Company: DSWL
Filing Date: 2025-07-29
Form Type: 20-F
Source: 0001174947-25-001096
Chunk: 26

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-07-29
Form: 20-F
Item: Item 3
Chunk 26
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 and we do not have a formal written charter addressing the nominations process.

Because of these exemptions or exclusions, investors are not afforded the same protections or information generally available to investors in public companies organized in the United States and having securities included on the NASDAQ Stock Market.

We have identified a material weakness in our disclosure controls and procedures and internal control over financial reporting. If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements or a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common shares.

We have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The identified material weakness related to the design and maintenance of effective controls over certain information technology general controls for an information system that is relevant to the preparation of our financial statements. Specifically, we did not design and maintain (i) program change management controls to ensure that program and data changes are identified, tested, authorized and implemented appropriately, and (ii) user access controls to ensure appropriate segregation of duties and adequately restrict user and privileged access to appropriate personnel.

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The material weaknesses did not result in any misstatements to the consolidated financial statements. However, these material weaknesses could result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected in the future.

The Company is committed to remediating this material weakness as promptly as possible. To do so, the Company intends to take the following measures:

•Engage a third party to assist in designing and implementing controls related to segregation of duties and information technology general controls.

•Design and implement controls to formalize roles and review responsibilities in order to formalize and implement controls over segregation of duties.

•Design and implement information technology general controls, including controls over program change management, the review and update of user access rights and privileges.

There can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses may not arise in the future. Any failure to remediate the material weaknesses or the development of new material weaknesses in our internal control over financial reporting could result in material misstatements of our financial statements, which in turn could have a