Company: DSWL
Filing Date: 2025-11-13
Form Type: 6-K
Source: 0001171843-25-007261
Chunk: 6

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-11-13
Form: 6-K
Chunk 6
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 shares assumed to be purchased with the proceeds from the exercise of options.

The net income for the six months ended September 30, 2025
and 2024 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

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.

Net Sales - The Company's net sales for the six months ended September 30,
2025 were $33,230,000, a decrease of $1,946,000 or 5.5%, as compared to $35,176,000 in the corresponding period in fiscal 2025. The decrease
was mainly related to decreases in sales revenues of $795,000 in the plastic segment, and of $1,151,000 in the electronic segment, as
compared with the respective net sales from these segments in the corresponding period of last fiscal year.

The decrease in net sales in the plastic segment was mainly related to decreases
in orders of $1,062,000 for plastic component parts of printers, and of $312,000 for tooling products from existing customers, offsetting
increases of $149,000 for plastic component parts for tool boxes and power tools handles, and of $448,000 for other plastic component
products from other existing customers.

The revenue decrease in the electronic segment was mainly due to decreases
in orders of $4,030,000 for mixing consoles and audio signal processors from existing customers, offsetting an increase in orders of $1,922,000
for home entertainment products, and of $957,000 for loudspeakers from other existing customers.

Gross Profit - Gross profit for the first half of fiscal 2026 was $7,788,000,
representing a gross margin of 23.4%. This compared with the overall gross profit of $6,864,000 or 19.5% of net sales for the first half
of fiscal 2025.

Gross profit in the plastic segment decreased by $213,000 to $913,000 or 18.3%