BONSO ELECTRONICS INTERNATIONAL INC.
May 7, 2010
Via Facsimile, EDGAR and Mail
Mr. Praveen Kartholy
Staff Accountant
Division of Corporation Finance
United States Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: Bonso Electronics International Inc.
Dear Mr. Kartholy:
This letter is in response to your letter dated February 18, 2010 (“Letter”) and the conference call on April 1, 2010, which relates to the Form 20-F for the fiscal year ended March 31, 2009, filed on September 30, 2009 with the United States Securities and Exchange Commission (“SEC”).
Form 20-F for the fiscal year ended March 31, 2009
Item 18. Financial Statements
Consolidated Statement of Operations and Comprehensive Income, page F-4
Nature of the inter-company loans to Gram and Korona
On November 1, 2008, the company disposed of its entire interest in Gram Precision Scales Inc. (“Gram”). On March 31, 2009, the company’s German subsidiary, Korona Haushaltwaren GmbH and Co. KG (“Korona”), sold its major assets (accounts receivable, inventories, and intellectual property rights) to a third party company, and immediately after the sale of the major assets, the company began the process of liquidating Korona. Due to losses from operations of the subsidiaries, Gram and Korona, for the past years, the company decided to dispose of or dissolve them. At the time of the disposal of Gram, it owed another subsidiary of the company (a manufacturer in Hong Kong within the continuing operations) $5,390,590. On March 31, 2009, Korona owed to the same subsidiary $2,180,779. In the past, Gram and Korona were trading companies, and they purchased goods from the manufacturer. However, since Gram and Korona were loss making in recent years, they were not able to pay back the manufacturer. The amounts due from the Gram and Korona (discontinued operations) to the manufacturer (continuing operations) were effectively inter-company loans to Gram and Korona for funding of their daily operations.
When the company disposed of Gram and sold the major assets of Korona as the first step to dissolve Korona, the company understood that the loans to Gram and Korona would not be recoverable. As a result, the irrecoverable debts became a loss to the continuing operations. The amount of the loan to Gram and waived by the manufacturer was $3,690,590 and Gram has to pay back the manufacturer the remaining $1,700,000 as stated in note 12 to the consolidated financial statements. The amount of the loan to Korona and waived by the manufacturer was $2,180,779.
Page 1 of 4
Unit 15-16 19/F Delta House, 3 On Yin Street, Shek Mun, Shatin, New Territories, Hong Kong
TEL: (852)2605 5822 Fax: (852)291 1724 E-mail: info@bonso.com
BONSO ELECTRONICS INTERNATIONAL INC.
Presentation of the waivers of loans and the gain from disposal of a subsidiary in the consolidated statement of operations for the fiscal year ended March 31, 2009
We believe that, in order to reflect that both Gram and Korona had benefited from the company’s decision of waiving their debts, gains arising from the loan waivers be reflected in discontinued operations and the loss to the company be included in continuing operations in the consolidated statement of operations in the Form 20-F for the fiscal year ended March 31, 2009, filed on September 30, 2009. In addition, for the benefit of the readers to realize the results of the discontinued operations, the gain from disposal of Gram was not included in discontinued operations, in the consolidated statement of operations in the Form 20-F for the fiscal year ended March 31, 2009, filed on September 30, 2009.
However, in view of your comments, we are prepared to present a revised consolidated statement of operations without showing these waivers of loans, and the gain from disposal of Gram included in the loss from discontinued operations in the March 31, 2010 Form 20-F filing, as follows:-
Consolidated Statement of Operations and Comprehensive Income | ||||
(Expressed in United States Dollars) | ||||
Year ended March 31, | ||||
Note | 2009 after changes | |||
$ | ||||
Net sales | 19 | 40,378,198 | ||
Cost of sales | -34,707,293 | |||
Gross profit | 5,670,905 | |||
Selling expenses | -649,377 | |||
Salaries and related costs | -3,776,841 | |||
Research and development expenses | -792,071 | |||
Administration and general expenses | -4,601,879 | |||
Loss from operations | 19 | -4,149,263 | ||
Interest income | 126,544 | |||
Interest expenses | -209,268 | |||
Foreign exchange loss | -278,944 | |||
Gain on disposal of property | 162,681 | |||
Other income | 706,541 | |||
Loss before income taxes | -3,641,709 | |||
Page 2 of 4
Unit 15-16 19/F Delta House, 3 On Yin Street, Shek Mun, Shatin, New Territories, Hong Kong
TEL: (852)2605 5822 Fax: (852)291 1724 E-mail: info@bonso.com
BONSO ELECTRONICS INTERNATIONAL INC.
Income tax expense | 9 | -208,003 | ||
Loss from continuing operations | -3,849,712 | |||
Loss from discontinued operations, (including gain from disposal of $363,411), net of tax | 12 | -3,734,702 | ||
Net loss | -7,584,414 | |||
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustments, net of tax | 811,368 | |||
Comprehensive loss | -6,773,046 | |||
Earnings (loss) per share | ||||
Weighted average number of shares | 18 | 5,577,639 | ||
Basic and diluted | ||||
- Continuing operations | -0.69 | |||
- Discontinued operations | -0.67 | |||
-1.36 | ||||
And the Note 12 on Discontinued Operations will become as follows.
Discontinued Operations (Korona and Gram) | ||||
Year ended March 31, | ||||
2009 after changes | ||||
$ | ||||
Sales | 10,722,372 | |||
Cost of Sales | -11,218,722 | |||
Gross Profit / (loss) | -496,350 | |||
Selling expenses | -1,148,101 | |||
Salaries and related costs | -1,480,815 | |||
Administrative expenses | -1,488,942 | |||
Operating loss | -4,614,208 | |||
Interest income | 53,039 | |||
Other income | 668,308 | |||
Interest expenses | -241,111 | |||
Foreign exchange gain | 44,719 | |||
Income tax expenses | -8,860 | |||
Gain from disposal of a subsidiary - Gram | 363,411 | |||
Net loss | -3,734,702 | |||
Page 3 of 4
Unit 15-16 19/F Delta House, 3 On Yin Street, Shek Mun, Shatin, New Territories, Hong Kong
TEL: (852)2605 5822 Fax: (852)291 1724 E-mail: info@bonso.com
BONSO ELECTRONICS INTERNATIONAL INC.
The detail changes in the above revised version can be found from the appendix to this letter. As the net loss and comprehensive loss for the year ended March 31, 2009 do not change from the original presentation, we propose the above revised consolidated statement of operations and comprehensive income be adopted and included in the March 31, 2010 Form 20-F filing.
If you have any questions or wish to discuss anything further, please do not hesitate to contact the undersigned.
Sincerely, | |
/s/ Albert So | |
Albert So | |
Chief Financial Officer and Secretary |
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Unit 15-16 19/F Delta House, 3 On Yin Street, Shek Mun, Shatin, New Territories, Hong Kong
TEL: (852)2605 5822 Fax: (852)291 1724 E-mail: info@bonso.com
BONSO ELECTRONICS INTERNATIONAL INC.
Bonso Electronics International Inc. | ||||||||||||||||||||||||
Appendix to letter to SEC on 2010-05-07 | ||||||||||||||||||||||||
Consolidated Statement of Operations and Comprehensive Income | ||||||||||||||||||||||||
(Expressed in United States Dollars) | ||||||||||||||||||||||||
This appendix shows the changes made on the revised presentation from the original presentation. | ||||||||||||||||||||||||
The net loss and comprehensive loss for the year ended March 31, 2009 in the revised presentation do not | ||||||||||||||||||||||||
change from the original presentation. | ||||||||||||||||||||||||
presentation as in Form 20-F filed | ||||||||||||||||||||||||
on September 30, | revised | changes | ||||||||||||||||||||||
2009 | presentation | made | Remark | |||||||||||||||||||||
Year ended | Year ended | |||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||
2009 after | ||||||||||||||||||||||||
Note | 2009 | changes | ||||||||||||||||||||||
$ | $ | |||||||||||||||||||||||
Net sales | 19 | 40,378,198 | 40,378,198 | |||||||||||||||||||||
Cost of sales | -34,707,293 | -34,707,293 | ||||||||||||||||||||||
Gross profit | 5,670,905 | 5,670,905 | ||||||||||||||||||||||
Selling expenses | -649,377 | -649,377 | ||||||||||||||||||||||
Salaries and related costs | -3,776,841 | -3,776,841 | ||||||||||||||||||||||
Research and development expenses | -792,071 | -792,071 | ||||||||||||||||||||||
Administration and general expenses | -4,601,879 | -4,601,879 | ||||||||||||||||||||||
Loss from operations | 19 | -4,149,263 | -4,149,263 | |||||||||||||||||||||
Gain from disposal of a subsidiary | 363,411 | 0 | -363,411 | (a) | ||||||||||||||||||||
Interest income | 126,544 | 126,544 | ||||||||||||||||||||||
Interest expenses | -209,268 | -209,268 | ||||||||||||||||||||||
Foreign exchange loss | -278,944 | -278,944 | ||||||||||||||||||||||
Gain on disposal of property | 162,681 | 162,681 | ||||||||||||||||||||||
Other income (expenses) | 706,541 | 706,541 | ||||||||||||||||||||||
Waiver of loan to subsidiaries | -3,690,590 | 0 | 3,690,590 | (b) | ||||||||||||||||||||
Waiver of loan to subsidiaries held for sale | -2,180,779 | 0 | 2,180,779 | (c) | ||||||||||||||||||||
Loss before income taxes | -9,149,667 | -3,641,709 | ||||||||||||||||||||||
Income tax expense | 9 | -208,003 | -208,003 | |||||||||||||||||||||
Loss from continuing operations | -9,357,670 | -3,849,712 | ||||||||||||||||||||||
Loss from discontinued operations, (including gain from disposal of $363,411), net of tax | 12 | 1,773,256 | -3,734,702 | |||||||||||||||||||||
Net loss | -7,584,414 | -7,584,414 | ||||||||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||||||
Foreign currency translation adjustments, net of tax | 811,368 | 811,368 | ||||||||||||||||||||||
Comprehensive loss | -6,773,046 | -6,773,046 | ||||||||||||||||||||||
Earnings (loss) per share |
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Unit 15-16 19/F Delta House, 3 On Yin Street, Shek Mun, Shatin, New Territories, Hong Kong
TEL: (852)2605 5822 Fax: (852)291 1724 E-mail: info@bonso.com
BONSO ELECTRONICS INTERNATIONAL INC.
Weighted average number of shares | 18 | 5,577,639 | 5,577,639 | |||||||||||||||||||||
Basic and diluted | ||||||||||||||||||||||||
- Continuing operations | -1.68 | -0.69 | ||||||||||||||||||||||
- Discontinued operations | 0.32 | -0.67 | ||||||||||||||||||||||
─────── | ─────── | |||||||||||||||||||||||
-1.36 | -1.36 | |||||||||||||||||||||||
Note 12 | ||||||||||||||||||||||||
Discontinued Operations (Korona and Gram) | ||||||||||||||||||||||||
Year ended | Year ended | |||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||
2009 after | changes | |||||||||||||||||||||||
2009 | changes | made | Remark | |||||||||||||||||||||
$ | $ | |||||||||||||||||||||||
Sales | 10,722,372 | 10,722,372 | ||||||||||||||||||||||
Cost of Sales | -11,218,722 | -11,218,722 | ||||||||||||||||||||||
Gross profit / (loss) | -496,350 | -496,350 | ||||||||||||||||||||||
Selling expenses | -1,148,101 | -1,148,101 | ||||||||||||||||||||||
Salaries and related costs | -1,480,815 | -1,480,815 | ||||||||||||||||||||||
Administrative expenses | -1,488,942 | -1,488,942 | ||||||||||||||||||||||
Operating loss | -4,614,208 | -4,614,208 | ||||||||||||||||||||||
Interest income | 53,039 | 53,039 | ||||||||||||||||||||||
Other income | 2,849,087 | 668,308 | -2,180,779 | (c) | ||||||||||||||||||||
Interest expenses | -241,111 | -241,111 | ||||||||||||||||||||||
Foreign exchange gain | 44,719 | 44,719 | ||||||||||||||||||||||
Loan forgiveness from continuing operations | 3,690,590 | 0 | -3,690,590 | (b) | ||||||||||||||||||||
Income tax expenses | -8,860 | -8,860 | ||||||||||||||||||||||
Gain from disposal of a subsidiary - Gram | 0 | 363,411 | 363,411 | (a) | ||||||||||||||||||||
Net loss | 1,773,256 | -3,734,702 | ||||||||||||||||||||||
0 | ||||||||||||||||||||||||
(total changes in continuing operations and discontinued operations) | ||||||||||||||||||||||||
Remark: | ||||||||||||||||||||||||
(a) To include the gain from disposal of a subsidiary in the discontinued operations | ||||||||||||||||||||||||
according to ASC 205-20-45-3. | ||||||||||||||||||||||||
(b) To remove the loss on waiver of loan to Gram in continuing operations, and gain from loan forgivenss | ||||||||||||||||||||||||
in discontinued operations. | ||||||||||||||||||||||||
(c) To remove the loss on waiver of loan to Korona in continuing operations, and gain from loan forgivenss | ||||||||||||||||||||||||
in discontinued operations. | ||||||||||||||||||||||||
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Unit 15-16 19/F Delta House, 3 On Yin Street, Shek Mun, Shatin, New Territories, Hong Kong
TEL: (852)2605 5822 Fax: (852)291 1724 E-mail: info@bonso.com