Mail Stop 0306
March 15, 2005
VIA U.S. MAIL and FACSIMILE (852) 2691 1724
Cathy Kit Teng Pang
Unit 1106-1110
3 Salisbury Road
Tsimshatsui
Kowloon, Hong Kong
RE: Bonso Electronics International, Inc.
Form 10-K for the fiscal year ended March 31, 2004
Filed August 13, 2004
File No. 000-17601
Dear Ms. Kit Teng Pang:
We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents. Where indicated, we think you should revise your
filings
in response to these comments. If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary. Please be as detailed as necessary in your
explanation. In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 20-F for the fiscal year ended March 31, 2004
Item 5. Operating and Financial Review and Prospects - Page 24
Operating Results - Page 24
1. Please expand in future filings to identify and describe
factors
responsible for the increased sales. For example, you state that
the
increase in sales came from new and previous customers, but do not
provide any details as to why the increase in sales occurred. In
general, MD&A both should identify factors responsible for changes
in
financial statement items and describe why those factors arose or
occurred. The general guidance should be applied throughout MD&A
for
all future periods.
2. You disclose that other income is a result of sales of scrap
material and compensation from a customer on excessive materials
caused by order cancellation. Tell us why these amounts are
appropriately classified as "non-operating".
Liquidity and Capital Resources - Page 33
3. Please expand your discussion in future filings to address
significant balance sheet items and changes in these items. In
this
regard, we note the significant inventory and accounts receivable
balances at March 31, 2004. Please discuss these balances and the
reasons for the significant increases in the current year. Also,
explain the basis of your conclusions regarding the recoverability
of
inventory and accounts receivable as of the most recent balance
sheet
date.
Critical Accounting Policies - Page 35
4. We see your critical accounting policy regarding revenue
recognition. However, the disclosure merely repeats the policies
from your significant accounting policies footnote without
elaboration. Please expand future filings to describe the
specific
factors that in your view make it critical. Discuss the nature of
estimates and uncertainties about those estimates inherent to your
revenue recognition policy, including how you make those
estimates.
Discuss how different assumptions, methods or conditions might
effect
your financial statements.
Item 15. Controls and Procedures - Page 59
5. We note that your chief executive officer and chief financial
officer concluded that the Company`s "disclosure controls and
procedures were effective to ensure that material information
relating to the Company was made known to them by others within
the
Company particularly during the period in which this Form 20-F was
being prepared". Please revise future filings to clarify, if
true,
that your officers concluded that disclosure controls and
procedures
are also effective to ensure that information required to be
disclosed in the reports filed or submitted under the Exchange Act
is
recorded, processed, summarized and reported within the time
periods
specified in the rules and forms of the Securities and Exchange
Commission and is accumulated and communicated to management to
allow
timely decisions regarding required disclosure. Refer to Exchange
Act Rule 13a-15(e).
6. Please revise in future filings the disclosure concerning
changes
in internal control over financial reporting to disclose any
change
in your internal control over financial reporting that occurred
during the last fiscal quarter that has materially affected, or
that
is reasonably likely to materially affect, your internal control
over
financial reporting, consistent with the language of amended Item
308(c) of Regulation S-K.
Consolidated Financial Statements
Note 1. Description of business and significant accounting
policies
- - Page 7
(b) Principles of consolidation - Page 7
7. In future filings please describe the nature of the
subsidiaries
that are included in the "Group." In particular, disclose whether
your consolidated subsidiaries are wholly owned and whether you
hold
any subsidiaries that are not consolidated. In this regard,
please
tell us and disclose in future filings whether your wholly-owned
subsidiary BEL consolidates their subsidiary BIL and Bonzo
Electronics. If not, please provide details of your accounting
for
these subsidiaries.
(d) Revenue Recognition - Page 8
8. Your disclosure regarding revenue recognition is too vague.
Expand future filings to describe your revenue recognition policy
in
greater detail. To the extent that policy differs among
significant
product lines (i.e. sensor-based versus wireless products), please
make your disclosure product line specific. Details should be
provided to the extent that policy differs among the various
marketing venues used by the Company, (i.e. distributors and
direct
sales force.) Also, if the policies vary in different parts of the
world those differences should be discussed. Provide details of
discounts, return policies, customer acceptance, warranties,
credits,
rebates, and price protection or similar privileges and how these
impact revenue recognition. Also provide a supplemental analysis
that explains your revenue recognition practices and demonstrates
that your policies are SAB 104 and SFAS 48 compliant.
9. We see that you offer limited product quality warranties for
your
products. If material, please include the disclosure requirements
of
paragraph 14 of FIN 45 in future filings.
(m) Stock options and warrants - page 11
10. Please revise future filings to separately describe how you
account for stock-based compensation issued to non-employees.
Also,
if the issuance is significant, you should provide additional
disclosure of the reasons for the issuance, how you accounted for
and
valued the transaction, including any significant valuation
assumptions.
(n) Warrants issued for non-cash consideration - Page 11
11. In future filings, describe how you determine the fair value
for
warrants issued in consideration for services rendered.
Note 15. Stock option plan - Page 28
12. In future filings please relocate the disclosures required by
paragraph 2(e) of SFAS 148 to disclose them in the "Summary of
Significant Accounting Policies" or its equivalent in your
financial
statements.
Note 16. Warrants - Page 32
13. Supplementally and in future filings, please describe how you
accounted for the modifications of warrants in October 2001. Cite
the
literature upon which you relied and demonstrate to us that your
accounting complies with GAAP.
Note 17. Business segment information - Page 33
14. To the extent that revenues from external customers attributed
to
an individual foreign country are material, please disclose
separately in future filings. Refer to paragraph 38(a) of SFAS
131.
15. In future filings please present only long-lived assets by
geographical area, as required by paragraph 38(b) of SFAS 131.
Consider that long-lived assets presented in your segment
disclosures
should only include tangible assets. See Question 22 on the FASB
Staff Implementation Guide to SFAS 131.
* * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
responses to our comments and provides any requested supplemental
information. Detailed cover letters greatly facilitate our
review.
Please file your cover letter on EDGAR. Please understand that we
may have additional comments after reviewing your responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require.
Since the company and its management are in possession of all
facts
relating to a company`s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Kristin Lochhead, Staff Accountant, at (202) 942-
8972
or me at (202) 942-1931 if you have any questions. In this
regard,
do not hesitate to contact Brian Cascio, Accounting Branch Chief,
at
(202) 942-1791.
Sincerely,
Angela Crane
Reviewing Accountant
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Ms. Kit Teng Pang
Bonso Electronics International, Inc.
March 15, 2005
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