabilities
  Bank overdraft                                             8            459,710        811,354
  Notes payable                                              8          3,736,526      3,863,465
  Accounts payable                                                      5,354,326      5,985,403
  Accrued charges and deposits                                          2,357,132      3,359,557
  Income tax liabilities                                     9            814,374          6,888
  Short-term loans                                           8          3,576,366      3,894,159
  Current portion of capital lease obligations              10             95,725        176,930
                                                                      -----------    -----------
  Total current liabilities                                            16,394,159     18,097,756
                                                                      -----------    -----------

Capital lease obligations, net of current portion           10             59,258        183,761

Income tax liabilities                                       9               --        2,595,135

Deferred income tax liabilities                              9             13,901          4,460

Commitments (Notes 10 and 11)

Shareholders' equity

Common stock par value $0.003 per share
  - authorized shares - 23,333,334
  - issued and outstanding shares : 2007 & 2008 - 5,577,639                16,729         16,729
Additional paid-in capital                                             21,764,788     21,764,788
Retained earnings (Accumulated losses)                                  9,584,181     (1,129,819)
Accumulated other comprehensive income                                  1,014,159      1,581,598
Common stock held at treasury (260,717 shares)              12         (1,328,560)    (1,328,560)
                                                                      -----------    -----------
                                                                       31,051,297     20,904,736
                                                                      -----------    -----------

Total liabilities and shareholders' equity                             47,518,615     41,785,848
                                                                      ===========    ===========

                     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             2006           2007           2008
                                                        -----------    -----------    -----------
                                                                  $              $              $

Net sales                                       18       64,542,963     66,491,380     62,686,501
Cost of sales                                           (51,114,155)   (53,946,323)   (57,682,498)
                                                        -----------    -----------    -----------
Gross margin                                             13,428,808     12,545,057      5,004,003

Selling expenses                                         (2,110,563)    (2,477,249)    (2,480,495)
Salaries and related costs                               (5,681,175)    (5,437,654)    (5,781,240)
Research and development expenses                          (847,401)      (983,172)      (883,304)
Administration and general expenses                      (3,420,485)    (3,004,358)    (4,636,553)
Amortization of brand name                       7         (200,000)      (200,000)      (200,000)
Impairment of goodwill                           7         (258,141)          --         (842,821)
Impairment of brand name                         7             --             --       (1,597,392)
Impairment of share investment                   7             --             --         (200,000)
Loss from water damage                          16             --         (700,950)          --
                                                        -----------    -----------    -----------
Income (Loss) from operations                   18          911,043       (258,326)   (11,617,802)
Interest income                                             202,155        312,768        203,102
Interest expenses                                          (504,280)      (626,188)      (693,000)
Foreign exchange loss                                      (183,887)      (183,952)      (216,239)
Gain on disposal of property                                   --             --        3,123,983
Other income                                                190,571        302,266        315,889
                                                        -----------    -----------    -----------
Income (Loss) before income taxes and
  minority interest                                         615,602       (453,432)    (8,884,067)
Income tax (expense) benefit                     9         (131,474)      (917,511)       334,154
                                                        -----------    -----------    -----------
Net income (loss) before minority interest                  484,128     (1,370,943)    (8,549,913)
Minority interest                                              --             --             --
                                                        -----------    -----------    -----------
Net income (loss)                                           484,128     (1,370,943)    (8,549,913)

Other comprehensive income, net of tax:
  Foreign currency translation adjustments,
   net of tax                                               (56,053)       227,389        567,439
                                                        -----------    -----------    -----------
Comprehensive income (loss)                                 428,075     (1,143,554)    (7,982,474)
                                                        ===========    ===========    ===========

Earnings (Loss) per share
  Basic                                         17             0.09          (0.25)         (1.53)
                                                        ===========    ===========    ===========

  Diluted                                       17             0.08          (0.25)         (1.53)
                                                        ===========    ===========    ===========

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

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 translation
  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 loss                               --            --            --            --       (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
                                -----------   -----------   -----------   -----------    -----------     -----------    -----------
Cumulative effect of adoption
  of FIN 48                            --            --            --            --       (2,164,087)           --       (2,164,087)
Net loss                               --            --            --            --       (8,549,913)           --       (8,549,913)
Foreign exchange translation
  adjustment                           --            --            --            --             --           567,439        567,439
                                -----------   -----------   -----------   -----------    -----------     -----------    -----------
Balance, March 31, 2008           5,577,639        16,729    21,764,788    (1,328,560)    (1,129,819)      1,581,598     20,904,736
                                ===========   ===========   ===========   ===========    ===========     ===========    ===========




                                       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,
                                                           -----------------------------------------
                                                                  2006           2007           2008
                                                           -----------    -----------    -----------
                                                                     $              $              $
Cash flows from operating activities
  Net income (loss)                                            484,128     (1,370,943)    (8,549,913)
  Adjustments to reconcile net income to net cash
   provided by operating activities:
   Depreciation                                              2,379,919      2,347,569      2,562,122
   Amortization                                                290,267        290,946        293,536
   Impairment of investment properties                          69,077          5,414           --
   (Gain) Loss on disposal of property, plant and
    equipment (Note 5)                                        (110,936)       (54,409)    (3,123,983)
   Inventory write-off                                         170,592        261,242      2,457,510
   Bad debt provision                                          223,388        134,931        869,995
   Impairment of goodwill                                      258,141           --          842,821
   Impairment of brand name                                       --             --        1,597,392
   Impairment of investment in a private company                  --             --          200,000
   Others                                                      (19,903)        11,639        141,862

   Changes in assets and liabilities:
   Trade receivables                                         3,622,351       (134,269)       958,151
   Other receivables, deposits and prepayments                (537,710)      (422,138)    (1,275,185)
   Inventories                                              (3,857,097)       181,169      1,606,430
   Deposits                                                    (90,711)          --         (155,125)
   Tax recoverable                                             303,225         76,618           --
   Accounts payable                                           (706,043)    (1,063,091)       369,173
   Accrued charges and deposits                                456,772        (77,862)       757,370
   Notes payable                                              (434,053)       425,853        126,939
   Income tax payable                                             --          814,374       (376,438)
   Deferred tax                                                (21,194)       (10,802)      (113,690)
                                                           -----------    -----------    -----------
  Net cash generated from (used in) operating activities     2,480,213      1,416,241       (811,033)
                                                           -----------    -----------    -----------
Cash flows from investing activities
   Restricted cash deposits                                      4,848           --             --
   Proceeds from disposal of property, plant and
    equipment                                                  579,896        173,583      4,875,513
   Acquisition of property, plant and equipment             (1,340,134)      (342,110)    (2,683,440)
   Acquisition of investment                                      --         (200,000)          --
   Proceeds from matured investment fund                          --             --          559,495
                                                           -----------    -----------    -----------
  Net cash (used in) generated from investing activities      (755,390)      (368,527)     2,751,568
                                                           -----------    -----------    -----------
Cash flows from financing activities
   Repurchase of common stocks                                    --       (1,328,560)          --
   Repayment of long-term borrowings                          (208,421)       (48,329)          --
   Capital lease payments                                     (426,556)      (250,513)      (168,487)
   Net (repayment of) advance from banking facilities       (1,657,181)       340,945         (1,891)
   Payment of dividends to stockholders                       (557,764)      (278,882)          --
                                                           -----------    -----------    -----------
  Net cash used in financing activities                     (2,849,922)    (1,565,339)      (170,378)
                                                           -----------    -----------    -----------

Net (decrease) increase in cash and cash equivalents        (1,125,099)      (517,625)     1,770,157
Effect of exchange rate changes on cash and cash
  equivalents held in foreign currencies                          (232)        53,386        307,187
Cash and cash equivalents, beginning of year                 9,707,588      8,582,257      8,118,018
                                                           -----------    -----------    -----------
Cash and cash equivalents, end of year                       8,582,257      8,118,018     10,195,362
                                                           ===========    ===========    ===========

Supplemental disclosure of cash flow information
Cash paid during the year for:
   Interest paid                                               494,310        614,269        692,232
   Income tax paid, net of refund                              153,008         37,321        155,974

Non-cash investing and financing activities
   Property, plant and machinery acquired under
     capital leases                                            188,718         98,462        374,195
   Interest income                                             202,155        312,768        139,239
Provision for FIN 48 uncertain tax positions upon
  adoption at April 1, 2007                                       --             --        2,164,087


                       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 Group sustained operating losses in fiscal years ended March 31, 2007
     and 2008, including a net loss of $8,549,913 for the fiscal year ended
     March 31, 2008.

     Notwithstanding the operating losses sustained in the last two fiscal
     years, the accompanying consolidated financial statements have been
     prepared on a going concern basis. Management believes the Group will have
     sufficient working capital to meet its financing requirements based upon
     their experience and their assessment of the Group's projected performance,
     credit facilities and banking relationships.

     The significant accounting policies are as follows:

(a)  Principles of consolidation

     The consolidated financial statements include the accounts of the Company
     and its subsidiaries after elimination of inter-company accounts and
     transactions.

     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
     routinely reviews its inventories for their saleability and for indications
     of obsolescence to determine if inventory carrying values are higher than
     market value. Some of the significant factors the Company considers in
     estimating the market value of its inventories include the likelihood of
     changes in market and customer demand and expected changes in market prices
     for its inventories.

(d)  Trade receivables

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

(e)  Investments

     Investment in a capital guaranteed fund is classified as held-to-maturity
     and recorded at amortized cost, while investment in a private company is
     recorded at cost less any impairment in the consolidated balance sheets.
     These investments are subject to impairment test (Note 4).

(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 assets 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 asset

     Other intangible asset represents 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. Provisions
     for impairments made on other long-lived assets are disclosed in the
     Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

     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, 2008, a provision of
     $842,821 was made by the Group on impairment of goodwill (2007: nil; 2006:
     $258,141).

                                       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 the
     quantity 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 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 are 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. (2008: $119,398; 2007: $142,642; 2006: $255,006)

(n)  Income taxes

     On April 1, 2007, the Company adopted FASB Interpretation No. 48,
     "Accounting for Uncertainty in Income Taxes -- An Interpretation of FASB
     Statement No. 109", or FIN 48 (Note 9). FIN 48 clarifies the accounting for
     uncertainty in income taxes recognized in financial statements in
     accordance with FASB Statement No. 109, "Accounting for Income Taxes." FIN
     48 prescribes a recognition threshold and measurement attributes for the
     financial statement recognition and measurement of a tax position taken or
     expected to be taken in a tax return. FIN 48 also provides guidance on
     derecognition, classification, interest and penalties, accounting in
     interim periods, disclosure and transition. Only tax positions that meet
     the more-likely-than-not recognition threshold at the effective date may be
     recognized or continue to be recognized upon adoption of FIN 48. The
     Company's accounting policy is to treat interest and penalties as a
     component of income taxes.


                                       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)  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.

(p)  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 Company 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.

     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 year ended March 31, 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 any 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)

(q)  Recent accounting pronouncements

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
     ("SFAS No. 157"). SFAS No. 157 provides guidance on the measurement of fair
     value in US GAAP and expands fair value measurement disclosures. SFAS No.
     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. SFAS No. 157 is effective for financial statements
     issued for fiscal years beginning after November 15, 2007, and interim
     periods within those fiscal years. The Company is in the process of
     assessing the impact of the recent accounting pronouncement. In February
     2008, the FASB issued FASB Staff Position ("FSP") 157-2, Effective Date of
     FASB Statement No. 157. FSP 157-2 provides a one-year deferral of the
     effective date of SFAS No. 157 for nonfinancial assets and nonfinancial
     liabilities, except those that are recognized or disclosed in financial
     statements at fair value on a recurring basis. The deferral is not
     available, however, to entities that issued interim or annual financial
     statements reflecting the measurement and disclosure provisions of SFAS No.
     157 before February 12, 2008.

     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. We do not expect the
     adoption of SFAS No. 159 to have a material impact on our consolidated
     financial statements.

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
     combinations" ("SFAS No. 141(R)"). SFAS No. 141(R) requires an acquiring
     entity in a business combination to recognize all (and only) the assets
     acquired and liabilities assumed in the transaction; establishes the
     acquisition-date fair value as the measurement objective for all assets
     acquired and liabilities assumed; and requires the acquirer to disclose to
     investors and other users all of the information they need to evaluate and
     understand the nature and financial effect of the business combination.
     SFAS No. 141(R) is effective for fiscal years beginning on or after
     December 15, 2008. We do not expect the adoption of SFAS No. 141(R) to have
     a material impact on our consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests
     in consolidated Financial Statements, an amendment of ARB No.51" ("SFAS No.
     160"). SFAS No. 160 clarifies that a non-controlling or minority interest
     in a subsidiary is considered an ownership interest and, accordingly,
     requires all entities to report such interests in subsidiaries as equity in
     the consolidated financial statements. SFAS No. 160 is effective for fiscal
     years beginning on or after December 15, 2008. We do not expect the
     adoption of SFAS No. 160 to have a material impact on our consolidated
     financial statements.


                                      F-11
<PAGE>

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

1    Description of business and significant accounting policies (Continued)

(q)  Recent accounting pronouncements (Continued)

     In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110,
     codified as SAB Topic 14, "Share-based payment." SAB No. 110 states that
     the SEC staff will continue to accept, under certain circumstances, the use
     of the simplified method in developing an estimate of expected term of
     "plain vanilla" share options in accordance with Statement of Financial
     Accounting Standard No. 123 (revised 2004) and SAB No. 107 beyond December
     31, 2007. The adoption of SAB No. 110 did not require any adjustments to
     our consolidated financial statements for the year ended March 31, 2008.

     In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
     Instruments and Hedging Activities an amendment of FASB Statement No. 133"
     ("SFAS No. 161"). SFAS No. 161 requires disclosures of how and why an
     entity uses derivative instruments, how derivative instruments and related
     hedged items are accounted for and how derivative instruments and related
     hedged items affect an entity's financial position, financial performance,
     and cash flows. SFAS No. 161 is effective for fiscal years beginning after
     November 15, 2008, with early adoption permitted. We do not expect the
     adoption of SFAS No. 161 to have a material impact on our consolidated
     financial statements.

     In April 2008, the FASB finalized Staff Position No. 142-3, "Determination
     of the Useful Life of Intangible Assets" ("FSP 142-3"). The position amends
     the factors that should be considered in developing renewal or extension
     assumptions used to determine the useful life of a recognized intangible
     asset under SFAS No. 142, "Goodwill and Other Intangible Assets". The
     position applies to intangible assets that are acquired individually or
     with a group of other assets and both intangible assets acquired in
     business combinations and asset acquisitions. FSP 142-3 is effective for
     fiscal years beginning after December 15, 2008, and interim periods within
     those fiscal years. The Company is in the process of assessing the impact
     of the recent accounting pronouncement.

     In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally
     Accepted Accounting Principles" ("SFAS No. 162"). SFAS No. 162 defines the
     order in which accounting principles that are generally accepted should be
     followed. SFAS No. 162 is effective 60 days following the SEC's approval of
     the Public Company Accounting Oversight Board amendments to AU Section 411,
     The Meaning of Present Fairly in Conformity with Generally Accepted
     Accounting Principles. We do not expect the adoption of SFAS No. 162 to
     have a material impact on our consolidated financial statements.

     In May 2008, the FASB finalized Staff Position No. APB 14-1, "Accounting
     for Convertible Debt Instruments That May Be Settled in Cash upon
     Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). The
     position clarifies that convertible debt instruments that may be settled in
     cash upon conversion (including partial cash settlement) are not addressed
     by APB Opinion No. 14 "Accounting for Convertible Debt and Debt Issued with
     Stock Purchase Warrants". FSP APB 14-1 further specifies that issuers of
     such instruments should separately account for the liability and equity
     components in a manner that will reflect the entity's nonconvertible debt
     borrowing rate when interest cost is recognized in subsequent period. FSP
     APB 14-1 is effective for financial statements issued for fiscal years
     beginning after December 15, 2008, and interim periods within those fiscal
     years. As of the date of this annual report, we do not have any convertible
     debt instruments that may be settled in cash upon conversion and FSP APB
     14-1 does not have any impact on us.

                                      F-12
<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 comprise:

                                              2006        2007        2008
                                          --------    --------    --------
                                                 $           $           $

     Balance, April 1                      399,006     227,001     108,151

     Exchange adjustment                   (21,415)      9,268      15,829
     Additions charged to expense          223,388     134,931     869,995
     Write-off                            (373,978)   (263,049)   (116,345)
                                          --------    --------    --------
     Balance, March 31                     227,001     108,151     877,630
                                          ========    ========    ========

3    Inventories

(a)  The components of inventories are as follows:

                                                    2007               2008
                                              ----------         ----------
                                                       $                  $

     Raw materials                             5,951,366          3,866,827
     Work in progress                          4,232,035          3,898,639
     Finished goods                            4,814,387          3,625,852
                                              ----------         ----------
                                              14,997,788         11,391,318
                                              ==========         ==========

     During the years ended March 31, 2006, 2007 and 2008, based upon material
     composition and expected usage, management wrote off obsolete inventories
     of $170,592, $261,242 and $2,457,510, respectively, which were charged to
     the consolidated statement of income (loss).

4    Investments

     Investments are 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 investments is to generate higher
     income yield.

     The investment in the capital guaranteed fund was matured and fully repaid
     in October 2007.

     The private biochemistry has incurred continuous operating losses and had
     net liabilities position in the past two years. The Company's investment
     will be worthless without further funding or merger; therefore, the Company
     concluded a full impairment of this investment during the year.

5    Property, plant and equipment, net

     During the years ended March 31, 2006, 2007 and 2008, depreciation expenses
     charged to the consolidated statements of income (loss) amounted to
     $2,379,919, $2,347,569 and $2,562,122, respectively. As at March 31, 2006,
     2007 and 2008, fully depreciated assets that were still in use by the Group
     amounted to $1,410,769, $3,457,543 and $5,451,641, respectively.

                                      F-13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>

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

5    Property, plant and equipment, net (Continued)

     During the year ended March 31, 2008, the Group sold one of its properties
     located in Hong Kong with a net book value of $1,751,530 to a third party
     at a consideration of $4,875,513 and made a gain of $3,123,983.

6    Interests in subsidiaries

     Particulars of principal subsidiaries as of March 31, 2007 and 2008 are as
     follows:

                             Place of
                             incorporation        Particulars of         Percentage of
                             and kind of         issued capital/       capital held by
     Name of company         legal entity     registered capital           the Company  Principal activities
     ---------------         ------------     ------------------       ---------------  --------------------
                                                                       2007       2008
                                                                       ----       ----
     Bonso Electronics       Hong Kong,            HK$5,000,000        100%       100%  Trading of scales and
      Limited *              limited                (US$641,026)                        telecommunication
      ("BEL")                liability                                                  products
                             company

     Bonso Investment        Hong Kong,            HK$3,000,000        100%       100%  Investment holding
      Limited                limited                (US$384,615)
                             liability
                             company

     Bonso Electronics       PRC,                 HK$97,519,772        100%       100%  Production of scales
      (Shenzhen) Co.         limited             (US$12,502,535)                        and telecommunication
      Limited                liability                                                  products
      ("BESCL")              company


     Bonso Advanced          Hong Kong,            HK$1,000,000        100%       100%  Investment holding
      Technology Limited *   limited                (US$128,205)
                             liability
                             company

     Bonso Advanced          PRC,                  HK$13,853,728          -       100%  Investment holding
      Technology (Xin        limited              (US$1,776,119)
      Xing) Limited #        liability
                             company

     Korona Haushaltswaren   Germany,                 EUR511,292       100%       100%  Trading of scales
      GmbH & Co. KG          limited                (US$795,485)
      ("Korona")             liability
                             partnership

     Gram Precision Scales   Canada,                    US$3,276        51%        51%  Trading of scales
      Inc.                   limited
      ("Gram")               liability
                             company

     * Shares directly held by the Company
     # Newly set up during the year ended March 31, 2008

                                      F-14
<PAGE>

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

7    Goodwill, brand name and other intangible asset

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

                                         Goodwill                   Brand name            Other intangible asset
                                         March 31                    March 31                   March 31
                                         --------                    --------                   --------
                                       2007         2008          2007          2008          2007          2008
                                 ----------   ----------    ----------    ----------    ----------    ----------
                                          $            $             $             $             $             $

     Cost                           842,821      842,821     3,000,000     3,000,000       544,267       544,267
     Less: accumulated
      amortization                     --           --      (1,202,608)   (1,402,608)      (28,225)      (41,773)
     Less: impairment loss for
      the year                         --       (842,821)         --      (1,597,392)         --            --
                                 ----------   ----------    ----------    ----------    ----------    ----------
                                    842,821         --       1,797,392          --         516,042       502,494
                                 ==========   ==========    ==========    ==========    ==========    ==========

     As of March 31, 2008, there were indicators that the goodwill associated
     with Gram might not be recoverable. These indicators, amongst others,
     included declines in the current and projected operating results and cash
     flows in Gram, and the slowdown of the worldwide economies in the second
     half of fiscal 2008 since the emergence of the subprime related problems,
     caused management to carry out an impairment review of the goodwill.
     Management evaluated the recoverability in accordance with SFAS No. 142,
     "Goodwill and Other Intangible Assets" ("SFAS No. 142). Based on the
     analysis, management determined that goodwill of $842,821 associated with
     Gram should be fully impaired as of March 31, 2008.

     As of March 31, 2008, management noted declines in the current and
     projected operating results and cash flows of Korona. Together with certain
     other indicators, like drop in selling prices of Korona branded products,
     management was of the view that the carrying value of the Korona brand name
     might not be recoverable, and therefore, performed an impairment review on
     the brand name. Management evaluated the recoverability of the brand name
     in accordance with the requirements under SFAS No. 142 and SFAS No. 144,
     "Accounting for the impairment of long-lived assets". Based upon the
     analysis, management determined that the brand name of $1,597,392 should be
     fully impaired as of March 31, 2008.

     Amortization expense in relation to brand name was $200,000 for each of the
     years ended March 31, 2006, 2007 and 2008.

     Amortization expense in relation to other intangible asset was $13,548 for
     each of the years ended March 31, 2006, 2007 and 2008.

     As of March 31, 2008, future minimum amortization expenses in respect of
     other intangible assets are as follows:

                                                         $
     2009                                           13,548
     2010                                           13,548
     2011                                           13,548
     2012                                           13,548
     2013                                           13,548
     Thereafter                                    434,754
                                                   -------
     Total                                        $502,494
                                                  ========


                                      F-15
<PAGE>

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

8    Banking facilities

     As of March 31, 2008, 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 $31,115,325 (2007: $30,017,128). 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:

                              Amount available            Amount utilized       Terms of banking facilities as of
                                  March 31                   March 31                     March 31, 2008
                          ------------------------    ----------------------    ---------------------------------
                                2007          2008         2007         2008             Interest     Repayment
                                   $             $            $            $                 rate         terms
     Import and export
     Facilities

     Letters of credit    18,589,744    19,230,769    3,736,526    3,863,465

     Including
     sub-limit
     of:
     Notes payable        17,564,103    17,564,103    3,736,526    3,863,465          HIBOR +1.5%  Repayable in
                                                                                                    full within
                                                                                                    four months


     Short-term loans      4,745,640     5,134,250    3,576,366    3,894,159      *Eonia+1.15% to  Repayable in
                                                                                           +1.95%   full within
                                                                                                         twelve
                                                                                                         months


     Other facilities

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


     Bank overdrafts       1,717,642     1,786,204      459,710      811,354           Prime rate     Repayable
                                                                                         +0.5% to     on demand
                                                                                              +1%
                                                                                   Or HIBOR+2.25%
                          ----------    ----------   ----------   ----------
                          30,017,128    31,115,325    7,772,602    8,568,978
                          ==========    ==========   ==========   ==========

     * EONIA stands for Euro Overnight Index Average.

                                      F-16
<PAGE>

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

8    Banking facilities (Continued)

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

                                                      Amount utilized
                                                          March 31
                                                 --------------------------
                                                      2007             2008
                                                 ---------        ---------
                                                         $                $

     Euro                                        3,576,366        3,894,159
     Hong Kong dollars                           2,957,631        3,863,465
     United States dollars                         778,895          300,192
     Canadian dollars                              459,710          511,162
                                                 ---------        ---------
                                                 7,772,602        8,568,978
                                                 =========        =========



     The Prime Rate, HIBOR rate and EONIA were 5.25%, 2.4% and 3.9% per annum,
     respectively, as of March 31, 2008. The Prime Rate is determined by the
     Hong Kong Bankers Association and is subject to revision from time to time.
     Interest rates are subject to change if the Company defaults on the amount
     due under the facility or draws in excess of the facility amounts, or at
     the discretion of the banks, which ranges from 4% to 6% in addition to the
     US and Hong Kong Prime Rate, respectively.

     The banking facilities are collateralized by guarantees of $5,766,607
     (2007: $4,276,218) by two banks, which in turn, received a fee from the
     Company for the provision of such collateralized guarantees.

     The weighted average interest rates of short-term borrowings of the Group
     are as follows:

                                                 Year ended March 31
                                              -------------------------
                                               2007                2008

     Bank overdrafts                          6.48%               5.76%
     Notes payable                            5.62%               3.39%
     Short-term loans                         4.88%               5.72%


                                      F-17
<PAGE>

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

9    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 tax rate of the subsidiaries operating in Hong Kong
     was 17.5% for the three years ended March 31, 2008. The subsidiary of the
     Group in Germany was registered as a partnership in Germany, which was
     subject to a statutory tax rate of 14.17% during the three years ended
     March 31, 2008. The Group is not subject to income taxes in the British
     Virgin Islands. The statutory tax rate in Canada and USA was 36% and 15%,
     respectively, for the three years ended March 31, 2008.

(b)  On March 16, 2007, the PRC Enterprise Income Tax Law, (the "EIT Law"), was
     enacted by the PRC government. The EIT Law, effective January 1, 2008,
     imposes a uniform tax rate of 25% for both domestic and foreign-invested
     enterprises and revokes the then current tax exemption, reduction and
     preferential treatments applicable to foreign-invested enterprises.
     However, there is a transition period for enterprises, whether
     foreign-invested or domestic, that were receiving preferential tax
     treatments granted by relevant tax authorities at the time the EIT Law
     became effective. Under the grandfathering rules of the EIT Law,
     enterprises that are subject to an enterprise income tax ("EIT") rate lower
     than 25% may continue to enjoy the lower rate and gradually transition to
     the new tax rate within five years after the effective date of the EIT Law.
     Enterprises that are currently entitled to exemptions or reductions from
     the standard income tax rate for a fixed term may continue to enjoy such
     treatment until the fixed term expires.

     During the period from January 1, 2008 to March 31, 2008, the Company's
     subsidiaries operating in the PRC were subject to the EIT Law and a
     standard tax rate of 25% was adopted. These PRC subsidiaries may be
     entitled to the grandfathering incentives if the PRC government has finally
     confirmed such grandfathering incentive in the BaoAn area where the
     Company's PRC subsidiaries operate. For the years ended December 31, 2006
     and 2007, the Company's PRC subsidiaries were subject to a tax rate of 10%
     and 15%, respectively.

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

                                    2006             2007             2008
                              ----------       ----------       ----------
                                       $                $                $

     Hong Kong                 1,055,120          854,807          849,199
     PRC                       1,194,690        1,303,303       (3,137,058)
     Germany                    (234,314)        (296,834)      (2,682,668)
     Canada                     (590,296)      (1,153,894)      (2,208,563)
     Others                     (809,598)      (1,160,814)      (1,704,977)
                              ----------       ----------       ----------
     Total                       615,602         (453,432)      (8,884,067)
                              ==========       ==========       ==========

     Others mainly include the profit (loss) from BVI and the United States.


                                      F-18
<PAGE>

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

9    Taxation (Continued)

(d)

                                                 2006        2007        2008
                                                    $           $           $

     Deferred income tax                       21,194      10,802     113,690
     Current income tax (expense)/ benefit   (152,668)   (928,313)    220,464
                                             --------    --------    --------
     Total income tax (expense)/ benefit     (131,474)   (917,511)    334,154
                                             ========    ========    ========

     The components of the income tax (expense)/ benefit by geographical
     location are as follows:

                                      2006            2007            2008
                                         $               $               $

     Hong Kong                     (89,035)       (797,225)        419,782
     PRC                           (36,842)       (126,617)        (72,213)
     Others                         (5,597)          6,331         (13,415)
                                  --------        --------        --------
     Total                        (131,474)       (917,511)        334,154
                                  ========        ========        ========

(e)

                                                         2007          2008
                                                            $             $


     Deferred income tax assets                        87,369       191,618
     Deferred income tax liabilities                   13,901         4,460

     Deferred tax assets comprised the following:


                                                     2007             2008
                                                        $                $

     Tax loss carry forwards                    1,167,987        2,997,132
     Others                                        87,369          191,618
     Less: Valuation allowance                 (1,167,987)      (2,997,132)
                                               ----------       ----------
                                                   87,369          191,618
     Less: current portion                           --               --
                                               ----------       ----------
     Non-current portion                           87,369          191,618
                                               ==========       ==========

     As of March 31, 2008 and 2007, the Group had accumulated tax losses
     amounting to $11,603,130 and $5,845,998 (the tax effect thereon is
     $2,997,132 and $1,167,987) respectively, subject to the approval of the tax
     authorities, which may be carried forward and applied to reduce future
     taxable income which is earned in or derived from Hong Kong, Germany,
     Canada and other countries. 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, 2008,
     the Group's accumulated tax losses have no definite period of expiration,
     except for tax losses of $2,591,798 which expires in 2013.

                                      F-19
<PAGE>

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

9    Taxation (Continued)

(f)  Changes in the valuation allowance consist of:

                                                        2007           2008
                                                           $              $

     Balance, April 1                                700,966      1,167,987
     Charged to income tax expense                   467,021      1,829,145
                                                   ---------      ---------
     Balance, March 31                             1,167,987      2,997,132
                                                   =========      =========

(g)  The actual income tax expense attributable to earnings for the years ended
     March 31, 2006, 2007 and 2008 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:

                                                                    2006          2007          2008
                                                                       $             $             $
     Income tax (expense) credit calculated at domestic tax
      rates applicable to loss/ profit in the respective
      countries                                                  (52,128)      205,583     1,823,709
     Profit not subject to income tax                            183,211       154,349       787,191
     Expenses not deductible for income tax purposes             (52,648)      (73,283)     (753,692)
     Over-provision for income tax in prior years                  6,623          --            --
     Tax losses utilized                                           5,093          --            --
     Increase in valuation allowance                            (221,625)     (467,021)   (1,829,145)
     (Provision made)/ reversal of provision as a result of
       development of tax rules                                     --        (737,139)      306,091
                                                              ----------    ----------    ----------
     Total income tax expense                                   (131,474)     (917,511)      334,154
                                                              ==========    ==========    ==========

(h)  Effective April 1, 2007, the Company adopted FIN 48. As a result of the
     adoption of FIN 48, the Company recognized a $1,169,777 increase in the
     liability for unrecognized tax benefits and penalties of $994,310, which
     were accounted for as a reduction to the April 1, 2007 balance of retained
     earnings.

     A reconciliation of the beginning and ending balance of unrecognized tax
     benefits is as follows:


     Balance as of April 1, 2007                                $1,906,916
     Decreases related to prior year tax positions                (306,091)
                                                                ----------
     Balance as of March 31, 2008                               $1,600,825
                                                                ==========

     Consistent with the provisions of FIN 48, the Company reclassified income
     tax liabilities of $737,139 as of April 1, 2007 from current to non-current
     liabilities because payment is not anticipated within one year of the
     balance sheet date.

                                      F-20
<PAGE>

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

9    Taxation (Continued)

(h)  (Continued)

     The Company's accounting policy is to treat interest and penalties as a
     component of income taxes. As of March 31, 2008, the Company had accrued
     penalties related to uncertain tax positions of $994,310.

     The Company files income tax returns in Hong Kong, the PRC and various
     foreign tax jurisdictions. There are a couple of subsidiaries which operate
     within each of the Company's major jurisdictions resulting in a range of
     open tax years. The open tax years for the Company and its significant
     subsidiaries range between fiscal 2000 and fiscal 2008. The provisions made
     as a result of these open tax cases are subject to the final agreement with
     the tax authorities.

10   Leases

(a)  Capital leases

     Plant and machinery include the following amounts for capitalized leases:

                                                         March 31
                                                         --------
                                                      2007            2008
                                                         $               $

     Cost                                        1,830,356         661,374
     Less: accumulated depreciation               (594,052)       (364,029)
                                                ----------      ----------
                                                 1,236,304         297,345
                                                ==========      ==========

     During the years ended March 31, 2006, 2007 and 2008, the Group entered
     into additional capital lease obligations amounting to $188,718, $154,983
     and $360,691, respectively.

     Future minimum payments under capital leases as of March 31, 2008 with an
     initial term of more than one year are as follows:

                                                                         $
     Total minimum lease payments                                  360,691
     Less: amount representing interest                            (13,309)
                                                                  --------
     Present value of net minimum lease payments
      (including current portion of $176,930 as of
      March 31, 2008)                                              347,382
                                                                  ========

     Future minimum payments under capital leases
     2008                                                          176,930
     2009                                                          131,790
     2010                                                           51,971
     Thereafter                                                          -
                                                                  --------
                                                                   360,691
                                                                  ========

                                      F-21
<PAGE>

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

10   Leases (Continued)

(b)  Operating leases

     As of March 31, 2008, 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:

                                                                          $
     2009                                                         1,177,208
     2010                                                         1,188,999
     2011                                                           422,849
     2012                                                           115,138
     Thereafter                                                      45,063
                                                                  ---------
                                                                  2,949,257
                                                                  =========

     Rental expense for all operating leases amounted to $688,469, $1,239,366
     and $1,273,389 for the years ended March 31, 2006, 2007 and 2008,
     respectively.

11   Commitments

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

                                                     2007              2008
                                                        $                 $

     Land use right                             1,472,325           350,758
                                                =========         =========

     In November 2006, the Group 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 was $1,472,325. A deposit of approximately $610,000 was paid
     in July 2007, while the remaining was paid in October 2007. During the year
     ended March 31, 2008, the Group prepaid $150,325 for the acquisition of the
     right to use another piece of land in XinXing, the total consideration for
     which will be $501,083. This prepayment was classified as other non-current
     asset in the consolidated balance sheet.




                                      F-22
<PAGE>

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

12   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. No shares had been
     repurchased during the fiscal year ended March 31, 2008. 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, 2008.

(c)  Dividends

     Dividends of $0.05, $nil and $nil per share were declared by the Company
     for the fiscal years ended March 31, 2006, 2007 and 2008, respectively.






                                      F-23
<PAGE>

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

13   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 increase 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 Mr. Anthony So and Mr. 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 current
     committee members 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-24
<PAGE>

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

13   Stock option and bonus plans (Continued)

(a)  (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 years ended March 31, 2006, 2007 and 2008.

     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 years ended
     March 31, 2006, 2007 and 2008.




                                      F-25
<PAGE>

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

13   Stock option and bonus plans (Continued)

(a)  (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
     years ended March 31, 2006, 2007 and 2008.

     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 years ended March 31, 2006, 2007 and 2008.

     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 2008, no shares or share options were
     granted.

(b)  The stock options summary as of March 31, 2008 is as follows:


                                                                      Weighted
                                                                       average
                                                      Number          exercise
                                                    of options          price

     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

     Granted                                             --               --
                                                    ---------         --------
     Balance, March 31, 2008                        1,104,500         $   4.13
                                                    =========         ========





                                      F-26
<PAGE>

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

13   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, 2008:

                                                   Weighted
                                  Number            average         Exercisable
     Weighted average     outstanding at     remaining life           shares at
     exercise price       March 31, 2008            (years)      March 31, 2008
     --------------       --------------            -------      --------------

     $1.61                       342,500                5.0             342,500
     $2.50                       168,000                4.0             168,000
     $2.55                        10,000                3.6              10,000
     $3.65                       196,000                3.1             196,000
     $4.50                        30,000                7.8              30,000
     $6.12                        40,000                6.0              40,000
     $6.20                        40,000                6.5              40,000
     $7.875                       30,000                2.8              30,000
     $8.00                       228,000                1.8             228,000
     $8.125                       20,000                1.8              20,000
                               ---------                              ---------
     $4.131                    1,104,500                3.9           1,104,500
                               =========                              =========

     The intrinsic value of options outstanding and exercisable was $1,967,290,
     $1,218,160 and $157,550 on March 31, 2006, 2007 and 2008. 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, 2006, 2007 and 2008.

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

(d)  Prior to 1 April 2006, the Company applied 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 year ended March 31 2006.








                                      F-27
<PAGE>

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

13   Stock option and bonus plans (Continued)

(d)  (Continued)

     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, 2006, 2007 and 2008 amounted to
     $83,605, $nil and $nil respectively.

                                                                        2006
                                                                           $

     Net income as reported                                          484,128

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

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

     Diluted earnings per share
     As reported                                                       $0.08
     Pro forma                                                         $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 and 2008, the following table only indicates
     the weighted-average assumptions for the year ended March 31, 2006:

                                                                        2006
                                                                           $

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


                                      F-28
<PAGE>

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

13   Stock option and bonus plans (Continued)

(d)  The weighted volatility factor of the expected market price of the
     Company's common share is calculated by annualizing the standard deviation
     of daily changes in price of the Company's common shares based on a period
     of 360 days.

     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.

14   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
     --------                -------        -----------                 ---

     2006               $583,215 (ii)          $113,913        $137,990 (i)
     2007               $741,947 (ii)      $68,222 (iv)            $151,095
     2008               $705,901 (ii)               Nil            $150,479

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

     2006                    Nil           $240,000 (v)                 Nil      $23,519 (iii)
     2007                    Nil     $180,000 (iv), (v)                 Nil      $14,571 (iii)
     2008                    Nil                    Nil                 Nil      $59,365 (iii)

     (i)  Included in the emoluments is a housing allowance for $38,462 for the
          year ended March 31, 2006 payable to a company in which Mr. Chung Kim
          Wah has a beneficial interest. No housing allowance was paid on behalf
          of Mr. Chung Kim Wah for the years ended March 31, 2007 and 2008.

     (ii) 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.

    (iii) The amount for the years ended March 31, 2006, 2007 and 2008
          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.

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

     (v)  This represented consultancy fee paid to Mr. George O'Leary for
          provision of support and marketing services in the United States and
          director fee since January 17, 2005.

(b)  As of March 31, 2008, BEL had paid deposits of approximately US$1,528,000
     with regard to potential investments in a commercial residential building
     and a land use right in the PRC. Subsequent to this fiscal year end, Mr.
     Anthony So, Chairman of Bonso decided to take up BEL's potential
     investments and paid BEL the full amount of approximately US$1,528,000 in
     September 2008. The carrying amount of the deposits approximates their fair
     value due to their short maturities.

     During the year ended March 31, 2007, BEL had paid certain deposits of
     US$799,000 for a potential investment in a hotel. Such potential investment
     was subsequently taken up by Mr. Anthony So and the full amount was paid to
     BEL in July 2007.

                                      F-29
<PAGE>

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

15   Employee retirement benefits

(a)  With effect from January 1, 1988, BEL, a wholly-owned foreign subsidiary of
     the Company in Hong Kong, implemented a defined contribution plan (the
     "Plan") with a major international insurance 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 eligible
     employee of the Plan is required to contribute 5% of their monthly salary,
     while BEL is required to contribute from 5% to 10% based on the eligible
     employee's salary, depending on the number of years of the eligible
     employee's service.

     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 insurance 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. The eligible
     employee's and employer's contributions to the MPF are both at 5% of the
     eligible employee's monthly salary and are subject to a maximum
     contribution of HK$1,000 (US$128) monthly.

     Pursuant to the relevant PRC regulations, the Group is required to make
     contributions for each employee at rates based upon the employee's standard
     salary base as determined by the local Social Security Bureau, to a defined
     contribution retirement scheme organized by the local Social Security
     Bureau in respect of the retirement benefits for the Group's employees in
     the PRC.

(b)  The contributions to each of the above schemes are recognized as employee
     benefit expenses when they are due and are charged to the consolidated
     statement of income (loss). The Group's total contributions to the above
     schemes for the years ended March 31, 2006, 2007 and 2008 amounted to
     $145,719, $164,348 and $251,538, respectively. The Group has no other
     obligation to make payments in respect of retirement benefits of the
     employees.









                                      F-30
<PAGE>

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

16   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 representing write-off of equipment and inventories, was
     recognised as a result of the heavy rain.

17   Earnings per share

                                                       Year ended March 31
                                              -------------------------------------
                                                    2006         2007          2008
                                                       $            $             $

     Net income (loss) applicable to common
      shareholders                               484,128   (1,370,943)   (8,549,913)

     Weighted average shares outstanding       5,577,639    5,577,639     5,577,639
     Incremental shares from assumed
      exercise of:
     Stock options                               360,005      305,009       194,534
                                              ----------   ----------    ----------
     Dilutive potential common shares            360,005      305,009       194,534
                                              ----------   ----------    ----------
     Dilutive weighted average shares          5,937,644    5,882,648     5,772,173
                                              ==========   ==========    ==========

     Basic earnings per share                       0.09        (0.25)        (1.53)
     Diluted earnings per share                     0.08        (0.25)        (1.53)


     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 includes the incremental shares
     of ordinary shares relating to outstanding options, to the extent such
     incremental shares are dilutive.

     The diluted net loss per share is the same as the basic net loss per share
     for the year ended March 31, 2008 as all 194,534 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-31
<PAGE>

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

18   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, Telecommunication products and Other.

     Scales operations principally involve 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 "Other" segment is a residual, 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.

     Summarized financial information by business segment for 2006, 2007 and
     2008 is as follows:

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

     2008
     ----

     Scales                          43,839,929    (5,662,780)    15,550,710          981,706        440,308
     Telecommunication products      18,597,938    (2,561,417)    10,426,828        1,092,028        489,789
     Other                              248,634        44,754         58,799                -              -
                                     ----------    ----------     ----------        ---------      ---------
     Total operating segments        62,686,501    (8,179,443)    26,036,337        2,073,734        930,097
     Corporate                                -    (3,438,359)    15,749,511          781,924      1,753,343
                                     ----------    ----------     ----------        ---------      ---------
     Group                           62,686,501   (11,617,802)    41,785,848        2,855,658      2,683,440
                                     ==========   ===========     ==========        =========      =========

     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
                                     ==========    ==========     ==========        =========      =========

                                      F-32
<PAGE>

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

18   Business segment information (Continued)

(a)  (Continued)

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

     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
                                     ==========       ==========        ==========       ==========       ==========

     Operating profit by segment equals total operating revenues less expenses
     directly attributable to the generation of 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 $842,821, $842,821 and nil arising from the purchase
     of Gram, is allocated to scales segment as of March 31, 2006, 2007 and
     2008, respectively.

(b)  The Group primarily operates in Hong Kong, the PRC, Germany, Canada and the
     United States. The manufacture of components and their assembly into
     finished products and research and development are carried out in the PRC.
     The Hong Kong office is mainly responsible for the purchase of raw
     materials and arrangement of shipments. Subsidiaries in Germany, Canada and
     the United States 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:

                                                        2007           2008
                                                           $              $

     Hong Kong                                     3,585,124      1,931,151
     The PRC                                       7,048,045      7,620,642
     Germany                                         115,655         91,096
     Canada                                          239,497        244,413
     United States                                    50,281         51,522
     Poland                                              571            240
                                                  ----------     ----------
     Total property, plant and equipment          11,039,173      9,939,064
                                                  ==========     ==========

                                      F-33
<PAGE>

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

18   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, 2006, 2007 and 2008:

                                                            Year ended March 31
                                ---------------------------------------------------------------------------
                                      2006            %         2007            %         2008            %
                                         $                         $                         $

     United States of America   37,352,618           58   36,432,384           55   31,810,515           51
     Germany                    13,302,506           21   17,545,242           26   17,283,135           28
     Other EC countries         10,259,900           15    7,219,581           11    8,412,168           13
     Asia and others             3,627,939            6    5,294,173            8    5,180,683            8
                                ----------   ----------   ----------   ----------   ----------   ----------
                                64,542,963          100   66,491,380          100   62,686,501          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
                                                   ---------------------------------------------------------------------------
                                                         2006            %         2007            %         2008            %
                                                            $                         $                         $

     Sunbeam Products, Inc.         Business
     (USA)                    segment scales       10,269,375           16   15,387,967           23   13,097,835           21

     TTI Tech Co., Ltd.   Tele-communication
                                    products       10,264,500           16    7,752,573           12    9,147,739           15

     Global Link                       Tele-
     Corporation Ltd.          communication
                                    products       10,462,434           16    8,457,868           13    8,574,010           14
                                                   ----------   ----------   ----------   ----------   ----------   ----------
                                                   30,996,309           48   31,598,408           48   30,819,584           50
                                                   ==========   ==========   ==========   ==========   ==========   ==========


                                                                    F-34
</TABLE>
<PAGE>

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

19   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.

20   Subsequent events

     In August 2008, the Group decided to dissolve its wholly-owned subsidiary,
     Bonso USA Inc., because of poor performance from this subsidiary. The Group
     would handle all the business of Bonso USA Inc. by its other subsidiaries.

















                                      F-35