Deswell Industries H1 FY2027 net income falls to $4.97M

Operating cash flow was negative for the first half, while the board declared a $0.10-per-share dividend.

Available on EDGAR 11/12/2026 - 08:40 AM EST Accepted by SEC EDGAR 11/12/2026 - 08:40 AM EST Learn about SEC filing dates

Rhea-AI Filing Summary

Deswell Industries, Inc. (DSWL) reported unaudited results for the six months ended September 30, 2026, with net sales of $33.021 million, down 0.6% from $33.230 million a year earlier. Gross margin declined to 19.8% from 23.4%; operating income was $879,000, compared with $2.514 million, and net income was $4.970 million, versus $7.519 million. Basic and diluted earnings per share were $0.31, compared with $0.47. Deswell attributed lower margins mainly to Renminbi appreciation and higher labor costs; lower net income also reflected reduced non-operating income.

Operating activities used $2.818 million of cash, versus providing $2.235 million in the prior-year period. At September 30, 2026, cash and equivalents were $22.429 million, working capital was $87.013 million, and Deswell reported no short- or long-term borrowings. The board declared a cash dividend of $0.10 per share for the first half of fiscal 2027.

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How the balance works

Positive

• None.

Negative

• Moderate pointFirst-half net income was $4.970 million, compared with $7.519 million a year earlier.
• Moderate pointOperating cash flow was $2.818 million used, versus $2.235 million provided in the prior-year period.

Filing Explained

This Form 6-K reports unaudited first-half fiscal 2027 results: Deswell had $4.970 million in net income, including $4.264 million in non-operating income, while operating income was $879,000.

Key Figures

Net sales: $33.021 million Gross margin: 19.8% Operating income: $879,000 +5 more

8 metrics

Net sales $33.021 million Six months ended September 30, 2026; $33.230 million in the prior-year period; decreased 0.6%

Gross margin 19.8% Six months ended September 30, 2026; 23.4% in the prior-year period

Operating income $879,000 Six months ended September 30, 2026; $2.514 million in the prior-year period

Net income $4.970 million Six months ended September 30, 2026; $7.519 million in the prior-year period

Basic and diluted income per share $0.31 per share Six months ended September 30, 2026; $0.47 per share in the prior-year period

Operating cash flow $2.818 million used Six months ended September 30, 2026; $2.235 million provided in the prior-year period

Cash and cash equivalents $22.429 million As of September 30, 2026

Cash dividend $0.10 per share Declared for the first six months of fiscal 2027

Key Terms

Gross margin, Non-operating income, Working capital, Unrealized holding gain, +1 more

5 terms

Gross margin financial

"total gross margin was 19.8% of net sales"

Gross margin is the difference between how much money a company makes from selling its products and how much it costs to produce them, expressed as a percentage of sales. It shows how efficiently a company is turning sales into profit before other expenses like marketing or salaries. Higher gross margin means the company keeps more money from each sale, which is a good sign of financial health.

Non-operating income financial

"decrease in total gross margin and non-operating income"

Non-operating income is money a company earns or loses from activities outside its main business — for example interest, investment gains or losses, and one-time sales of assets. Investors watch it because it can inflate or mask the health of the core business: think of it as a shop owner’s extra income from renting out a back room rather than from selling products, which can boost short-term profits but may not reflect sustainable performance.

Working capital financial

"working capital totaling $87.0 million"

Working capital is the money a business has available to cover its daily expenses, like paying bills and buying supplies. It’s like the cash in your wallet that helps you handle everyday costs; having enough ensures the business can operate smoothly without running into money shortages.

Unrealized holding gain financial

"Unrealized holding gain on marketable securities"

Held-to-maturity investment financial

"Decrease (increase) in held-to-maturity investment"

A held-to-maturity investment is a debt security that an entity has both the positive intent and the ability to hold until its contractual maturity date; under accounting rules such securities are measured at amortized cost rather than at fair value. Interest income is recognised over time using the effective interest method, and sales or reclassifications before maturity are restricted because they can require remeasurement or loss of the held-to-maturity classification and lead to accounting consequences.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

How much revenue did DSWL report for the first half of fiscal 2027?

DSWL reported net sales of $33.021 million for the six months ended September 30, 2026, down 0.6% from $33.230 million in the corresponding period of fiscal 2026.

When will DSWL pay its $0.10 dividend?

The $0.10-per-share cash dividend is payable on December 23, 2026 to shareholders of record as of December 2, 2026.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

For November 12, 2026

DESWELL INDUSTRIES, INC.

(Registrant’s name in English)

10B Edificio Associacao Industrial de Macau

32-36 Rua do Comandante Mata e Oliveira

Macau

Special Administrative Region, PRC

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.Form.

20-F ☒       Form 40-F ☐

Deswell Announces First Half 2027 Results

Company Announces First Half Cash Dividend of $0.10 Per Share -

FOR IMMEDIATE RELEASE

MACAO (November 12, 2026) - Deswell Industries, Inc. (Nasdaq: DSWL) today announced its unaudited financial results for the first six months of fiscal 2027, ended September 30, 2026.

Net sales for the six months ended September 30, 2026 were $33.0 million, a slightly decrease of 0.6% compared to net sales of $33.2 million for the six months ended September 30, 2025. Net sales increased by 17.7% to $5.9 million in the plastic segment and decreased by 3.9% to $27.2 million in the Company’s electronic segment. 

Total gross margin was 19.8% of net sales during the six months ended September 30, 2026, as compared to 23.4% for the corresponding period of last year.  Gross margin in the plastic segment decreased to 12.9% of net sales in the segment for the first half of fiscal 2027, compared to 18.3% of net sales in the segment for the corresponding period of last fiscal year. As a percentage of sales, gross margin in the plastic segment decreased due to the appreciation of the Renminbi, increased labor costs resulting from the raise in minimum wage and social insurance costs in the first six months of fiscal 2027. Gross profit margin in the electronic segment decreased to 21.3% compared to 24.3% of net sales in the segment for the first half of last fiscal year. This was mainly due to the appreciation of the Renminbi, increased labor costs resulting from the raise in minimum wage and social insurance costs for the first six months of fiscal 2027. Operating income in the first half of fiscal 2027 was $0.9 million, compared to operating income of $2.5 million for the same period of fiscal 2026.

The Company reported net income of $5.0 million for the six months ended September 30, 2026, compared to net income of $7.5 million for the six months ended September 30, 2025. This was primarily due to a decrease in total gross margin and non-operating income for the six months ended September 30, 2026, as compared to the same period of fiscal 2026. Deswell reported basic and diluted income per share of $0.31 for the first half of fiscal 2027 (based on 15,885,000 weighted average shares outstanding), as compared to basic and diluted income per share of $0.47 for the first half of fiscal 2026 (based on 15,935,000 weighted average shares outstanding).

The Company's financial position remained strong, with $22.4 million in cash and cash equivalents and working capital totaling $87.0 million as of September 30, 2026. Furthermore, the Company has no long-term or short-term borrowings as of September 30, 2026.

Mr. Edward So, Chief Executive Officer, commented, “Revenue largely held steady in the first half of fiscal 2027 despite cautious end-market spending and subdued customer demand, reflecting the strength of our long-standing customer relationships. Supply chain volatility pushed back the timing of new product introductions, as extended component lead times and limited parts availability affected launch schedules. At the same time, Renminbi appreciation raised our operating and locally sourced material costs, with mandated minimum wage increases adding to labor costs.

“Our focus is on what we can control. We’re prioritizing operational efficiency, renegotiating supplier terms, and making selective investments in automation to protect margins while positioning ourselves for growth when customer demand improves. With a strong balance sheet, a solid cash position and no debt, we believe Deswell is well positioned to navigate the current economic environment to further drive shareholder value.”

First Half Dividend

The Company also announced that its Board of Directors today declared a cash dividend of $0.10 per share for the first six months of fiscal 2027. The dividend will be payable on December 23, 2026 to shareholders of record as of December 2, 2026.

About Deswell

Deswell manufactures injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers (“OEMs”) and contract manufacturers at its factories in the People’s Republic of China.  The Company produces a wide variety of plastic parts and components used in the manufacture of consumer and industrial products; printed circuit board assemblies using surface mount (“SMT”) and finished products such as telephones, telephone answering machines, sophisticated studio-quality audio equipment and computer peripherals.  

To learn more about Deswell Industries, Inc., please visit the Company’s website at www.deswell.com.

Forward-Looking Statements

Statements in this press release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. For example, our statements regarding our expected growth in sales from the electronic division in the coming year and our efforts to reduce overhead costs in our plastic division are forward-looking statements.  Actual results could differ materially because of the following factors, among others, which may cause revenues and income to fall short of anticipated levels or our overhead expenses to increase: our dependence on a few major customers; vigorous competition forcing product price reductions or discounts; the timing and amount of significant orders from our relatively few significant customers; continuing increases in resin prices that cannot be passed on to customers; unexpected production delays; obsolete inventory or product returns; losses resulting from fraudulent activity of our customers or employees; labor shortages that increase labor and costs; changes in the mix of products we manufacture and sell; adverse currency fluctuations in the Renminbi and Hong Kong dollar when translated to US dollars; potential new accounting pronouncements; and the effects of travel restrictions and quarantines associated with major health problems, such as the Severe Acute Respiratory Syndrome, on general economic activity.

For further information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” section of Company’s Annual Report on Form 20-F, copies of which may be obtained from the Website maintained by the Securities and Exchange Commission at http://www.sec.gov.

All information in this release is made as of the date of this press release.  Deswell undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Deswell’s expectations.

Investor Relations Contact:

John Nesbett/Jennifer Belodeau

IMS Investor Relations

203.972.9200

jnesbett@imsinvestorrelations.com

DESWELL INDUSTRIES

CONSOLIDATED BALANCE SHEET

(U.S. dollars in thousands)

		September 30,				March 31,
		2026				2026
ASSETS		(Unaudited)				(Audited)
Current assets:
Cash and cash equivalents		$	22,429			$	23,062
Time deposits with original maturities over three months			14,488				19,552
Marketable securities (note 2)			36,488				27,874
Held-to-maturity investment			3,677				11,846
Accounts receivable, net			15,623				11,433
Inventories (note 3)			16,423				11,750
Prepaid expenses and other current assets			1,267				1,375
Total current assets			110,395				106,892
Property, plant and equipment, net			22,045				22,326
Deferred tax assets			759				746
Total assets		$	133,199			$	129,964
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable		$	9,412			$	6,842
Accrued payroll and employee benefits			9,204				8,833
Customer deposits			2,286				2,643
Other accrued liabilities			1,324				1,016
Income taxes payable			1,156				1,029
Total current liabilities			23,382				20,363
Deferred income tax liabilities			223				211
Total liabilities			23,605				20,574
Shareholders' equity
Common shares nil par value; authorized 30,000,000 shares; 17,081,810 shares issued;
15,885,239 shares outstanding as of March 31, 2026 and September 30, 2026			53,202				53,202
Treasury stock at cost; 1,196,571 shares as of March 31, 2026 and September 30, 2026			(2,990	)			(2,990	)
Additional paid-in capital			7,973				7,973
Accumulated other comprehensive income			5,316				5,316
Retained earnings			46,093				45,889
Total shareholders' equity			109,594				109,390
Total liabilities and shareholders' equity		$	133,199			$	129,964

DESWELL INDUSTRIES

CONSOLIDATED STATEMENT OF OPERATIONS & COMPREHENSIVE INCOME

(UNAUDITED)

(U.S. dollars in thousands, except per share data)

		Six months ended
		September 30,
		2026				2025
Net sales		$	33,021			$	33,230
Cost of sales			(26,479	)			(25,442	)
Gross profit			6,542				7,788
Selling, general and administrative expenses			(5,357	)			(5,432	)
Other (expense) income, net			(306	)			158
Operating income			879				2,514
Non-operating income, net			4,264				5,172
Income before income taxes			5,143				7,686
Income taxes			(173	)			(167	)
Net income attributable to Deswell Industries, Inc.		$	4,970			$	7,519
Other comprehensive income		$	—			$	—
Comprehensive income attributable to Deswell Industries, Inc.		$	4,970			$	7,519
Net income per share attributable to
Deswell Industries, Inc. (note 4)
Basic:
Net income per share		$	0.31			$	0.47
Weighted average common shares outstanding shares (in thousands)			15,885				15,935
Diluted:
Net income per share		$	0.31			$	0.47
Weighted average number of shares outstanding (in thousands)			15,885				15,935

DESWELL INDUSTRIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(U.S. dollars in thousands)

		Six months ended				Six months ended
		September 30,				September 30,
		2026				2025
Cash flows from operating activities:
Net income		$	4,970			$	7,519
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			728				741
Provision for doubtful accounts			64				16
Allowance for obsolete inventories, net			(189	)			(284	)
Gain on disposal of property, plant and equipment			(4	)			(26	)
Unrealized holding gain on marketable securities			(2,782	)			(930	)
Realized loss (gain) on disposal of marketable securities			7				(2,881	)
Deferred tax credit			(1	)			(63	)
Changes in operating assets and liabilities:
Accounts receivable			(4,254	)			(4,003	)
Inventories			(4,484	)			(384	)
Prepaid expenses and other current assets			108				391
Accounts payable			2,570				1,523
Accrued payroll and employee benefits			371				635
Customer deposits			(357	)			(203	)
Other accrued liabilities			308				118
Income taxes payable			127				66
Net cash (used in) provided by operating activities			(2,818	)			2,235
Cash flows from investing activities
Purchase of property, plant and equipment			(455	)			(326	)
Proceeds from disposal of property, plant and equipment			12				42
Purchase of marketable securities			(6,119	)			(7,450	)
Proceeds from disposal of marketable securities			280				9,546
Decrease (increase) in fixed deposits with original maturities over three months			5,064				(1,785	)
Decrease of fixed deposits with original maturities over twelve months			—				2,761
Decrease (increase) in held-to-maturity investment			8,169				(8,180	)
Net cash provided by (used in) investing activities			6,951				(5,392	)
Cash flows from financing activities
Dividends paid			(4,766	)			(1,594	)
Net cash used in financing activities			(4,766	)			(1,594	)
Net decrease in cash and cash equivalents			(633	)			(4,751	)
Cash and cash equivalents, at beginning of period			23,062				28,133
Cash and cash equivalents, at end of period			22,429				23,382
Supplementary disclosures of cashflow information:
Cash paid during the period for:
Interest			—				—
Income taxes			56				170

DESWELL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousands except per share data)

1. Management’s Statement

In the opinion of Management, the accompanying unaudited financial statements contain all adjustments (all of which are normal and recurring in nature) necessary to fairly present the financial position of Deswell Industries, Inc. (the Company) at September 30, 2026 and March 31, 2026, the results of operations for the six months ended September 30, 2026 and September 30, 2025, and the cash flows for the six months ended September 30, 2026 and September 30, 2025.  The notes in the Consolidated Financial Statements contained in the Form 20-F Annual Report filed on July 30, 2026 under the Securities Exchange Act of 1934 should be read in conjunction with these Consolidated Financial Statements.

2. Marketable securities and other securities investments

Marketable securities and other securities investments include debt and equity securities of which the aggregate fair value, unrealized gain and cost are as follows:

		March 31, 2026
		Cost				Gross Unrealized Gain				Fair value
Marketable securities
Equity securities		$	25,526			$	2,348			$	27,874

		September 30, 2026
		Cost				Gross Unrealized Gain				Fair value
Marketable securities
Equity securities		$	31,358			$	5,130			$	36,488

Marketable Securities

The Company acquired equity securities mainly listed on the Hong Kong Stock Exchange and the New York Stock Exchange. These securities are recorded at fair value based on quoted market prices.

Unrealized gain from these marketable securities for the six months ended September 30, 2026 is included in the non-operating income of the consolidated statement of income.

During the first half of fiscal 2027, realized loss from the sale of marketable securities was $7.

3. Inventories

		September 30,				March 31,
		2026				2026
Inventories by major categories:
Raw materials		$	10,697			$	7,884
Work in progress			4,282				2,801
Finished goods			1,444				1,065
		$	16,423			$	11,750

4. Earnings Per Share

The basic net income per share and diluted net income per share are computed in accordance with ASC No. 260, "Earnings Per Share" (formerly the SFAS No.128 “Earnings Per Share”).

The basic net income per share is computed by dividing income available to common holders by the weighted average number of common shares outstanding during the period.  Diluted net income per share gives effect to all potentially dilutive common shares outstanding during the period.  

The weighted average number of common shares outstanding is adjusted to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.  In computing the dilutive effect of potential common shares, the average stock price for the period is used in determining the number of treasury shares assumed to be purchased with the proceeds from the exercise of options.

The net income for the six months ended September 30, 2026 and 2025 were both from the Company’s continuing operations.

DESWELL INDUSTRIES, INC.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Results of Operations

General

The Company’s revenues are derived from the manufacture and sale of (i) injection-molded plastic parts and components, and (ii) electronic products and subassemblies of audio equipment.  The Company carries out all of its manufacturing operations in southern China, where it is able to take advantage of the lower overhead costs and less expensive labor rates as compared with Hong Kong.

Six Months Ended September 30, 2026 Compared to Six Months Ended September 30, 2025

Net Sales - The Company's net sales for the six months ended September 30, 2026 were $33,021,000, a slightly decrease of $209,000 or 0.6%, as compared to $33,230,000 in the corresponding period in fiscal 2026. The decrease was mainly related to the decrease in sales revenues of $1,090,000 in the electronic segment, offsetting the increase in sales revenues of $881,000 in the plastic segment, as compared with the respective net sales from these segments in the corresponding period of last fiscal year.

The increase in net sales in the plastic segment was mainly related to increases in orders of $1,338,000 for plastic component parts of printers from existing customers, offsetting decreases of $282,000 for plastic component parts for tool boxes and power tools handles, and of $173,000 for other plastic component products from other existing customers.

The revenue decrease in the electronic segment was mainly due to decreases in orders of $2,669,000 for home entertainment products, and of $1,168,000 for loudspeakers from existing customers, offsetting an increase in orders of $1,524,000 for audio signal processors-related products, $773,000 for digital audio workstation products, and $401,000 for instrument amplifiers from other existing customers.

Gross Profit - Gross profit for the first half of fiscal 2027 was $6,542,000, representing a gross margin of 19.8%. This compared with the overall gross profit of 7,788,000 or 23.4% of net sales for the first half of fiscal 2026.

Gross profit in the plastic segment decreased by $155,000 to $758,000 or 12.9% of net sales in the segment for the six months ended September 30, 2026, as compared to $913,000 or 18.3% of net sales in the segment for the same period in the prior fiscal year. As a percentage of sales, gross margin in the plastic segment decreased for the first six months of fiscal 2027 due to the appreciation of the Renminbi, increases in labor costs resulting from the raise in minimum wage and social insurance costs as compared to the same period for the last fiscal year.

Gross profit in the electronic segment decrease by $1,091,000 to $5,784,000 or 21.3% of net sales in the segment for the six months ended September 30, 2026, as compared to $6,875,000 or 24.3% of net sales in the segment for the same period of last fiscal year. The decrease in gross margin for the first six months of fiscal 2027 was mainly due to the appreciation of the Renminbi, increases in labor costs resulting from the raise in minimum wage and social insurance costs as compared to the corresponding period of last fiscal year.

Selling, general and administrative expenses - SG&A expenses for the six months ended September 30, 2026 were $5,357,000 or 16.2% of total net sales, as compared to $5,432,000 or 16.3% of total net sales for the six months ended September 30, 2025.

Corporate expenses increase by $326,000 to $885,000 for the six months ended September 30, 2026 as compared to $559,000 for the same period ended September 30, 2025. The increase was primarily due to the re-allocation of audit, legal and professional fees and staff costs.

SG&A expenses in the plastic segment decreased to $1,488,000 or 25.4% of net sales in the segment for the first half of fiscal 2027, as compared to $1,671,000 or 33.5% of net sales in the segment for the corresponding period of fiscal 2026. The decrease in SG&A expenses for the first six months of fiscal 2027 was mainly due to a decrease of $122,000 in administration staff costs and welfare due to cost control as compared with the same period in the prior fiscal year.

SG&A expenses in the electronic segment decreased by 219,000 to $2,984,000 or 11.0% of net sales in the segment for the six months ended September 30, 2026, as compared to $3,203,000 or 11.3% of net sales in the segment for the corresponding period in fiscal 2026. The slightly decrease in SG&A expenses was primarily related to the decrease of $242,000 in administration staff costs, and offset by an increase of $22,000 in R&D expense when compared to the corresponding period in the prior fiscal year.

Other expenses - Other expenses were $306,000 for the six months ended September 30, 2026, as compared to other income of $158,000 in the corresponding six months of the prior fiscal year.

On a segment basis, other expenses attributable to the plastic segment for the six months ended September 30, 2026 were $193,000, as compared to other expenses of $57,000 for the same period in the prior fiscal year. The increase in other expenses was mainly due to increases of $20,000 in exchange loss, of $47,000 from the loss of provision of doubtful debt, of $33,000 from the loss of disposal of fixed assets and of $36,000 in other expenses during the six months ended September 30, 2026, as compared to the same period of last fiscal year.

Other expenses attributable to the electronic segment for the six months ended September 30, 2026 were $113,000, as compared to other income of $215,000 for the corresponding period in the prior fiscal year. This increase in other expenses was mainly due to increases of $154,000 in exchange loss, of $47,000 from sales of materials, of $146,000 from sales related to other expenses, and of $39,000 from the loss of provision of doubtful debt, offsetting an increase of $11,000 from the gain on disposal of fixed assets and of $48,000 from other income during the six months ended September 30, 2026, as compared to the same period of last fiscal year.

Operating income - Operating income was $879,000 for the six months ended September 30, 2026, as compared to operating income of $2,514,000 in the corresponding six months in the prior fiscal year.  

On a segment basis, the operating loss in the plastic segment was $923,000 in the six months ended September 30, 2026, as compared to an operating loss of $815,000 in the corresponding period in fiscal 2026. The increase in operating loss in the plastic segment was mainly due to the decreases in gross profit margin and an increase in other expenses, as described above.

The electronic segment reported operating income of $2,687,000 in the six months ended September 30, 2026, as compared to operating income of $3,887,000 in the corresponding period in fiscal 2026.  The decrease in operating income was mainly due to the decrease in gross profit margin as described above.

Non-operating income – Non-operating income for the six months ended September 30, 2026 was $4,264,000, as compared to non-operating income of $5,172,000 in the prior year period  The decrease in non-operating income was primarily due to a decrease of $2,889,000 in realized gain from sales of marketable securities, offsetting increases of $1,852,000 in unrealized holding gain on the fair value of marketable securities, of $35,000 in rental income as well as of $49,000 in dividend income from securities investments during the six months ended September 30, 2026, as compared to the same six months of the prior fiscal year.

Income Taxes – Income taxes for the six months ended September 30, 2026 represented an income tax expense of $168,000 and a deferred tax expense of $5,000, as compared to an income tax expense of $230,000 and a deferred tax benefit of $63,000 in the corresponding six months of the prior fiscal year.  

On a segment basis, there was an income tax expense of $14,000 and a deferred tax expense of $9,000 in the plastic segment for the six months ended September 30, 2026, as compared to an income tax expense of $13,000 and a deferred tax benefit of $63,000 during the prior year period. Income tax expense in the electronic segment was $154,000 and a deferred tax benefit of $4,000 for the six months ended September 30, 2026, as compared to an income tax expense of $217,000 for the corresponding six months of fiscal 2026.

Net income – The Company had a net income of $4,970,000 for the six months ended September 30, 2026, as compared to net income of $7,519,000 for the six months ended September 30, 2025.  The decrease net income for the first six months of fiscal 2027 was mainly attributed to the decrease in operating income, non-operating income in the plastic segment, as well as the decrease in gross profit margin in the electronic segment as described above.

Net income for the plastic segment for the six months ended September 30, 2026 totaled $2,206,000, as compared to a net income of $3,499,000 for the corresponding six months in fiscal 2026. The decrease in net income in the first six months of fiscal 2027 for the plastic segment was mainly attributable to the decrease in non-operating income in fiscal 2027 as described above.

Net income for the electronic segment for the six months ended September 30, 2026 was $3,649,000, compared to net income of $4,579,000 for the corresponding six months of fiscal 2026. The decrease in net income in the first six months of fiscal 2027 for the electronic segment was mainly attributable to the decrease in gross profit margin as described above.

Liquidity and Capital Resources

The Company relies primarily upon internally-generated funds to finance its operations and investments.

As of September 30, 2026, the Company had working capital of $87,013,000 as compared to $86,529,000 at March 31, 2026.   The Company has generated sufficient funds from its operating activities to finance its operations and believes there is little need for external financing. The Company had no long-term or short-term borrowings as of September 30, 2026.  

As of September 30, 2026, the Company had cash and cash equivalents of $22,429,000, as compared to $23,382,000 as of September 30, 2025.  During the six months ended September 30, 2026, net cash used in operating activities was $2,818,000. Net cash provided by investing activities was $6,951,000, mainly due to cash used in the purchase of $6,119,000 of marketable securities and the $455,000 purchase of fixed assets, offsetting cash provided by proceeds of $280,000 from disposal of marketable securities and $8,169,000 in held-to-maturity investments, as well as a release of $5,064,000 of time deposits maturing over three months during the first half of fiscal 2027. Net cash used in financing activities was comprised mainly of $4,766,000 in payments for dividends during the six months ended September 30, 2026.

As of September 30, 2026, the Company had no general banking facilities. 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

For and on behalf of

Deswell Industries, Inc.

by

Edward So

Chief Executive Officer

Date: November 12, 2026