AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 23, 2000
F-2 REGISTRATION NO. 333-32524
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C
AMENDMENT NO. 1 TO
FORM F-2
ORIGINALLY FILED ON FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BONSO ELECTRONICS INTERNATIONAL INC.
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(Exact name of Registrant as specified in its charter)
British Virgin Islands None
---------------------- ----
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Flat A-D, 8th Floor
Universal Industrial Centre
23-25 Shan Mei Street
Fo Tan, Shatin
New Territories, Hong Kong
(852) 2605-5822
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(Address and telephone number of Registrant's principal executive offices)
Henry F. Schlueter, Esq.
Schlueter & Associates, P.C.
1050 Seventeenth Street, Suite 1700
Denver, Colorado 80265
(303) 292-3883
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(Name, address and telephone number of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
<TABLE>
<CAPTION>
Calculation of Registration Fee(1)
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Proposed maximum Proposed maximum Amount of
Title of each class of Amount to be offering price aggregate offering registration
securities to be registered registered per unit(2) price(2) fee
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<S> <C> <C> <C> <C>
Common stock purchase warrants(3) 2,174,403(4) $ 0.00 $ 0.00 $ 0
Common stock issuable upon
exercise of the common stock
purchase warrants 1,087,201(4) $17.50 $19,026,017 $5,023
Common stock issuable upon
exercise of outstanding common
stock purchase warrants(5)(6) 250,000(4) $ 8.00 $ 2,000,000 $ 528
Common stock(6) 350,000 $14.875(7) $ 5,206,250(7) $1,374
Total registration fee $6,925(8)
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</TABLE>
(1) In United States dollars.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) To be issued as a warrant dividend to holders of record of certain prior
warrants at the close of trading on January 19, 2000, and to all persons
who exercised the prior warrants during the period commencing on November
22, 1999 and ending at the close of trading on January 19, 2000.
(4) An indeterminate number of additional shares of common stock are registered
hereunder which may be issued, as provided in the warrants, in the event
provisions against dilution become operative. No additional consideration
will be received by Bonso upon issuance of additional shares issued as a
result of the exercise of these warrants.
(5) Underlie warrants issued to a consultant in accordance with a consulting
agreement dated January 14, 2000.
(6) May be sold from time to time, at varying prices, by a selling shareholder.
(7) Based upon the closing price of the common stock on March 1, 2000.
(8) Previously paid.
The registrant hereby amends this registration statement on the date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on the date as the Commission, acting pursuant to said section 8(a),
may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which the offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of that state.
ii
<PAGE>
BONSO ELECTRONICS INTERNATIONAL INC.
Item No. and Heading
In Form F-2
Registration Statement Location In Prospectus
---------------------- ----------------------
1. Forepart of the Registration Forepart of Registration Statement
Statement and outside front and outside front cover page of
cover of Prospectus Prospectus
2. Inside front and outside back Inside front and outside back cover
cover pages of Prospectus pages of Prospectus
3. Summary Information, Prospectus Summary and Risk Factors
Risk Factors and Ratio of
Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Determination of Offering Price
6. Dilution Not Applicable
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Description of Securities
Registered
10. Interests of Named Experts and Legal Matters
Counsel
11. Material Changes Recent Developments
12. Information with Respect Additional Information
to the Registrant
13. Disclosure of Commission Not Applicable
Position on Indemnification for
Securities Act Liabilities
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<PAGE>
BONSO ELECTRONICS INTERNATIONAL INC.
1,087,201 Shares of Common Stock
Issuable on Exercise of Common Stock Purchase Warrants
and
600,000 Shares of Common Stock Offered by Selling Shareholders
We are registering 2,174,403 common stock purchase warrants that we will
issue as a dividend to all record holders at the close of trading on January 19,
2000 of certain prior warrants, which expired on January 31, 2000, and to all
persons who exercised the prior warrants during the period commencing on
November 22, 1999 and ending at the close of trading on January 19, 2000. We are
also registering 1,087,201 shares of common stock issuable upon the exercise of
those warrants.
Each two warrants are exercisable to purchase one share of our common stock
at an exercise price of $17.50 per share. The warrants expire on December 31,
2001.
The warrants are redeemable by us upon 30 days notice at a redemption price
of $.01 per warrant but only if the public trading price for our common stock
equals or exceeds 110% of the then-current exercise price of the warrants for 20
trading days within the preceding 30 trading days.
We are also registering for resale by certain selling shareholders 250,000
shares of common stock which may be issued upon exercise of outstanding warrants
and 350,000 outstanding shares of common stock. These shares may be offered and
sold from time to time by selling shareholders.
Prior to this offering, the common stock has traded on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") under
the symbol "BNSO." As of ______, 2000 (one day prior to the date of this
prospectus), the reported closing sales price of the common stock on
NASDAQ-National Market System was $______.
An investment in these securities involves a high degree of risk. See "Risk
Factors" beginning at page 5 of this prospectus for a discussion of certain
factors that you should consider before investing in these securities.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
Underwriting
Price to Discounts and Proceeds to
Public(1)(2) Commissions Company(3)
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Per Warrant $ 0.00 $ 0.00 $ 0.00
Per Share(4) $ 17.50 $ 0.00 $ 17.50
Total Offering $19,026,017.50 $ 0.00 $19,026,017.50
================================================================================
Footnotes on following page
The date of this prospectus is _______, 2000
<PAGE>
(1) The warrants are being issued as a dividend to all record holders of our
warrants at the close of trading on January 19, 2000, and to all persons
who exercised our warrants during the period commencing on November 22,
1999 and ending at the close of trading on January 19, 2000. The shares of
common stock underlying the warrants are being offered by us to the holders
of the warrants. There is no minimum purchase amount. The shares of common
stock are offered for cash only. The exercise price of the warrants was
arbitrarily determined and bears no relationship to the value of the
company or its assets, nor does the exercise price represent that the
common stock has a value or could be resold at that price. The shares of
common stock are being sold on a "best efforts" basis by us; consequently,
no minimum number of shares is required to be sold.
(2) The 600,000 shares offered by the selling shareholders are being registered
for the benefit of, and may be sold from time to time by, the selling
shareholders. We will receive no proceeds from the sale of these shares by
the selling shareholders.
(3) Before deducting other expenses of the offering payable by us estimated at
$125,000, including, among others, registration and filing fees,
professional fees and printing expenses. All proceeds received upon
exercise of the warrants will be applied directly to our benefit. There is
no escrow of funds and no assurance that all or any portion of the warrants
will be exercised.
(4) Shares underlying the dividend warrants.
You may exercise your warrants only if you live in a state where the common
stock has been qualified for issuance under applicable state laws, including
registration if required under your state's law. As a result, you may not be
permitted to exercise your warrants but may have to sell your warrants or let
them expire unexercised.
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<PAGE>
PROSPECTUS SUMMARY
This summary highlights important information about our business and about
this offering. Because it's a summary, it doesn't contain all the information
you should consider before exercising your warrants. Therefore, please read the
entire prospectus.
As used in this prospectus, "China" refers to all parts of the People's
Republic of China other than the Special Administrative Region of Hong Kong. The
term "we" or "us" refers to Bonso Electronics International Inc. and, where the
context requires or suggests, its direct and indirect subsidiaries. All
outstanding share data excludes 271,700 shares of common stock reserved for
issuance upon exercise of certain outstanding stock options, 250,000 selling
shareholder shares reserved for issuance upon exercise of certain restricted
warrants and 986,300 shares reserved for issuance upon exercise of stock options
which may be granted in the future under our 1996 Stock Option Plan and our 1996
Non-Employee Directors' Stock Option Plan.
The Warrant Dividend
On January 5, 2000, we declared a warrant dividend payable to all record
holders of our warrants at the close of trading on January 19, 2000, and to all
persons who exercised our warrants during the period commencing on November 22,
1999 and ending at the close of trading on January 19, 2000. The warrant
dividend and January 19, 2000 record date were publicly announced in a press
release. Each two warrants are exercisable to purchase one share of our common
stock at an exercise price of $17.50 per share. The warrants are exercisable any
time prior to 2:00 p.m. (Pacific Time) on December 31, 2001, unless extended by
the board of directors.
The warrants are redeemable by us upon 30 days notice at a redemption price
of $.01 per warrant but only if the public trading price for our common stock
equals or exceeds 110% of the then-current exercise price of the warrants for 20
trading days within the preceding 30 trading days.
The registration statement of which this prospectus is a part registers the
warrants and the shares of common stock underlying the warrants.
The exercise price of the warrants as described above is wholly arbitrary
and there is no assurance that the price of the common stock will, at any time,
equal or exceed the exercise price of the warrants. The warrants can be
exercised only if a current prospectus is in effect. See "Description of
Securities--Warrants."
The Company
We design, develop, manufacture, assemble and market a comprehensive line
of electronic scales and weighing instruments and electronic consumer and health
care products, as well as, our new line of telecommunications products. Our
electronic scales include bathroom, kitchen, office, jewelry, laboratory,
pocket, hanging, postal, industrial and parcel scales that are used in consumer,
commercial and industrial applications. Our electronic consumer and health care
products include pedometers, chronographs, electronic thermometers and blood
pressure meters. Our tele-communications products include two-way radios,
cordless telephones and hand-held music players.
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<PAGE>
Our wholly-owned Hong Kong subsidiary - Bonso Electronics Limited ("Bonso
Electronics") - is responsible for the design, development, manufacture and sale
of our products. Bonso Electronics has one active Hong Kong subsidiary - Bonso
Investment Limited ("BIL") - which has been used to acquire and hold our real
estate investments in Hong Kong and China, and one inactive subsidiary - Bonso
Advanced Technology Limited.
We have manufactured all of our products in China since 1989 in order to
take advantage of lower overhead costs and competitive labor rates available
there. In January 1997, we completed a new manufacturing facility in the DaYang
Synthetical Development District in Shenzhen, China, which approximately tripled
our production capacity. The leasehold, facilities, machinery, furniture and
equipment at that facility are owned and operated by Bonso Electronics
(Shenzhen) Co. Ltd. ("Shenzhen Bonso"), our wholly-owned Chinese limited
liability company which was formed in June 1994. The location of our factory in
Shenzhen, only about 50 miles from Hong Kong, permits us to manage easily
manufacturing operations from Hong Kong, and facilitates transportation of our
products out of China through the port of Hong Kong.
For the fiscal year ended March 31, 1999, we had sales of US$13,046,265 and
net income of US$13,754. For the six months ended September 30, 1999, we had
sales of US$7,854,730 and net income of US$621,536.
Our principal executive offices are located at Flat A-D, 8th Floor,
Universal Industrial Centre, 23-25 Shan Mei Street, Fo Tan, Shatin, New
Territories, Hong Kong and our telephone number is (852) 2605-5822.
The Offering
Securities offered ......... 2,174,403 warrants, exercisable to purchase one
share of common stock for each two warrants
exercised until 2:00 p.m. (Pacific Time) on
December 31, 2001.
1,087,201 shares of common stock, $0.003 par
value, issuable upon exercise of warrants
Exercise price per share ... $17.50 per share
of common stock
Terms of the offering ...... We will issue 2,174,403 warrants as a dividend
to all record holders of our warrants at the
close of trading on January 19, 2000, and to
all persons who exercised our warrants during
the period commencing on November 22, 1999 and
ending at the close of trading on January 19,
2000. We are offering the shares of common
stock solely to the holders of the warrants.
Shares not issued in this offering will not be
offered or sold to the public. However, shares
issued upon exercise of the warrants, as well
as the other shares being registered by the
registration statement which included this
prospectus, may be resold under this prospectus
from time to time.
4
<PAGE>
Common stock outstanding ... 5,512,610 shares
prior to offering
Common stock outstanding ... 6,599,811 shares
after offering if all
warrants exercised
Estimated net proceeds to .. $18,901,017
Bonso if all warrants
exercised
Use of proceeds ............ We intend to use the net proceeds from this
offering for working capital. See "Use of
Proceeds."
Risk factors ............... Acquisition of shares of our common stock
entails a high degree of risk and exercise of
our warrants also entails immediate substantial
dilution. See "Risk Factors" and "Dilution."
Nasdaq symbols ............. Common Shares..... BNSO
Warrants.......... BNSOZ (proposed)
RISK FACTORS
Investment in the securities offered through this prospectus involves a high
degree of risk. Please carefully consider the following risk factors, along with
the other information contained in this prospectus, before deciding whether to
exercise your warrants.
Political, Legal, Economic and Other Uncertainties of Operations in China and
Hong Kong
China's Sovereignty over Hong Kong Could Cause Instability. Our principal
executive and corporate offices are located in Hong Kong, formerly a British
Crown Colony. Sovereignty over Hong Kong was transferred effective July 1, 1997
to China, and Hong Kong became a Special Administrative Region of China. The
National People's Congress of China enacted the Basic Law in 1990 as the
constitution of Hong Kong under China's sovereignty. While we do not believe
that the transfer of sovereignty over Hong Kong to China has had or will have a
material adverse effect on our business, there can be no assurance as to the
continued stability of political, economic or commercial conditions in Hong
Kong, and any instability could have an adverse impact on our business.
The Hong Kong dollar and the United States dollar have been fixed at
approximately 7.80 Hong Kong dollars to $1.00 since 1983. The Chinese government
expressed its intention in the Basic Law to maintain the stability of the Hong
Kong currency after the sovereignty of Hong Kong was transferred to China. There
can be no assurance that this will continue and we could face increased currency
risks if the current exchange rate mechanism is changed.
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<PAGE>
Manufacturing in China Involves Risks Caused by Internal Political Factors.
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, regulations or the interpretation of laws and regulations,
confiscatory taxation, 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. There can be no assurance that the Chinese government will
continue to pursue these policies, that these policies will be successful if
pursued, that these policies will not be significantly altered from time to time
or that business operations in China would not become subject to the risk of
nationalization, which could result in the total loss of investment in that
country. 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 there can be no assurance that we could continue our
operations.
If China Were to Lose Most Favored Nation Status, We Could be Adversely
Affected. China currently enjoys most favored nation ("MFN") trade status, which
provides China with the trading privileges generally available to trading
partners of the United States. The United States annually reconsiders the
renewal of China's MFN status. Various interest groups continue to urge that the
United States not renew MFN for China and there can no assurance that
controversies will not arise that threaten the status quo involving trade
between the United States and China or that the United States will not revoke or
refuse to renew China's MFN status. In any of these eventualities, our business
could be adversely affected, by among other things, causing our products in the
United States to become more expensive, which could result in a reduction in the
demand for our products by customers in the United States. Trade friction
between the United States and China, whether or not actually affecting our
business, could also adversely affect the prevailing market price of our common
stock and warrants.
The Chinese Legal System and Application of Chinese Laws Are Uncertain. The
legal system of China relating to foreign investments is both new and
continually evolving, and currently there can be no certainty as to the
application of its laws and regulations in particular instances. China does not
have a comprehensive system of laws. 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.
China's Economic Policies Could Change. As part of its economic reform,
China has designated certain areas, including Shenzhen where our manufacturing
complex is located, as Special Economic Zones. Foreign enterprises in these
areas benefit from greater economic autonomy and more favorable tax treatment
than enterprises in other parts of China. Changes in the policies or laws
governing Special Economic Zones could have a material adverse effect on us.
Moreover, economic reforms and growth in China have been more successful in
certain provinces than others, and the continuation or increase of these
disparities could affect the political or social stability of China.
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<PAGE>
We are Dependent on a Single Factory. All of our products are currently
manufactured at our manufacturing facility located in Shenzhen, China. We do not
own the land underlying our factory complex. It occupies the site under an
agreement with the local Chinese government under which we are entitled to use
the land upon which our factory complex is situated until May 2044. This
agreement and the operations of our Shenzhen factory are dependent on our
relationship with the local government. Our operations and prospects would be
materially and adversely affected by the failure of the local government to
honor the agreement. In the event of a dispute, enforcement of the agreement
could be difficult in China.
Moreover, fire fighting and disaster relief or assistance in China may not
be as developed as in Western countries. We currently maintain property damage
insurance aggregating approximately $13,900,000 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 against, could have a material adverse effect
on our financial condition, results of operations, business and prospects.
Asia Has Recently Experienced Significant Economic Problems. Recently,
several countries in Southeast Asia have experienced a significant devaluation
of their currencies and decline in the value of their capital markets. In
addition, several Asian countries have experienced a number of bank failures and
consolidations. We believe that most Asian countries have recovered from these
declines and we do not believe that the declines in Southeast Asia will affect
the demand for our products, because virtually all of our products are sold into
developed countries not experiencing these declines. Moreover, because most of
our products are paid for in U.S. dollars, we believe that we are less
susceptible to the effects of a devaluation in the Hong Kong dollar or Chinese
renminbi if either or both were to occur despite assurances to the contrary by
the Chinese government. However, the decline in the currencies of other
Southeast Asian countries could render our products less competitive if
competitors located in these countries are able to manufacture competitive
products at a lower effective cost. Investors are cautioned that the decline in
Southeast Asia may have a material adverse effect on our business, financial
condition, results of operations or market price of our securities.
Risk Factors Relating to Our Business
The Loss of Any of Our Major Customers Could Significantly Affect Our
Profitability. Four major customers accounted for approximately 62% of our sales
in the fiscal year ended March 31, 1998 and 51% of its sales during the fiscal
year ended March 31, 1999. The loss of any of these major customers could have a
material negative impact on our business.
We Are Dependent on Our Key Personnel. Our future performance will depend
to a significant extent upon the efforts and abilities of certain members of
senior management as well as upon our ability to attract and retain other
qualified personnel. In particular, we are largely dependent upon the continued
efforts of Mr. Anthony So, our president, secretary, treasurer and chairman of
our board of directors, and Mr. Kim Wah Chung, our director of engineering and
research and development. To the extent that the services of Mr. So or Mr. Chung
would be unavailable to us, we would be required to obtain other personnel to
perform the duties that they otherwise would perform. There can be no assurance
that we would be able to employ another qualified person or persons, with the
appropriate background and expertise, to replace Mr. So or Mr. Chung on terms
suitable to us.
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<PAGE>
We Face Strong Competition. Our business is in an industry that is highly
competitive, and many of our competitors, both local and international, have
substantially greater technical, financial and marketing resources than we have.
We Need Qualified Employees. Our success is dependent on our ability to
attract and retain qualified technical, marketing and production personnel. We
will have to compete with other larger companies for this type of personnel, and
there can be no assurance that we will be able to attract or retain qualified
personnel of this nature.
Management Controls the Company. At the present time, Mr. Anthony So, our
founder and president, beneficially owns approximately 31.9% of the outstanding
shares of common stock and Mr. J. Stewart Jackson, one of our directors,
beneficially owns approximately 14.3%. Due to their stock ownership, Messrs. So
and Jackson 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.
Our Operating Results 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.
Certain Legal Consequences of Foreign Incorporation and Operations
Judgments Against Us and Our Management May Be Difficult to Obtain or
Enforce. We are a holding corporation organized as an International Business
Company under the laws of the British Virgin Islands. Our principal operating
subsidiary is organized under the laws of Hong Kong, where our principal
executive offices are also located. Outside the United States, it may be
difficult for investors to enforce judgments against us obtained in the United
States in actions brought against us, including actions predicated upon 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 and of the company 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 U.S. securities
laws. We have been advised by our Hong Kong counsel and our British Virgin
Islands counsel that there is substantial doubt as to the enforceability against
us or any of our directors or officers located outside the United States in
original actions or in actions for enforcement of judgments of U.S. courts of
liabilities predicated solely on the civil liability provisions of federal
securities laws.
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<PAGE>
Because We Are Incorporated in the British Virgin Islands, Our Shareholders
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 U.S.
securities laws.
Our Shareholders Do Not Have the Same Protections or Information Generally
Available to Shareholders of U.S. Corporations Because of Exemptions for Foreign
Private Issuers. We are a foreign private issuer within the meaning of rules
promulgated under the Securities Exchange Act of 1934. As a result, and though
our common stock is registered under Section 12(g) of the Exchange Act, we are
exempt from 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 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 of the exemptions
under the Exchange Act applicable to foreign private issuers, our shareholders
are not afforded the same protections or information generally available to
investors in public companies organized in the United States.
Risks Relating to this Offering
You May Not be Able to Sell Your Shares of Common Stock for What You Paid
for Them. The exercise price of the warrants has been arbitrarily determined by
us and does not necessarily bear any relationship to our assets, operating
results, book value or shareholders' equity or any other statistical criterion
of value. The exercise price of the warrants should not under any circumstances
be regarded as an indication of any future market price of our common stock.
You May Not Be Able to Exercise Your Warrants. Exercise of our outstanding
warrants is subject to our either maintaining the effectiveness of our
registration statement, or filing an effective registration statement with the
Securities and Exchange Commission and complying with the appropriate state
securities laws. No assurance can be given that at the time a warrant holder
seeks to exercise the right to purchase our common stock an effective
registration statement will in fact be in effect or that we will have complied
with all appropriate state securities laws.
Future Sales of Restricted Shares Into the Public Market Could Depress the
Market Price of the Common Stock. As of the date of this prospectus, 3,889,333
outstanding shares of our common stock are restricted securities as that term is
defined in Rule 144 under the Securities Act of 1933. Although the Securities
Act and Rule 144 place certain prohibitions on the sale of restricted
securities, they may be sold into the public market under certain conditions.
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<PAGE>
Further, we have outstanding options and restricted warrants to purchase 521,700
shares of common stock and have reserved an additional 986,300 shares for
issuance upon exercise of stock options which may be granted in the future under
our existing stock option plans, in addition to the 1,087,201 shares which could
be issued under this prospectus. It is possible that, when permitted, the sale
to the public of these shares, or shares acquired upon exercise of the options,
could have a depressing effect on the price of the common stock. Further, future
sales of these shares and the exercise of these options could adversely affect
our ability to raise capital in the future.
The Market Price of Our Common Stock Fluctuates. The markets for equity
securities have been volatile and the price of our common stock has been and
could continue to be subject to wide fluctuations in response to quarter to
quarter variations in operating results, news announcements, trading volume,
sales of common stock by officers, directors and principal shareholders, general
market trends and other factors.
Shareholders Who Do Not Exercise Their Warrants Would Be Diluted By the
Exercise of Other Warrants. Our current shareholders who are issued dividend
warrants will have their percentage of ownership in the company diluted if they
choose to let their warrants expire and other warrant holders choose to exercise
their warrants.
We Might Decide to Redeem the Warrants. The warrants are redeemable by us
at any time at $0.01 per warrant upon 30 days notice if the public trading price
of the common stock equals or exceeds 110% of the then-current exercise price of
the warrants for 20 trading days within the preceding 30 trading days. If we
call the warrants for redemption, the holders of the warrants must either (i)
exercise the warrants and pay the exercise price at a time when it may be
disadvantageous for them to do so; (ii) sell the warrants at the then current
market price when they might otherwise wish to hold the warrants; or (iii)
accept the nominal redemption price, which is likely to be substantially less
than the market value of the warrants. No assurance can be given that at the
time of redemption an effective registration statement will be in effect or that
we will have complied with all appropriate state securities laws so that a
warrant holder will be able to exercise his warrants rather than accepting the
$0.01 per warrant redemption price.
ADDITIONAL INFORMATION
We file annual and special reports, proxy statements and other information
with the Securities and Exchange Commission. You may read and copy any document
we file at the Commission's Public Reference Rooms in Washington, D.C., New
York, New York, and Chicago, Illinois. Please call the Commission at
1-800-SEC-0330 for further information on the Public Reference Rooms. You can
also obtain copies of our Commission filings by going to the Commission's
website at http://www.sec.gov.
The Commission requires us to both "incorporate by reference" the
information we file with them, which means that we can disclose important
information to you by referring you to those documents, and to deliver with this
Prospectus copies of certain documents previously filed with the Commission on
behalf of the Company. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934. This prospectus is part of a registration statement we
filed with the Commission.
10
<PAGE>
We incorporate the documents listed below by reference. These documents are
also delivered with this prospectus.
1. Our Annual Report on Form 20-F for the fiscal year ended March 31, 1999
filed with the Commission on August 4, 1999; and
2. Our Forms 6-K filed with the Commission on August 3, 1999, and February
10, 2000 (which contain our financial statements at and for the three months
ended June 30, 1999, and the six months ended September 30, 1999).
You may request an additional copy of these filings at no charge by a written or
oral request to Henry F. Schlueter, Schlueter & Associates, P.C., 1050
Seventeenth Street, Denver, Colorado 80265 (303) 292-3883. You may also obtain
these filings electronically at the Commission's worldwide website at
http://www.sec.gov/edgarhp/htm.
You should rely only on the information incorporated by reference,
contained in the documents delivered with this prospectus, or provided in this
prospectus or any supplement to this prospectus. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any supplement to this
prospectus or in the documents delivered with this prospectus is accurate as of
any date other than the date on the front of those documents.
FORWARD-LOOKING STATEMENTS
Some statements contained in this prospectus that are not statements of
historical facts are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, among others, statements regarding our future economic
performance and financial position and plans and objectives of management for
future operations including plans and objectives relating to the development and
sale of telecommunications products. Forward-looking statements are subject to
factors that could cause the actual results to differ materially from future
results expressed or implied by forward-looking statements. They are based on
assumptions, including the following:
o that political, economic and commercial conditions in Hong Kong and
China will not change materially or adversely
o that competitive conditions affecting us will not change materially or
adversely
o that demand for our products will be strong
o that we will retain existing key management personnel
o that our forecasts will accurately anticipate market demand
o that there will be no material adverse change in our operations or
business
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<PAGE>
Assumptions relating to these factors involve judgments with respect to,
among other things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond our control. Although we believe that
the assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be no assurance
that the results contemplated in forward-looking information will be realized.
We intend that the forward-looking statements contained in this prospectus be
subject to the safe harbors created by Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934.
USE OF PROCEEDS
If all of the 2,174,403 warrants are exercised, of which there can be no
assurance, the maximum estimated net proceeds to us will be approximately
$18,901,017 after deduction of fees and the expenses of this offering.
We intend to use the net proceeds for working capital. Working capital may
be used for further expansion of our operations, on-going operations, general
and administrative expenses or any other use which the board of directors deems
appropriate.
Pending utilization, we intend to make temporary investments of the
proceeds in bank certificates of deposit, interest-bearing savings and checking
accounts, prime commercial paper or government obligations. An investment in
interest-bearing assets, if continued for an extensive period of time within the
definitions of the Investment Company Act of 1940, as amended, could subject us
to classification as an "investment company" under the Investment Company Act of
1940 and to registration and reporting requirements thereunder, although we do
not intend this to be a result.
DETERMINATION OF OFFERING PRICE
The offering price of the 1,087,201 shares offered upon the exercise of the
warrants is $17.50 per share. The exercise price per share was determined by us
and bears no relationship to the market price of our common stock, the
prevailing market conditions, our operating results in recent periods, our book
value or other recognized criteria of value.
12
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth
o the number of shares of our common stock owned of record and
beneficially by the selling securityholders as of the date of this prospectus,
o the number of shares of our common stock that are to be offered and
sold by the selling securityholders from time to time under this prospectus,
assuming exercise of all of the warrants to be issued to selling
securityholders,
o the number of shares of our common stock to be owned by the selling
securityholders after the offering, assuming the sale of all 600,000 of the
shares of our common stock by the selling securityholders and
o the percent of our outstanding shares to be owned by the selling
securityholders after the offering assuming that all 2,174,403 dividend warrants
are exercised.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Selling Owned Shares to be Owned % Owned
Securityholder Prior to Offering Offered After Offering After Offering
-------------- ----------------- ------- -------------- --------------
<S> <C> <C> <C> <C>
J. Stewart Jackson 800,000 350,000 450,000 6.8%
Profit Concepts, Ltd. 250,000 250,000 0 0.0%
</TABLE>
J. Stewart Jackson is a member of our board of directors. An aggregate of
100,000 of the shares beneficially owned by Mr. Jackson underlie dividend
warrants to be issued to Mr. Jackson under this prospectus. All of the shares
listed above as owned by Profit Concepts, Ltd. underlie warrants previously
issued to that securityholder.
PLAN OF DISTRIBUTION
We have agreed to issue warrants as a dividend to the record holders of our
warrants at the close of trading on January 19, 2000, and to all persons who
exercised warrants between November 22, 1999 and the close of trading on January
19, 2000. The warrants will be distributed immediately after the effective date
of this registration statement. The warrants entitle the holders to purchase up
to 1,087,201 shares of common stock at an exercise price of $17.50 per share.
We are offering the shares of common stock underlying the warrants. Those
shares may be offered on a delayed or continuous basis under Rule 415 under the
Securities Act. No underwriter or placement agent will be involved and no
commissions or similar compensation will be paid to any person. You may resell
the warrants and/or shares of common stock from time to time in transactions
(which may include block transactions) on the Nasdaq SmallCap Market, in
negotiated transactions or through other methods of sale, at market prices
prevailing at the time of sale, or at negotiated prices. You may sell the
warrants and/or common stock directly to purchasers or through broker-dealers
that may act as agents or principals. Such broker-dealers may receive
compensation in the form of discount, concessions or commissions from you and/or
the purchasers of the warrants and/or shares of common stock.
13
<PAGE>
You and any broker-dealers that act as a principal in connection with the
sale of the warrants and/or shares of common stock may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act and any
commissions received by them and any profit on the resale of the warrants and/or
shares of common stock might be deemed to be underwriting discounts and
commissions under the Securities Act. You may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of the
warrants and/or shares of common stock against some forms of liability,
including liability arising under the Securities Act. We will not receive any
proceeds from the issuance of the warrant dividend or from the sales of warrants
or shares of common stock by you. Transactions involving the warrants and/or
shares of common stock or even the potential of such sales, may have an adverse
effect on the market price of the warrants and/or our common stock.
We have agreed to pay all expenses incurred in connection with the
registration of the securities we are offering. You will be responsible to pay
any and all commissions, discounts and other payments to broker-dealers incurred
in connection with your sale of the warrants and/or common stock.
In order to comply with certain states' securities laws, if applicable, the
common stock may be sold in those jurisdictions only through registered or
licensed brokers or dealers. In certain states the common stock may not be sold
unless it has been registered or qualified for sale in any of those states, or
unless an exemption from registration or qualification is available and is
obtained.
DESCRIPTION OF SECURITIES
Common Stock
Our authorized capital consists of 23,333,334 shares of common stock,
$0.003 par value per share.
Holders of common stock are entitled to one vote for each whole share on
all matters to be voted upon by shareholders, including the election of
directors. Holders of common stock do not have cumulative voting rights in the
election of directors. All shares of common stock are equal to each other with
respect to liquidation and dividend rights. Holders of common stock are entitled
to receive dividends if and when declared by the board of directors out of funds
legally available therefor under British Virgin Islands law. In the event of the
liquidation of the company, all assets available for distribution to the holders
of the common stock are distributable among them according to their respective
holdings. Holders of common stock have no preemptive rights to purchase any
additional, unissued shares of common stock. All of the outstanding shares of
common stock of the company are, and those to be issued pursuant to this
offering will be, fully paid and non-assessable.
Under our Memorandum and Articles of Association and the laws of the
British Virgin Islands, our Memorandum and Articles of Association may be
amended by the board of directors without shareholder approval. This includes
amendments increasing or reducing the authorized capital stock of the company
and increasing or reducing the par value of our shares. The board of directors
may also increase the capital of the company without shareholder approval by
14
<PAGE>
transferring a portion of the company's surplus to capital or reduce the
company's capital by transferring a portion of the company's capital to surplus.
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 without any further action by the
shareholders, including but not limited to a tender offer to purchase the common
stock at a premium over then current market prices.
Under United States law, majority and controlling shareholders generally
have certain fiduciary responsibilities to the minority shareholders.
Shareholder action must be taken in good faith and actions by controlling
shareholders that are obviously unreasonable may be declared null and void. The
British Virgin Islands law protecting the interests of the minority shareholders
may not be as protective in all circumstances as the laws protecting minority
shareholders in United States jurisdictions. While British Virgin Islands law
does permit a shareholder of a British Virgin Islands company to sue its
directors derivatively, i.e., in the name of and for the benefit of the company,
and to sue the company and its directors for his benefit and the benefit of
others similarly situated, the circumstances in which any action may be brought
and the procedures and defenses that may be available with respect to any action
may result in the rights of shareholders of a British Virgin Islands company
being more limited than those rights of shareholders in a United States company.
Warrants
We are authorized to issue 2,174,403 warrants that will be issued to you
after the effectiveness of the registration statement which includes this
prospectus. The warrants covered by this prospectus entitle the holders thereof
to purchase 1,087,201 shares of common stock at an exercise price of $17.50 per
share. We will not issue fractional shares upon exercise of warrants but,
instead, we will pay the warrant holder the current market price of the
fractional share, in cash. The warrants are exercisable for a period beginning
on the effective date of the registration statement and ending December 31,
2001. In the event the warrants are not exercised within such period, all
unexercised warrants will expire and be void and of no further force or effect.
We may extend the warrant exercise period in our discretion. The warrants will
expire, become void and be of no further force or effect upon conclusion of the
applicable exercise period, or any extension thereof. The warrants will be
governed by the terms of a warrant agreement between U.S. Stock Transfer, Inc.,
as warrant agent, and us. In our option, we may redeem the warrants upon 30 days
notice, at a redemption price of $.01 per warrant, if the public trading price
for our common stock equals or exceeds 110% of the then current exercise price
of the warrants for 20 trading days within the preceding 30 trading days. The
exercise price and the number and kind of common shares to be received upon
exercise of the warrants are subject to adjustment on the occurrence of events
such as stock splits, stock dividends or recapitalization. In the event of our
liquidation, dissolution or winding up, the holders of the warrants will not be
entitled to participate in the distribution of our assets. Additionally, holders
of the warrants have no voting, pre-emptive, liquidation or other rights of
shareholders, and no dividends will be declared on the warrants or the shares
underlying the warrants.
The warrants will be issued to you as part of a dividend to our warrant
holders, and upon issuance will be freely tradable. Prior to this offering, our
warrants have been traded on the Nasdaq SmallCap Market. Continuation of low
volume trading may adversely affect the liquidity of large holdings and may
contribute to high volatility of the price of our warrants. Additionally, we
cannot assure you that a public trading market for the warrants will continue.
15
<PAGE>
Transfer and Warrant Agent
The transfer agent and registrar for the common stock and the warrant agent
for the public warrants is U.S. Stock Transfer Corporation, 1745 Gardena Avenue
#200, Glendale, California 91204.
Reports to Shareholders
We intend to furnish annual reports to shareholders which include audited
financial statements reported on by our independent accountants and quarterly
reports for each of our first three quarters which contain unaudited financial
statements. We will continue to comply with the periodic reporting requirements
imposed on foreign issuers by the Exchange Act. We plan to furnish the same
annual and quarterly reports to holders of our public warrants.
Exchange Controls and Other Limitations Affecting Shareholders
There are no exchange control restrictions on payments of dividends on our
common stock or on the conduct of our operations either in Hong Kong, where our
principal executive offices are located, or the British Virgin Islands, where we
are incorporated. Other jurisdictions in which we conduct operations may have
various exchange controls. Taxation and repatriation of profits regarding our
China operations are regulated by Chinese laws and regulations. To date, these
controls have not had and are not expected to have a material impact on our
financial results. There are no material British Virgin Islands laws that impose
foreign exchange controls on us or that affect the payment of dividends,
interest or other payments to nonresident holders of our securities. 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.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 6,599,811 shares of common
stock outstanding if all of the dividend warrants are exercised. Of these,
approximately 3,889,333 shares of common stock, other than shares held by our
affiliates, will be freely transferable and tradeable without restriction under
the Securities Act. This includes the 1,087,201 shares to be issued upon
exercise of the warrants. The remaining 2,710,478 shares of common stock are
restricted securities. These shares may only be sold in the public United States
market under an effective registration statement or in accordance with Rule 144
promulgated under the Securities Act.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are required to be aggregated) who has beneficially owned his or
her shares for at least one year, including our affiliates, would be entitled to
sell within any three-month period a number of shares equal to the greater of 1%
of the then outstanding shares of our common stock (approximately 65,998 shares
immediately after this offering if all of the warrants are exercised) or the
average weekly trading volume of our common stock during the four calendar weeks
preceding the filing of the required notice of the sale. Sales under Rule 144
also are subject to certain manner of sale restrictions, notice requirements and
the availability of current public information about us. Under Rule 144(k), a
person who is not deemed to have been an affiliate of ours at any time during
the 90 days preceding a sale, and who has beneficially owned the shares proposed
to be sold for at least two years, is entitled to sell the shares without regard
to the requirements described above. Sales of substantial numbers of shares of
common stock pursuant to a registration statement, Rule 144 or otherwise,
whether in the United States or abroad, could adversely affect the market price
of the common stock.
We also have reserved 271,700 shares of common stock for issuance upon
exercise of certain outstanding options, 250,000 selling shareholder shares
reserved for issuance upon exercise of certain restricted warrants and 986,300
shares for issuance upon exercise of stock options which may be granted in the
future under our stock option plans. If the holders of the options exercise the
options, the shares of common stock to be issued will constitute restricted
securities, subject to Rule 144.
16
<PAGE>
RECENT DEVELOPMENTS
Recent Warrant Exercises
An aggregate of 1,637,776 of our warrants, which expired on January 31,
2000, were exercised between November 22, 1999 and the expiration date, for the
purchase of 1,637,776 shares of our common stock at $7.35 per share. This
resulted in an equity infusion of over $12,000,000. An additional 25,597
warrants were exercised in 1998, for the purchase of 25,597 shares at $7.35 per
share.
New Products
New Wireless Communications Products. On January 24, 2000, we announced
that we had received significant contract manufacturing orders for a family of
two-way radios (walkie-talkies) and had commenced production shipments of this
new product. Our two-way radio products operate on the Family Radio System
("FRS") channel frequency and have a range of up to two miles. Our two-way radio
products include entry-level models with one channel up to the top of the line
unit, which offers 14 channels and as many as 38 sub-channels on each frequency.
All units include a "power indicator" light. Some units include a "call button"
that sends out a tone before the user sends his message. The higher priced
models come with a setting that changes the tone to vibration, similar to pagers
or cell phones.
New Cordless Telephone Products. On February 2, 2000, we announced that we
had received significant contract manufacturing orders for a family of 900 MHz
cordless telephones and had commenced production shipments of this product.
Hand-Held MP3 Music Player. On February 14, 2000, we announced that we have
developed a new hand-held MP3 music player. The product features solid-state
technology, flash memory and the ability to download through the internet and
store high-fidelity music. Smaller than a minidisk player, the MP3 can fit into
a shirt pocket. It comes in either a 32MB version, which can hold up to 30
minutes of near CD quality music which can be doubled by adding a 32MB flash
memory cartridge, or a 64MB version, which includes the cartridge. The MP3
player comes in a compact magnesium case and includes a voice recorder with up
to 12 hours of dictation capacity. It features a square LCD and control buttons
which follow the convention of CD players.
New Director
J. Stewart Jackson, IV was elected to our Board of Directors by the
shareholders at our Annual Shareholder Meeting held in Denver, Colorado on
January 10, 2000, increasing the number of directors from six to seven. 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 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., of which he is currently president. Mr. Jackson served
17
<PAGE>
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 was
graduated from the University of Colorado in 1962 with a degree in Business
Management and Engineering.
Mr. Jackson currently owns 700,000 shares of our common stock. In addition,
he is entitled to receive dividend warrants to purchase 100,000 shares of our
common stock. These share holdings, not including the shares underlying the
warrants, constitute approximately 12.7% of our outstanding shares of common
stock.
Resignation of Director
Effective as of April 3, 2000, Kam Sun Luk resigned as a director of the
Company to pursue other business opportunities.
Options
The following table sets forth all options to purchase common stock granted
by us which are outstanding as of the date of this prospectus:
Number of Exercise Price Expiration
Options per Share Date
------- --------- ----
10,000 $5.06 September 8, 2007
241,700 $8.00 January 6, 2010
20,000 $8.125 January 12, 2010
At the annual meeting of shareholders which was held on January 10, 2000,
our shareholders approved an increase in the number of options which may be
granted under the 1996 Stock Option Plan from 400,000 to 900,000 and an increase
in the number of options which may be granted under the 1996 Non-Employee
Directors' Stock Option Plan from 100,000 to 600,000. After the increases, there
were 500,000 options available for issuance under the 1996 Stock Option Plan,
23,700 of which have since been granted, and 530,000 options available for
issuance under the 1996 Non-Employee Directors' Stock Option Plan, 20,000 of
which have since been granted.
Principal Shareholders
The following table sets forth, as of February 29, 2000, the beneficial
ownership of our common stock by each person known to us to beneficially own
more than 5% of our common stock outstanding as of that date and by our officers
and directors as a group. Except as otherwise indicated, all shares are owned
directly.
Person or Group Amount Owned
--------------- ------------------------------
Options/Warrants
Shares of to Purchase Percent of
Common Stock Common Stock Class
------------ ------------ -----
Anthony So 1,651,195 158,000 31.9%
J. Stewart Jackson 700,000 100,000 14.3%
Officers and directors
as a group (8 persons) 2,710,478 338,000 52.1%
18
<PAGE>
LEGAL MATTERS
The validity of the common stock underlying the warrants will be passed
upon by Harney, Westwood & Riegels, Tortola, British Virgin Islands, who have
also advised us on all matters of BVI law disclosed in this prospectus.
Schlueter & Associates, P.C., Denver, Colorado has acted as United States
counsel for us in connection with this offering. Wong & Fok, Solicitors, Hong
Kong, has acted as Hong Kong counsel with respect to all matters in this
prospectus concerning the Hong Kong subsidiaries and Hong Kong law.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 20-F for the year ended March 31, 1999
have been so incorporated in reliance on the report of PricewaterhouseCoopers,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
19
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[Back Cover Page]
BONSO ELECTRONICS INTERNATIONAL INC.
1,087,201 Shares of Common Stock
Issuable on Exercise of Common Stock Purchase Warrants
and
600,000 Shares of Common Stock Offered by Selling Shareholders
TABLE OF CONTENTS
Page
Prospectus Summary ........................................................
Risk Factors ..............................................................
Additional Information ....................................................
Forward-Looking Statements ................................................
Use of Proceeds ...........................................................
Determination of Offering Price ...........................................
Selling Securityholders ...................................................
Plan of Distribution ......................................................
Description of Securities .................................................
Shares Eligible for Future Sale ...........................................
Recent Developments .......................................................
Legal Matters .............................................................
Experts ...................................................................
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
MADE HEREBY. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS TO WHICH IT RELATES, OR AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY WOULD
BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THE COMPANY HAS UNDERTAKEN TO
FILE POST-EFFECTIVE AMENDMENTS TO THE REGISTRATION STATEMENT OF WHICH THIS
PROSPECTUS IS A PART IF MATERIAL CHANGES OR EVENTS OCCUR DURING THE WARRANT
EXERCISE PERIOD OR ANY EXTENSION THEREOF.
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection with
this registration:
SEC Registration Fees.................................. $ 6,925
Nasdaq Application and Entry Fees...................... $44,750
Printing Registration Statement, Prospectus
and Related Documents............................... $25,000(1)
Accounting Fees and Expenses........................... $10,000(1)
Legal Fees and Expenses................................ $30,000(1)
Transfer/Warrant Agent Fees and Expenses............... $ 1,500(1)
Miscellaneous.......................................... $ 6,825(1)
-------
Total.................................................. $125,000(1)
==========
- ------------------------
(1) Estimated
Item 15. Indemnification of Directors and Officers.
The Articles of Association of Bonso provide that, subject to British
Virgin Islands law, every director or other officer of Bonso shall be entitled
to be indemnified out of the assets of Bonso against all losses or liabilities
which he may sustain or incur in or about the execution of the duties of his
office or otherwise in relation thereto. No director or other officer shall be
liable for any loss, damage or misfortune which may happen to, or be incurred by
Bonso in the execution of the duties of his office, or in relation thereto.
Item 16. Exhibits.
The following Exhibits are filed as part of this Registration Statement, or
are incorporated by reference to previously filed documents:
Exhibit No. Description
- ----------- -----------
4.1 Form of Warrant Agreement between Bonso and the (1)
Warrant Agent (with form of Warrant certificate
annexed)
4.2 Specimen Certificate of Common Stock, $.003 par (2)
value and relevant portions of Memorandum and
Articles of Association of the Registrant, as
amended
5.1 Opinion and consent of Schlueter & Associates, (3)
P.C. as to legality of securities being registered
5.2 Opinion and consent of Harney, Westwood & Riegels, (3)
P.O. Box 71, Road Town, Tortola, British Virgin
Islands, as to the legality of securities being
registered
II-1
<PAGE>
Exhibit No. Description
- ----------- -----------
5.3 Opinion and consent of Wong & Fok, Solicitors, (3)
Room 2014-15, Hutchison House, 10 Harcourt Road,
Central, Hong Kong, as to certain matters
regarding the Hong Kong subsidiaries and Hong Kong
law
5.4 Opinion and consent of Shenzhen Jinyuan Law Firm, (4)
7/F Office Tower, Shun Hing Square, Di Wang
Commercial Centre, Shen Nan Dong Road, Shenzhen,
PRC 518008, as to certain matters regarding the
PRC subsidiary and PRC law
23.1 Consent of PricewaterhouseCoopers (3)
23.2 Consent of Schlueter & Associates, P.C. (included (3)
in Exhibit 5.1)
23.3 Consent of Harney, Westwood & Riegels (included in (3)
Exhibit 5.2)
23.4 Consent of Wong & Fok, Solicitors (included in (3)
Exhibit 5.3)
23.5 Consent of Shenzhen Jinyuan Law Firm (included in (4)
Exhibit 5.4)
- ------------------------
(1) Previously filed.
(2) This document has been previously filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form F-2 (SEC Registration No. 33-84872) and is
hereby incorporated by reference.
(3) Filed herewith.
(4) This document has been previously filed as an Exhibit to the Registrant's
Registration Statement on Form F-3 (SEC Registration No. 333-9002) and is
hereby incorporated by reference.
Item 17. Undertakings
With regard to the securities of the Registrant being registered pursuant
to Rule 415 under the Securities Act of 1933, the Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
II-2
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) To file a post-effective amendment to the Registration Statement to
include any financial statements required by Rule 3-19 of Regulation S-X at the
start of any delayed offering or throughout a continuous offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 14 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hong Kong, on May 16, 2000.
BONSO ELECTRONICS INTERNATIONAL INC.
By: /s/ Anthony So
------------------
Anthony So, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: May 16, 2000 /s/ Anthony So
- ------------------ --------------------------------------
Anthony So, President (Chief Executive
Officer), Secretary, Treasurer
(Chief Financial Officer) and
Chairman of the Board of Directors
Date: May 16, 2000 /s/ Kim Wah Chung
- ------------------ --------------------------------------
Kim Wah Chung, Director
Date: May 16, 2000 /s/ Woo Ping Fok
- ------------------ --------------------------------------
Woo Ping Fok, Director
Date: May 16, 2000 /s/ Cathy Pang
- ------------------ --------------------------------------
Cathy Pang, Director
Date:
- ------------------ --------------------------------------
George O'Leary, Director
Date:
- ------------------ --------------------------------------
J. Stewart Jackson, Director
SCHLUETER & ASSOCIATES, P.C.
Date: May 16, 2000 /s/ Henry F. Schlueter
- ------------------ --------------------------------------
Henry F. Schlueter, Authorized
Representative in the United States
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.1 Form of Warrant Agreement between Bonso and the (1)
Warrant Agent (with form of Warrant certificate
annexed)
4.2 Specimen Certificate of Common Stock, $.003 par (2)
value and relevant portions of Memorandum and
Articles of Association of the Registrant, as
amended
5.1 Opinion and consent of Schlueter & Associates, (3)
P.C. as to legality of securities being registered
5.2 Opinion and consent of Harney, Westwood & Riegels, (3)
P.O. Box 71, Road Town, Tortola, British Virgin
Islands, as to the legality of securities being
registered
5.3 Opinion and consent of Wong & Fok, Solicitors, (3)
Room 2014-15, Hutchison House, 10 Harcourt Road,
Central, Hong Kong, as to certain matters
regarding the Hong Kong subsidiaries and Hong Kong
law
5.4 Opinion and consent of Shenzhen Jinyuan Law Firm, (4)
7/F Office Tower, Shun Hing Square, Di Wang
Commercial Centre, Shen Nan Dong Road, Shenzhen,
PRC 518008, as to certain matters regarding the
PRC subsidiary and PRC law
23.1 Consent of PricewaterhouseCoopers (3)
23.2 Consent of Schlueter & Associates, P.C. (included (3)
in Exhibit 5.1)
23.3 Consent of Harney, Westwood & Riegels (included in (3)
Exhibit 5.2)
23.4 Consent of Wong & Fok, Solicitors (included in (3)
Exhibit 5.3)
23.5 Consent of Shenzhen Jinyuan Law Firm (included in (4)
Exhibit 5.4)
- --------------------------
(1) Previously filed.
(2) This document has been previously filed as Exhibit 4.1 to the Registrant's
Registration Statement on Form F-2 (SEC Registration No. 33-84872) and is
hereby incorporated by reference.
(3) Filed herewith.
(4) This document has been previously filed as an Exhibit to the Registrant's
Registration Statement on Form F-3 (SEC Registration No. 333-9002) and is
hereby incorporated by reference.
II-5
Board of Directors
Bonso Electronics International Inc.
May 19, 2000
Page 1
SCHLUETER & ASSOCIATES, P.C.
1050 Seventeenth Street, Suite 1700
Denver, Colorado 80265
(303) 292-3883
Facsimile (303) 296-8880
May 19, 2000
Board of Directors
Bonso Electronics International Inc.
Flat A-D, 8th Floor
Universal Industrial Centre
23-25 Shan Mei Street
Fo Tan, Shatin, N.T., Hong Kong
Gentlemen:
We have served as your counsel in connection with the preparation and
filing with the United States Securities and Exchange Commission of a
Registration Statement on Form F-3 and amendment thereto on Form F-2, of Bonso
Electronics International Inc. (the "Company"). The Registration Statement
covers an offering of 2,174,403 common stock purchase warrants (the "Dividend
Warrants") to be issued as a dividend to all record holders at the close of
trading on January 19, 2000 of your prior warrants, which expired on January 31,
2000, and to all persons who exercised the prior warrants during the period
commencing on November 22, 1999 and ending at the close of business on January
19, 2000. The Registration Statement also covers 1,087,201 shares of the
Company's $0.003 par value common stock (the "Common Stock") issuable upon the
exercise of those warrants, 250,000 shares of Common Stock issuable upon
exercise of certain outstanding warrants and 350,000 outstanding shares to be
sold by an existing shareholder (the 600,000 shares to be referred to herein
collectively as the "Selling Securityholders' Stock"). Each two Dividend
Warrants may be exercised to purchase one share of Common Stock at $17.50 per
share.
In connection with this opinion, we have made such investigations and
examined such records, including the Company's Memorandum and Articles of
Association, as amended, and corporate minutes, as we deemed necessary to the
performance of our services and to give this opinion. We have also examined and
are familiar with the originals or copies, certified or otherwise identified to
our satisfaction, of such other documents, corporate records and other
instruments as we have deemed necessary for the preparation of this opinion. In
expressing this opinion we have relied, as to any questions of fact upon which
our opinion is predicated, upon representations and certificates of the officers
of the Company. We are not qualified to practice law in any jurisdiction other
than the State of Colorado, and with respect to those matters involving the laws
of the British Virgin Islands, China and Hong Kong we have relied exclusively on
the opinions of local counsel in those jurisdictions. In rendering this opinion,
we have relied with respect to matters involving the laws of the British Virgin
Islands on the opinion of Harney, Westwood & Riegels, British Virgin Islands
counsel for the Company; with respect to matters involving the laws of Hong
Kong, we have relied on the opinion of Wong & Fok, Solicitors, Hong Kong counsel
for the Company; and with respect to matters involving the laws of China upon
Shenzhen Jinyuan Law Firm, Solicitors for the People's Republic of China, dated
July 26, 1999.
<PAGE>
Board of Directors
Bonso Electronics International Inc.
May 19, 2000
Page 2
In giving this opinion we have assumed:
(a) the genuineness of all signatures and the authenticity and
completeness of all documents submitted to us as originals;
(b) the conformity to originals and the authenticity of all documents
supplied to us as certified, photocopied, conformed or facsimile copies and
the authenticity and completeness of the originals of any such documents;
(c) the proper, genuine and due execution and delivery of all
documents by all parties to them and that there has been no breach of the
terms thereof; and
(d) that the performance of any obligation under any documents in any
jurisdiction outside the United States will not be illegal or ineffective
under the laws of that jurisdiction.
Based upon the foregoing and subject to the qualifications set forth above,
we are of the opinion that:
1. The Company is a validly existing corporation in good standing as a
limited liability International Business Company under the laws of the British
Virgin Islands, with full corporate power and authority to own and operate its
properties and to carry on its business as it is now being conducted.
2. The Company's authorized capital consists of 23,333,334 shares of $0.003
par value Common Stock. As of May 19, 2000, the Company had issued and
outstanding 5,512,610 shares of Common Stock, $0.003 par value. All of the
issued and outstanding shares of Common Stock were validly issued, fully paid
and non-assessable.
3. All necessary corporate proceedings of the Company have been duly taken
to authorize the filing of the Registration Statement and the proposed public
offering of the securities noted above in accordance with the terms of that
Registration Statement.
4. The 1,087,201 shares of $0.003 par value Common Stock to be issued upon
the exercise of the Dividend Warrants will, upon the purchase, receipt of full
payment, issuance and delivery thereof in accordance with the terms of the
offering described in the Registration Statement, be duly and validly
authorized, legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the use of our name in the Prospectus included as
part of the Registration Statement in connection with the matters referred to
under the caption "Legal Matters."
Sincerely,
/s/ SCHLUETER & ASSOCIATES, P.C.
--------------------------------
SCHLUETER & ASSOCIATES, P.C.
19 May 2000 11140-007-WAW-o01-v03
Bonso Electronics International Inc
Flat A-D, 8th Floor
Universal Industrial Centre
23 - 25 Shan Mei Street, Fo Tan
Shatin, New Territories
Hong Kong
Dear Sirs
Bonso Electronics International Inc.
We have acted as British Virgin Islands counsel for Bonso Electronics
International Inc., a British Virgin Islands corporation (the "Company"), in
connection with the registration under the United States Securities Act of 1933
of 2,174,403 Common Stock Purchase Warrants, 1,087,201 Common Shares issuable on
exercise of the Warrants and 250,000 shares of common stock which may be issued
upon exercise of outstanding warrants and 350,000 outstanding Common Shares
offered by selling shareholders (the "Selling Shareholders") (together the
"Securities"). All capitalized terms used herein which are not defined herein
shall have the meanings ascribed thereto in the Registration Statement.
1. For the purpose of this opinion we have reviewed the following documents:
(a) the Registration Statement on Form F-3 provided to us ("Registration
Statement") filed by the Company with the United States Securities and
Exchange Commission for the purpose of registering the Securities;
(b) (i) the Memorandum & Articles of Association and Certificate of
Incorporation of the Company;
(ii) resolutions of directors of the Company dated 5 January 2000 and
8 March 2000 authorising the issue of the Warrants and, pursuant
thereto, the Common Shares; and
(iii) registered agent's certificate dated 17 March 2000 issued by HWR
Services Ltd, the registered agent of the Company in the British
Virgin Islands.
<PAGE>
We have also made such other enquiries and reviewed such matters of law and
examined the originals, certified or otherwise identified to our
satisfaction, of such other documents, records, agreements and certificates
as we have considered relevant for the purposes of giving the opinion
expressed below.
2. In giving this opinion we have assumed the following:
(a) the genuineness of all signatures and the authenticity and
completeness of all documents submitted to us as originals;
(b) the conformity to originals and the authenticity of all documents
supplied to us as certified, photocopied, conformed or facsimile
copies and the authenticity and completeness of the originals of any
such documents;
(c) the proper, genuine and due execution and delivery of all documents by
all parties to them and that there has been no breach of the terms
thereof; and
(d) that the performance of any obligation under any documents in any
jurisdiction outside the British Virgin Islands will not be illegal or
ineffective under the laws of that jurisdiction.
3. Based on the foregoing and subject to the qualifications set forth in
paragraph 4 below, we are of the following opinions:
(a) The Company has been duly organized and is validly existing and in
good standing as a limited liability International Business Company
under the laws of the British Virgin Islands. Bonso has full power and
authority (corporate and otherwise) to conduct its business as
described in the Registration Statement.
(b) The Company's authorized capital consists of 23,333,334 Common Shares,
$0.003 par value. Prior to the sale of the Securities, the Company's
issued and outstanding shares consisted of 5,512,610 Common Shares
which are held of record as indicated in the Registration Statement.
All of such issued shares have been duly authorized and validly issued
and are fully paid and non-assessable and are not subject to
pre-emptive rights of any shareholders of the Company. There are no
securities laws in the British Virgin Islands to which the issue of
the shares are subject.
(c) The 1,087,201 Common Shares issuable upon exercise of the Warrants
have been duly authorized and upon the purchase, receipt of full
payment, issuance and delivery thereof in accordance with the terms of
the Registration Statement will be validly issued, fully paid and
non-assessable, are not subject to pre-emptive rights of any
shareholder of the Company and conform to the description thereof in
the Registration Statement. The 600,000 Common Shares to be sold by
the Selling Shareholders have been duly authorized and will not be
subject to pre-emptive rights of any shareholder of the Company and
will conform to the description thereof in the Registration Statement.
(d) Upon purchase of the Securities, any underwriter or other purchaser
thereof will, to the best of our knowledge, receive good, valid and
marketable title to the Securities, free and clear of all liens,
encumbrances, claims, security interests, restrictions on transfer,
stockholders' agreements, voting trusts and other defects of title
whatsoever.
<PAGE>
(e) To the best of our knowledge, there are no outstanding options,
warrants, calls, rights or other commitments relating to the share
capital of the Company other than as disclosed in the Registration
Statement.
(f) To the best of our knowledge, all of the Common Shares of Bonso
Electronics Limited, a company incorporated under the laws of Hong
Kong ("Bonso HK"), owned by Bonso HK are owned beneficially by the
Company and are subject to no mortgage, pledge, lien, encumbrance,
charge or adverse claim.
(g) The conduct of the business of the Company as described in the
Registration Statement, does not and will not conflict with or result
in a breach of any of the terms or provisions of, or constitute a
default under, the Company's Memorandum and Articles of Association or
of any indenture, mortgage, agreement, instrument, order, writ,
judgment or decree known to us to which the Company is a party or by
which any of its properties are bound, nor violate any existing law,
rule, regulation, judgment or decree or any governmental body or court
of the British Virgin Islands having jurisdiction over the Company or
any of its properties.
(h) No British Virgin Islands governmental approvals, authorisations or
other actions are required in connection with the issue of the
Securities and the conduct of the business of the Company as described
in the Registration Statement.
(i) The descriptions in the Registration Statement of applicable British
Virgin Islands law are accurate and fairly present such law.
(j) We have no reason to believe that the Registration Statement (except
that we do not express an opinion as to the financial statements or
other financial data included therein) contains any untrue statement
of a material fact required to be stated therein or omits any material
fact necessary to make the statements therein not misleading.
4. This legal opinion is confined to and given on the basis of the laws of the
British Virgin Islands at the date hereof and is currently applied by the
courts of the British Virgin Islands. We have not investigated and we do
not express or imply nor are we qualified to express or imply any opinion
in the laws of any other jurisdiction.
5. We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the statement with respect to our firm under
the headings "Risk Factors -- Certain Legal Consequences of Foreign
Incorporations and Operations" and "Legal Matters" included in the
Registration Statement.
Yours faithfully
/s/ HARNEY WESTWOOD & RIEGELS
- -----------------------------
HARNEY WESTWOOD & RIEGELS
April 18, 2000
Bonso Electronics International Inc.
Flat A-D, 8th Floor
Universal Industrial Centre
23-25 Shan Mei Street
Fo Tan, Sha Tin Town, N.T.
Hong Kong
and
Henry F. Schlueter, Esq.
Schlueter & Associates, P.C.
1050 Seventeenth Street, Suite 1700
Denver, Colorado 80265
U.S.A.
Re: BONSO ELECTRONICS INTERNATIONAL INC.
Letter of Opinion
Dear Sirs:
We are the Hong Kong Special Administrative Region solicitors for Bonso Advance
Technology Limited (formerly known as Bonso Optical Instruments Limited) ("Bonso
Technology"), Bonso Electronics Limited ("Bonso Electronics"), and its Hong Kong
subsidiary Bonso Investment Limited ("Bonso Investment"), (collectively "the
Companies") in connection with the proposed offering of 1,087,201 shares of
Common Stock issuable on exercise of Common Stock Purchase Warrants and 600,000
shares of Common Stock offered by Selling Shareholders and the prospectus
included in the Registration Statement (collectively the "Registration
Statement") filed with the United States Securities and Exchange Commission on
March 15, 2000.
Terms defined in the Registration Statement shall have the same meaning when
used in this opinion, unless the context otherwise requires.
We are practitioners of Hong Kong Special Administrative Region Law only and our
opinion is confined to and given on the basis of Hong Kong Special
Administrative Region Law as currently applied by the Hong Kong Special
Administrative Region Courts and we have made no investigation of the laws of
any country or jurisdiction other than Hong Kong Special Administrative Region
and we do not express or imply any opinion thereon. Our opinion is to be
construed in accordance with and is governed by Hong Kong Special Administrative
Region law.
To the extent that this opinion refers to any corporations not incorporated or
entities not constituted under the laws of Hong Kong Special Administrative
Region, we have assumed that such corporations or entities are duly organised or
constituted as the case may be and legally existing under the laws of the
jurisdictions in which they were incorporated or constituted.
1. DOCUMENTS
In giving this opinion we confirm examination of the following document:
Form F-3 Registration Statementof Bonso Electronics International Inc.
(BEII) filed with the U.S. Securities and Exchange Commission on March 13, 2000.
and we have examined originals or copies, certified or otherwise identified to
our satisfaction, of such other instruments, documents and records as we have
deemed necessary for the purposes of this opinion and have made such
investigations as we consider to be proper.
<PAGE>
2. ASSUMPTIONS
In giving this opinion, we have assumed:-
(a) The genuineness of all signatures and the authenticity and completeness of
all documents submitted to us as originals;
(b) The conformity to originals and authenticity of all documents supplied to us
as certified, photocopied, conformed or facsimile copies and the authenticity
and completeness of the originals of any such documents;
(c) The proper, genuine and due execution and delivery of all documents by all
parties to them and that there has been no breach of the terms thereof;
(d) That the performance of any obligation under any documents in any
jurisdiction outside Hong Kong Special Administrative Region will not be illegal
or ineffective under the laws of that jurisdiction;
(e) That the representations and warranties as to matters of fact made in the
Registration Statement are true and accurate;
(f) That all facts stated in all documents are correct, that all actions stated
to have been so taken, that all assets and rights stated to be vested in any
party have been so vested and that certificates and other documents dated
earlier than the date of this opinion and on which we have expressed reliance
are accurate as regards material matters stated therein which have not been
independently established, remain valid and in full force and effect, that no
power or authority has been revoked, modified and superseded prior to execution
of any relevant document by any appointee appointed in that power or authority,
and that none of the corporate resolutions have been amended or rescinded;
(g) That any person described in any document as holding any office in a company
has been validly appointed to and holds the office described;
(h) That the files at the Hong Kong Special Administrative Region Companies
Registry relating to the corporations mentioned herein which have been
incorporated under the Laws of Hong Kong Special Administrative Region contained
all matters which ought to have been recorded therein and certificates and
searches were and will continue to remain accurate;
(i) That there are no provisions of the laws in the United States of America,
the People's Republic of China and the British Virgin Islands which would have
any effect on the opinion we express;
(j) That the Registration Statement filed with the United States Securities and
Exchange Commission have been duly authorised, executed and delivered by the
parties; and
(k) That no pre-restructuring commitment has been entered into by any one or
more of the Companies in Hong Kong Special Administrative Region with any person
firm or corporation in relation to BEII and which would be influenced affected
or revoked by the restructuring unless consented to by such company or
companies.
3. QUALIFICATIONS
This opinion is subject to the following qualifications:
(a) In giving our opinion as to the enforceability of any particular documents,
we have used the word "enforceable" as referring to the legal character of the
obligations assumed by the respective parties to such documents, in that they
are of a character which the law enforces or recognises. It does not mean or
imply that any such documents will be enforced in all circumstances by or
against a particular party or that any particular remedy will be available;
(b) Our opinion does not apply to any amendment or variation of any documents
which we have not seen;
(c) We neither express nor imply an opinion as to any law other than the laws of
Hong Kong Special Administrative Region in force as at the date of this opinion;
<PAGE>
(d) Enforcement may be limited by the general principles of equity. In
particular, equitable remedies are discretionary, subject to equitable defences
and are not available where damages are considered to be an adequate remedy, nor
will specific performance normally be ordered in respect of a monetary
obligation;
(e) Our opinion is subject to any laws from time to time in effect relating to
money lending, bankruptcy, liquidation, receivership, re-organisation,
moratoria, court schemes or other similar laws which may be applicable and
affecting generally the enforcement of creditors' rights;
(f) Claims may become barred under statutes imposing limited periods within
which suits, actions or proceedings can be brought or may be or become subject
to defences of set-off, abatement or counterclaim;
(g) Enforcement proceedings are subject to the general jurisdiction of the Court
in regard to award of costs, even as against a successful party;
(h) Enforcement is subject to the general common law doctrine of estoppel in
relation to representations, acts or omissions of any relevant party which may
preclude, limit or affect the ability of that party to enforce against any other
party the obligations of that other party;
(i) We express no opinion as to the validity or binding effect of any
obligations of any party which may be construed as a penalty. A Court would not
give effect to a provision if it could be established that the amount expressed
as being payable was such that the provision was in the nature of a penalty,
being a requirement for a stipulated sum to be paid irrespective of , or
necessarily greater than, the loss likely to be sustained. Should a Court decide
that any provision of any relevant obligation to pay damages or interest were in
the nature of a penalty, it would only award to the plaintiff damages, or
interest on the whole or any part of the sums not paid under any such obligation
when due (or, as the case may be, when duly demanded) at whatever rate that the
Court thinks fit in the particular circumstances for the whole or any part of
the period of the default until judgement or until the date of payment if later;
(j) Any provision in any document relating to the severability of any invalid
provision may not be enforceable in accordance with its items, as a Court may
reserve to itself a decision as to whether any such provision is severable;
(k) Any provision in any document which purports to give conclusive effect to
any calculation, determination or certification may not be enforced as a Court
may review the grounds on which such calculation, determination or certification
is made or given;
(l) Where any party to a document is vested with a discretion or may determine a
matter in its opinion, Hong Kong Special Administrative Region law may require
that such discretion be exercised reasonably and that such opinion be based on
reasonable grounds;
(m) The enforceability of any obligations under the Registration Statement is
subject to the requirement that the resolutions by the directors of those
companies authorising the entry into the Registration Statement were passed by
those directors bona fide and in the interests and for the respective benefits
of each such company;
(n) We express no opinion on any provisions of any document imposing currency
indemnity obligations;
(o) Hong Kong Special Administrative Region Courts may stay any proceedings
commenced therein against a party under any obligation if there are other
proceedings in respect of the relevant obligation in other jurisdictions
simultaneously on foot against that party;
(p) Any claims in a foreign currency against a Hong Kong Special Administrative
Region corporate defendant in liquidation will, as a matter of practice, be
converted by the Official Receiver and Liquidator into Hong Kong dollars at the
rate of exchange prevailing at the date of the commencement of the winding up;
(q) We express no opinion on the enforceability of any obligations to negotiate
in good faith;
(r) It is possible that a winding-up order may have been made, a resolution
passed, a winding-up petition presented, or a receiver appointed in respect of
the Companies and for such facts not to be revealed by search due to the fact
that details thereof do not yet appear on the face of the records maintained in
respect of the Companies at the Companies Registry either on account of delay in
presentation for filing or on account of delay in the administration of the
Companies Registry;
<PAGE>
(s) Where any obligations are to be performed in jurisdictions outside Hong Kong
Special Administrative Region, such obligations may not be enforceable under the
laws of Hong Kong Special Administrative Region to the extent that such
performance would be illegal under the laws of any such jurisdiction;
(t) We have made no inquiry whatsoever into the financial status or standing of
the Companies and nothing in this opinion shall be taken to constitute any
representation in relation to the solvency or otherwise of the Companies or in
relation to their financial status and standing;
(u) The choice of a particular law to govern documents is a valid choice of law
but such chosen law may, by virtue of repugnance, illegality or other principles
in conflict with the laws of Hong Kong Special Administrative Region, not
necessarily be applied by the Courts of Hong Kong Special Administrative Region
in the enforcement of the documents;
(v) It is doubtful as to whether an action could be brought in Hong Kong Special
Administrative Region against the Company's officers and directors on the first
instance on the basis of liability predicated solely upon the civil liability
provisions of the United States securities laws;
(w) Although we are of the opinion that no stamp duty in respect of any document
other than transfers of shares will be charged in Hong Kong Special
Administrative Region, the Collector of Stamp Revenue has wide discretionary
powers of assessment under the Stamp Ordinance, Chapter 117 of the laws of Hong
Kong Special Administrative Region and, therefore, our above opinion is in all
respects given subject to such discretionary powers. No instrument chargeable
with stamp duty under the Stamp Ordinance shall be received in evidence in any
proceedings whatsoever (except criminal proceedings and civil proceedings to
recover stamp duty) nor shall the same be acted upon, filed or registered by any
Public Office or by any company unless such instrument is duly stamped. Offences
under the Stamp Ordinance are punishable by criminal proceedings;
(x) The rate of Hong Kong Special Administrative Region for Profits Tax
chargeable on taxable profits of Corporations is 16%.
4. OPINION
Based upon and subject to the assumptions and qualifications set out above and
the reservations set out below and based on the documents we have examined, we
are of the opinion that:
(1) Each of Bonso Electronics, Bonso Technology, and Bonso Investment has been
duly organised and is legally existing under the laws of Hong Kong Special
Administrative Region. Each such corporation has full corporate power and
authority to conduct its business as described in the Registration Statement.
(2) Bonso Electronics' authorised share capital consists of One Million
(1,000,000) ordinary shares, par value HK$10.00 per share. Bonso Electronics'
issued share capital consists of Five Hundred Thousand (500,000) ordinary
shares, Four Hundred Ninety Nine Thousand and Nine Hundred Ninety Nine (499,999)
of which are held by BEII and one (1) of which is held by Anthony SO Hung Gun in
trust for BEII. All of such issued shares have been duly authorised and legally
issued and are fully paid.
(3) Bonso Technology's authorised share capital consists of One Hundred Thousand
(100,000) ordinary shares, par value HK$10.00 per share. Bonso Technology's
issued share capital consists of One Hundred Thousand (100,000) ordinary shares,
Ninety Nine Thousand and Nine Hundred Ninety Nine (99,999) of which are held by
BEII and one of which is held by Anthony SO Hung Gun in trust for BEII. All of
such issued shares have been duly authorised and legally issued and are fully
paid.
(4) Bonso Investment's authorised share capital consists of Three Hundred
Thousand (300,000) ordinary shares, par value HK$10.00 per share. Bonso
Investment's issued share capital consists of Three Hundred Thousand (300,000)
ordinary shares, Two Hundred Ninety Nine Thousand and Nine Hundred Ninety Nine
(299,999) of which are held by Bonso Electronics and one of which is held by
Anthony SO Hung Gun in trust for Bonso Electronics. All of such issued shares
have been duly authorised and legally issued and fully paid.
(5) To the best of our knowledge and after reasonable inquiry with the
respective directors and shareholders of the companies, there are no outstanding
options, warrants, calls, rights or other commitments relating to the capital
stock of Bonso Electronics, Bonso Technology and Bonso Investment.
(6) To the best of our knowledge and after reasonable inquiry, all of the issued
shares of Bonso Investment owned by Bonso Electronics are owned beneficially by
Bonso Electronics, and all of the issued shares of Bonso Technology and Bonso
<PAGE>
Electronics owned by BEII are owned beneficially by BEII. To the best of our
knowledge and after reasonable inquiry with the respective directors and
shareholders of the companies, none of the said shares is subject to mortgage,
pledge, lien, encumbrance, charge or adverse claim.
(7) To the best of our knowledge and after reasonable inquiry:-
(i) Anthony SO Hung Gun owns (a) one share in each of Bonso Technology and
Bonso Electronics in trust for BEII, (b) one share in Bonso Investment in trust
for Bonso Electronics.
(ii) All of such shares have been duly authorised and legally issued and
are fully paid and legally and properly held by Anthony SO Hung Gun in trust
respectively for BEII and for Bonso Electronics as respective beneficial owners
thereof.
(8) To the best of our knowledge and after reasonable inquiry with the
respective directors and shareholders of the companies, we are not aware of any
facts or circumstances which may render the conduct of the business of Bonso
Electronics, as described in its latest audited financial accounts, and of Bonso
Technology and Bonso Investment in violation of each such corporation's articles
of association or any agreement, instrument, order, writ, judgement or decree to
which such corporation is a party or subject.
(9) To the best of our knowledge and after reasonable inquiry with the
respective directors and shareholders of the companies, we are not aware of any
facts or circumstances which may render the conduct of the business of Bonso
Electronics, Bonso Technology and Bonso Investment as described in the
Registration Statement in breach of any material Hong Kong Special
Administrative Region governmental approvals, permits, authorisations, or other
actions in connection with the conduct of such business.
(10) To the best of our knowledge and after reasonable inquiry, the descriptions
in the Registration Statement of Hong Kong Special Administrative Region
statutes, Hong Kong Special Administrative Region legal and governmental
proceedings and applicable Hong Kong Special Administrative Region laws
accurately and fairly represent the information required to be shown.
(11) We have no reason to believe that the Registration Statement (except that
we do not express any opinion as to the financial statements and other financial
data included therein) contains any untrue statement of material fact required
to be stated therein or omits any material fact necessary to make the statements
therein not misleading.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the statements with respect to our firm under the
headings "Legal Matters", "Enforceability of Certain Civil Liabilities and
Certain Foreign Issuer Considerations", "Business Certain Foreign Issuer
Considerations", "Risk Factors-Country Risks, Service and Enforcement of Legal
Process" in the Prospectus included in the Registration Statement.
This opinion is addressed to the addressees on the basis that none of them will,
without our prior written consent, release the same to any person other than its
officers, staff and such advisers as in the ordinary course of business are
required to have access to its papers and records in connection with the
Registration Statement and on the basis that they will similarly make no further
disclosure. It may not be relied upon by the addressees for any purpose other
than in connection with the said proposed public offering and the Registration
Statement. With the exception of the filing of this opinion with the United
States Securities and Exchange Commission and the references to our firm in the
Prospectus included in the Registration Statement to which we have given our
express consent in the immediately preceding paragraph, this opinion is not to
be quoted or referred to in any other public documents or filed with any other
government agency or other persons without our express written consent. In
addition, this opinion is limited strictly to matters stated herein and is not
to be read as extending by implication to any other matter not specifically
referred to herein.
Yours faithfully,
WONG & FOK per:
/s/ Woo-ping FOK
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Woo-ping FOK
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form F-2 of Bonso Electronics International Inc. of our report
dated May 28, 1999 relating to the financial statements appearing in Bonso
Electronics International Inc.'s Annual Report on Form 20-F for the year ended
March 31, 1999. We also consent to the reference to us under the headings
"Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers
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PricewaterhouseCoopers
Hong Kong
May 15, 2000
