-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HvUOQPgCiDGn249PF2bzYnb8Vt/jGYgKmeJQ/Ddh1EpDoKYikd9bfZooMPJLX89V Q9UYCQywNVLIOBTGEMhdRw== 0001050502-05-000621.txt : 20051212 0001050502-05-000621.hdr.sgml : 20051212 20051212122346 ACCESSION NUMBER: 0001050502-05-000621 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051209 FILED AS OF DATE: 20051212 DATE AS OF CHANGE: 20051212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BONSO ELECTRONICS INTERNATIONAL INC CENTRAL INDEX KEY: 0000846546 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 000000000 STATE OF INCORPORATION: K3 FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17601 FILM NUMBER: 051257462 BUSINESS ADDRESS: STREET 1: UNIT 1106-1110, STAR HOUSE, 3 SALISBURY STREET 2: ROAD, TSIMSHATSUI, KOWLOON CITY: HONG KONG STATE: K3 BUSINESS PHONE: 01185226055822 MAIL ADDRESS: STREET 1: UNIT 1106-1110, STAR HOUSE, 3 SALISBURY STREET 2: ROAD, TSIMSHATSUI, KOWLOON CITY: HONG KONG STATE: K3 6-K 1 bonso6k12-9.txt 6-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934 For December 9, 2005 BONSO ELECTRONICS INTERNATIONAL INC. ------------------------------------ (Translation of Registrant's name into English) Unit 1106-1110, 11F., Star House 3 Salisbury Road, Tsimshatsui Kowloon, Hong Kong ------------------------------ (Address of principal executive offices) [Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F.] Form 20-F [X] Form 40-F [ ] [Indicate by check mark whether the Registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.] Yes [ ] No [X] BONSO ELECTRONICS INTERNATIONAL INC. Information for the Quarter Ended June 30, 2005 TABLE OF CONTENTS REPORT FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005 ON FORM 6-K Page ---- First Quarter Shareholders Letter..............................................1 Consolidated Financial Statements..............................................3 Unaudited Consolidated Balance Sheet as of June 30, 2005 and unaudited Consolidated Balance Sheet as of March 31, 2005.............................4 Unaudited Consolidated Statements of Income and Comprehensive Income for the Three-Month Periods Ended June 30, 2005 and 2004.............5 Management's Discussion and Analysis...........................................6 Liquidity and Capital Resources................................................7 Stock Repurchase Program.......................................................7 Legal Proceedings..............................................................9 EXHIBITS: 99.1 - Press Release - Dated September 27, 2005 Presentation at the New York Society of Securities Analyst Conference in New York.......................12 [Bonso Electronics International Inc. Letterhead] Dear Shareholders: 26 September 2005 During the quarter ended June 30, 2005. Sensor based scale product sales were up but communications product sales were down. We anticipate that sales of communications products will be continue to be soft in the near term future. Earnings per share stayed at $0.12 despite net income dropping by $46,000. The Company reported sales of $18,150,000 and net earnings of $647,000 for the three months period ended 30 June 2005. This represents an increase of 0.6% in sales and a decrease of 6.6% in net income as compared to sales of $18,041,000 and net income of $693,000 posted during the same period last year. Despite continued increases in material and labor costs we were able to keep the gross profit margin to within 0.3% of last year's level. We attribute this to our ongoing formal program of product redesign and process improvement, as well as, our cost-cutting sourcing strategy. The primary cause of the increase in expenses was the expansion of the branded sales operation in North America; we consider this another investment in the future. We are aware of the uncertainties in the market, such as the shortage of skilled labor in the PRC, the recent announcement of the 2% appreciation of the Chinese currency (RMB) on July 21, 2005, power supply shortages and high oil and material prices. The Company reviews these, and many other issues on a regular basis, and is taking appropriate steps to safeguard itself and to mitigate the potential impact on our performance. Our factories have their own electricity generating capability to ensure our operations will not be affected by any disruptions to the electricity supply. High costs of oil and raw materials will undoubtedly exert pressure on the Company's gross profit margin. Nevertheless, we expect it to be relieved by our proven cost-cutting sourcing strategy and long term relationship with our suppliers. Competition remains keen but we have successfully secured new orders from existing customers to offset the potential impact from increased competition. Going forward, the Company intends to continue to expand its operation in the PRC and restructure its Hong Kong operation to keep a minimal workforce, which we will maintain for so long as required. With a cash position of $9.7 million, the Company continues to maintain a strong financial position even after the payment of a dividend of $0.10 per share in August, 2005. Furthermore, we have no material long-term short-term debt. With our strong cash position, we expect to be able to finance our investment and expansion of our business internally in the foreseeable future. As a result, we do not believe that we are subject to any material risk in relation to any rise in interest rates. Our strategy for sustained, profitable growth is to enhance the core business, extend the business and expand the market. We believe that the size of the global market opportunity for weighing instruments is approximately $3.5 billion. This includes major industry segments such as laboratory, personal health, industrial, mailing and food processing. We are currently addressing the main segments of the available market for weighing instruments. Therefore we are in the fortunate position to pick and chose the most lucrative areas for corporate capability and new product enhancement and development. Since North America and Europe represent approximately 75% of the world wide market potential; we believe that we are well positioned to capitalize on our current OEM customer base, as well as, our branded product distribution operations in both Europe and North America. Currently we are doing in excess of 90% of our business in these two areas. 1 The company will hold its 2005 Annual General Meeting (Shareholders Meeting) at 10:00 AM on December 1, 2005 at the Hilton Hotel, located at 5711 West Century Boulevard, Los Angeles, CA 90045. All shareholders of record are cordially invited to attend. As our first quarter results have demonstrated, we are committed to keeping one eye on the future and one eye on the bottom line; as we continue to pursue planned profitable growth. We thank you for your patience and support as we strive for consistency in our earnings and revenue growth in the future. Best regards, Bonso Electronics International, Inc George O'Leary President and Chief Executive Officer U.S. Contact: George O'Leary 949-760-9611, FAX 949-760-9607 Hong Kong Contact: Cathy Pang 852 2605 5822, FAX 852 2692 1724 Attachments: 1) Balance Sheet 2) Income Statement This letter includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward looking statements may be identified by such words or phrases "should," "intends," "is subject to," "expects," "will," "continue," "anticipate," "estimated," "projected," "may," "we believe," "future prospects," or similar expressions. The forward-looking statements above involve a number of risks and uncertainties. Factors that might cause actual results to differ include, but are not limited to, success of any reorganization; ability to raise additional funds; conditions in the general economy and in the markets served by the Company; competitive factors, such as price pressures and the potential emergence of rival technologies; interruptions of suppliers' operations affecting availability of component materials at reasonable prices; timely development and market acceptance, and warranty performance of new products; success in integrating prior acquisitions; changes in product mix, costs and yields, fluctuations in foreign currency exchange rates; uncertainties related to doing business in Hong Kong and China; and the risk factors listed from time to time in the Company's SEC reports. The Company from time-to-time considers acquiring or disposing of business or product lines. Forward-looking statements do not include the impact of acquisitions or dispositions of assets, which could affect results in the near term. Actual results may differ materially. The Company assumes no obligation to update the information in this issue. 2 BONSO ELECTRONICS INTERNATIONAL INC. CONSOLIDATED BALANCE SHEET (In U.S. Dollars) Unaudited June 30 March 31 2005 2005 Assets - ------ Current assets Cash and cash equivalents 9,731,619 9,707,588 Restricted cash deposits 4,785 4,848 Trade receivables, net 12,732,914 10,585,968 Inventories, net 14,214,064 11,402,239 Tax recoverable 578,941 486,618 Deferred income tax assets - current 52,057 52,057 Other receivables, deposits and Prepayments 1,230,610 1,450,322 ---------- ---------- Total current assets 38,544,990 33,689,640 ========== ========== Deposits 72,789 72,789 Long term investment 500,000 500,000 Deferred income tax assets - non current 46,797 46,849 Goodwill 1,100,962 1,100,962 Brand name, net 2,147,392 2,197,392 Other intangible, net 539,751 543,138 Net property plant & equipment 13,539,269 14,311,986 Total assets 56,491,950 52,462,756 Liabilities and shareholders' equity - ------------------------------------ Current liabilities Bank overdraft 236,619 281,085 Notes payable 3,898,921 3,744,726 Accounts payable 10,712,557 6,938,578 Accrued charges and deposits 1,972,042 1,978,222 Short-term loans 4,643,619 4,742,685 Current portion of long-term debt and capital lease obligations 425,748 425,748 ---------- ---------- Total current liabilities 21,889,506 18,111,044 ========== ========== Long-term debt and capital lease obligations net of current maturities 139,323 375,874 Deferred income tax 43,967 43,856 Shareholders' equity - -------------------- Common stock par value $0.003 per share - authorized shares - 23,333,334 - issued and outstanding shares: 2005-5,577,639; 30 June 2005-5,577,639 16,729 16,729 Additional paid-in capital 21,764,788 21,764,788 Retained earnings 11,954,391 11,307,642 Accumulated other comprehensive income 683,246 842,823 ---------- ---------- 34,419,154 33,931,982 ========== ========== Total liabilities and shareholders' equity 56,491,950 52,462,756 3 BONSO ELECTRONICS INTERNATIONAL INC. CONSOLIDATED INCOME STATEMENT (In Thousands of U.S. Dollars) Unaudited Three months ended June 30 2005 2004 Net sales 18,150 18,041 Cost of sales (14,540) (14,421) ---------- ---------- Gross margin 3,610 3,620 Selling expenses 615 699 Salaries and related costs 1,368 1,252 Research and development expenses 108 90 Administration and general expenses 740 673 Amortization of brand name and goodwill 50 53 ---------- ---------- Income from operations 728 854 Interest Income 55 43 Interest Expenses (137) (207) Foreign exchange gains/ (losses) (37) (51) Other income 83 40 ---------- ---------- Income before income taxes & Minority Interest 692 679 Income tax benefit/(expense) (45) (10) Net Income before Minority Interest 647 669 Minority Interest -- 24 Net income 647 693 Earnings per share Diluted 0.12 0.12 Adjusted weighted average shares 5,577,639 5,825,287 Management Discussion and Analysis of Financial Conditions and Results of Operations - ------------------------------------------------------------------------- Period ended June 30, 2004 compared to period ended June 30, 2005 Net Sales. Our sales increased 0.6% or $109,000 from approximately $18,041,000 for the period ended June 30, 2004, to approximately $18,150,000 for the period ended June 30, 2005. Sales from our scales segment increased from approximately $10,842,000 for the period ended June 30, 2004, to approximately $11,085,000 for the period ended June 30, 2005 and telecommunication segment dropped from approximately $7,199,000 for the period ended June 30, 2004, to approximately $7,065,000 for the period ended June 30, 2005. Gross Margin. Gross margin expressed as a percentage of sales remained relatively unchanged at 20% for the three months period ended June 30, 2005 and June 30, 2004. Selling Expenses. Selling expenses decreased by 12% or $84,000 from approximately $699,000 for the period ended June 30, 2004 to approximately $615,000 for the period ended June 30, 2005. This decrease is attributable primarily to a tighten control in cost, such as to consolidate shipments in containers to save freight costs. Salaries And Related Costs. Salaries and related costs increased 9.3% from approximately $1, 252,000 for the period ended June 30, 2004 to approximately $1,368,000 for the period ended June 30, 2005. This increase was primarily the result of an increase in the number of employees. Research And Development. Research and development expenses increased 20% from approximately $90,000 for the period ended June 30, 2004 to approximately $108,000 for the period ended June 30, 2005. The increase is attributable to increased research and development activities for both scales and telecommunications products. Administration And General Expenses. Administration and general expenses increased by 10% from approximately $673,000 for the period ended June 30, 2004 to approximately $740,000 for the period ended June 30, 2005. This increase was primarily due to increase in rental expenses in the amount of $25,000 for our Canadian subsidiary's new office and the increase in professional fees of approximately $25,000 relating to the disposal of the old office. Amortization Of Brand Names and Goodwill. The brand name is amortized using the straight line method over the related estimated useful life of 15 years. Income From Operations. As a result of the above changes, income from operations decreased 14.6% from approximately $854,000 for the period ended June 30, 2004 to $728,000 for the period ended June 30, 2004. Interest Income. Interest income was approximately $55,000 for the period ended June 30, 2005, compared to approximately $43,000 for the period ended June 30, 2004. This increase was primarily the result of an increase in interest rates and depositing our cash into a higher yield account. 5 Interest Expenses. Interest expenses decreased 33.8% or approximately $70,000 from approximately $207,000 for the period ended June 30, 2004 to approximately $137,000 for the period ended June 30, 2005. The decrease is primarily the result of the decreased utilization of our banking facilities and lower interest rates on amounts borrowed from our banks. Foreign Exchange Losses/Gains. We experienced a foreign currency exchange loss of approximately $37,000 for the three month period ended June 30, 2005 as compared to a loss of approximately $51,000 for the period ended June 30, 2004. This loss was primarily resulted from the devaluation of United States dollars to Canadian dollars. Other Income. Other income increased 107.5% or approximately $43,000 from approximately $40,000 for the period ended June 30, 2004 to approximately $83,000 for the period ended June 30, 2005. This increase was the result of a gain on the disposition of our Canadian subsidiary's old office. Income tax benefit/expense. We recorded a tax expense in the amount of approximately $45,000 for the period ended June 30, 2005 as compared to the tax expense of approximately $10,000 for the period ended June 30, 2004. Net Income. As a result of the above changes, net income decreased from approximately $693,000 for the period ended June 30, 2004 to $647,000 for the period ended June 30, 2005, an decrease of approximately $46,000, or 6.6%. 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 working capital resulting from normal operation. 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 the next 12 months. As of June 30, 2005 we had $9,731,619 in cash and cash equivalents as compared to $9,707,588 as of March 31, 2005. Working capital at June 30, 2005 was $16,655,484 compared to $15,578,596 at March 31, 2005. We believe that current cash balances and working capital plus cash flow from operations will be sufficient to fund its capital and liquidity needs in the foreseeable future. Stock Repurchase Program - ------------------------ In August 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 shares were purchased under this program in the first quarter of fiscal 2006. The Company may from time to time repurchase shares of its Common Stock under this program. 6 Legal Proceedings Jefferson County Colorado Litigation On August 20, 2004, Bonso and three of Bonso's directors were served with a copy of a Complaint filed on July 23, 2004 in District Court of Jefferson County, State of Colorado, Case No. 03CV2505. Plaintiffs Doug Moreland, William Pinard, Richard Pinard, Leigh Investment Company, LP, Patricia Johnson, Jason Pinard and Larry Rowe (collectively the "Plaintiffs") named Anthony So, George O'Leary, Henry F. Schlueter, Cathy Pang, and John Stewart Jackson (the "Individual Defendants") and Bonso as defendants in the case. On September 26, 2004, the Company and the Individual Defendants filed a motion to dismiss the Complaint for lack of standing, failure to state a claim, and failure to comply with the appropriate procedural requirements for out of state defendants instituting and maintaining a legal action in the state of Colorado. On October 30, 2004, the Plaintiff's filed an amended complaint (the "Amended Complaint") with the substantially the same factual allegations as asserted in the original Complaint. The Amended Complaint alleged derivative claims (the "Derivative Claims") against the Individual Defendants for breaches of fiduciary duties for: (i) insider selling and misappropriation of information, (ii) dissemination of misleading and inaccurate information and (iii) waste of corporate assets. The Derivative Claims allege that Bonso has sustained damages as a result of the Individual Defendants actions. The Amended Complaint sought disgorgement of all profits realized by the Individual Defendants, the imposition of a constructive trust in favor of Bonso for the amount of profits received by the Individual Defendants as a result of their sales of Bonso stock and damages in favor of Bonso for breaches of the Individual Defendants fiduciary duties. In response, Bonso engaged an independent counsel to review the validity and appropriateness of the Derivative Claims. The Amended Complaint also alleged individual claims (the "Individual Claims") against the Individual Defendants for breach of fiduciary duty against the individual defendants for: (i) insider selling and misappropriation of information, (ii) dissemination of misleading and inaccurate information, (iii) negligent misrepresentations, and (iv) fraud. On November 20, 2004, the Company and the Individual Defendants filed a motion to dismiss the Amended Complaint for lack of standing and failure to comply with the appropriate procedural requirements for out of state defendants instituting and maintaining a legal action in the state of Colorado. On January 8, 2005, the Court entered an Order denying Defendants' motion to dismiss but requiring the non-resident Plaintiff to file a cost bond. Thereafter, Plaintiffs filed a Verified Second Amended Complaint (the "Second Amended Complaint") on January 21, 2004. While the Second Amended Complaint asserts essentially the same derivative and direct claims as the Amended Complaint, it includes new factual allegations concerning Bonso's December 17, 2003 announcement to extend the expiration date of its December 31, 2003 warrants (the "Warrants") and reduce the exercise price. On April 8, 2005, the District Court of Jefferson County, State of Colorado dismissed with prejudice this lawsuit with each party paying their own costs and fees. The Parties' Stipulation For Dismissal With Prejudice was based upon the Report of Independent Counsel Richard R. Greengard. In his 57 page Independent Counsel's Report, Mr. Greengard found no credible evidence to support the plaintiffs' derivative claims after conducting an exhaustive review of the documents provided by both the plaintiffs and the defendants and conducting interviews of the individuals identified as having knowledge of the particular claims. 7 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BONSO ELECTRONICS INTERNATIONAL INC. (Registrant) Date: December 9, 2005 By George D. O'Leary -------------------- President and Chief Executive Officer 8 EX-99.1 2 bonso6k99-1.txt PRESS RELEASE EXHIBIT 99.1 Bonso Electronics to Present at the New York Society of Securities Analyst Conference in New York HONG KONG, September 27, 2005/ -- Bonso Electronics International Inc. (NASDAQ: BNSO) - a designer and manufacturer of Sensor based and Telecommunications products, today announced that they will be presenting at the "Investing in China and India Conference" on Thursday, 29 September 2005 at the Harvard Club, 32 West 45th Street, New York, NY 10035. About Bonso Electronics Headquartered in Hong Kong, Bonso Electronics designs, develops, manufactures, assembles and markets a comprehensive line of telecommunications products, electronic scales and weighing instruments and health care products. Bonso products are manufactured in the People's Republic of China on behalf of customers primarily located in North America and Europe. Company services include product design and prototyping, production tooling, procurement of components, total quality management, and just-in-time delivery. Bonso also independently designs and develops electronic products for private label markets. For further information, visit the company's web site at www.bonso.com. The statements contained in the press release which are not historical facts are forward-looking statements that involve certain risks and uncertainties including, but not limited to, risks associated with the uncertainty of future financial results, additional financing requirements, development of new products, government approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties detailed in the company's filings with the Securities and Exchange Commission. For more information, please contact In US - George OLeary Tel: +1-949-760-9611 Fax: +1-949-760-9607 In Hong Kong - Cathy Pang Tel: +852-2605-5822 Fax: +852-2691-1724 -----END PRIVACY-ENHANCED MESSAGE-----