Deswell(DSWL) - 2025 Q2 - Quarterly Report

Form 6-K Filing Information Filing Details Deswell Industries, Inc. filed Form 6-K on September 30, 2024, as a foreign private issuer submitting annual reports under Form 20-F - Type: Form 6-K, Report of Foreign Private Issuer[1] - Filing Date: September 30, 2024[1] - Annual Report Type: Form 20-F[2] - Registrant: DESWELL INDUSTRIES, INC.[1] - Principal Executive Office: Macao, Special Administrative Region, PRC[1] Annual Meeting of Shareholders Meeting Logistics Deswell will hold its annual shareholders' meeting on November 12, 2024, in Dongguan, China, to elect directors and ratify auditors - Meeting Date & Time: Tuesday, November 12, 2024, at 10:00 a.m. local time[3] - Meeting Location: No.5, Shichangxiang, Chang'an Town, Dongguan City, Guangdong Province, CHINA[3] - Record Date: September 16, 2024[3] - Purposes: Elect five members of the Board of Directors; Ratify BDO China Shu Lun Pan Certified Public Accountants LLP as independent registered public accountants for the year ending March 31, 2025[4] Voting Information Shareholder and Proxy Definitions Key terms for shareholders are defined, including 'proxy', 'shareholder of record', and 'street name' holders - Proxy Definition: Legal designation of another person to vote on your behalf[14] - Shareholder of Record: Shares registered directly in your name with Computershare Investor Services, the Company's transfer agent[18] - Street Name Holder: Shares held in the name of a brokerage, bank, trust, or other nominee as a custodian[18] - Multiple Voting Materials: May be received if shares are held in more than one brokerage account, registered in more than one name, or held in different ways (e.g., joint tenancy, trusts, custodial accounts)[16] Quorum and Voting Eligibility A quorum requires 33⅓% of outstanding shares; only shareholders of record on September 16, 2024, can vote - Quorum Requirement: The presence of holders of not less than thirty-three and one-third percent (33⅓%) of the aggregate number of the Company's common shares outstanding on the Record Date[19] Quorum and Voting Eligibility Data | Metric | Value | | :--- | :--- | | Shares Outstanding (Record Date) | 15,935,239 | | Required Shares for Quorum | 5,311,747 | | Votes per Common Share | 1 | - Voting Eligibility: Only shareholders of record at the close of business on September 16, 2024, are entitled to vote[21] Voting Procedures Shareholders can vote in person, by mail, or electronically, with options to change or revoke votes before exercise - Voting Methods: In person at the annual meeting; By mail, completing and returning the proxy card; By telephone or electronically through the Internet (for shareholders of record, or if allowed by broker for street name holders)[26][27][28] - Changing Votes: A vote can be revoked or changed at any time before the proxy is exercised by delivering a notice of revocation, signing a later-dated proxy card, or attending the annual meeting and voting in person[29][30] - Meeting Chairman: Mr. Edward So Kin Chung, Deswell's Chief Executive Officer, will serve as Chairman at the 2024 annual meeting[25] Vote Counting and Board Recommendations Herman Wong will count votes; the Board recommends FOR all director nominees and FOR auditor ratification - Vote Counter: Herman Wong, Chief Financial Officer and Inspector of Election[32] - Board Recommendation (Proposal 1): FOR the election of directors named in the proxy statement[33][34] - Board Recommendation (Proposal 2): FOR the ratification of the selection of BDO China Shu Lun Pan Certified Public Accountants LLP as Deswell's independent registered public accountants for the year ending March 31, 2025[34] Voting Requirements and Broker Non-Votes Majority vote required for proposals; abstentions count for quorum but not votes; broker non-votes count for quorum but not proposals - Vote Required (Proposal 1 & 2): Affirmative vote of a majority of the votes cast in person or represented by proxy at the annual meeting, if a quorum is present[36][40] - Abstentions: For Proposal 2, abstentions will not be treated as votes cast but will be considered present for quorum purposes[36][38] - Broker Non-Votes: Counted for quorum determination but are not considered present and entitled to vote on the specific proposal (e.g., Proposal 1, election of directors, where brokers cannot vote without instructions)[39][42] - Broker Voting Restrictions: Brokers may not vote on Proposal 1 (election of directors) without receiving instructions from the beneficial owners[41] Proposal 1: Election of Directors Director Nominees Five directors are elected annually; proxy holders vote for named nominees unless directed otherwise; all nominees are available - Number of Directors to be Elected: Five[44] - Term: Directors are elected annually to serve until the next annual general meeting[44] - Proxy Voting: Proxy holders will vote all shares represented by proxies for the election of the named nominees unless otherwise directed[45] - Nominee Availability: All nominees have indicated their availability and willingness to serve if elected[45] Director Biographies Biographies of five director nominees, including Chairman Vivian Wai-Ming Lau and Audit Committee Chairman Allen Yau-Nam Cham - Vivian Wai-Ming Lau (45): Chairman, CPA, former Executive Director at PAG Consulting and Goldman Sachs, previously at Deloitte Touche Tohmatsu; Daughter of late Chairman Mr. Pui Hon Lau[48][53] - Chin Pang Li (79): Executive Director of Manufacturing and Administration for Plastic Operations, served the Company since 1987, former Chief Financial Officer (1995-2006)[49] - Hung-Hum Leung (78): Non-executive director and Audit Committee member since December 1999, over 25 years of experience in electronic products manufacturing[50] - Allen Yau-Nam Cham (77): Non-executive director and Audit Committee member since August 2003, over 20 years of experience in the securities industry; Currently Chairman of the Audit Committee and an "audit committee financial expert"[51][58][59] - Wing-Ki Hui (80): Non-executive director and Audit Committee member since October 2004, over 20 years of experience in the electronic manufacturing industry[52] Director and Executive Officer Compensation Total compensation for directors and executive officers in FY2024 was approximately $1,688,000 (cash benefits), with no stock options granted, and a recovery policy adopted on October 2, 2023 - Total Compensation (FY2024): Approximately $1,688,000 paid to all directors and executive officers as a group (cash benefits)[54] - Stock Options Granted (FY2024): No options were granted to directors and officers[54] - Compensation Recovery Policy: Adopted on October 2, 2023, to recover erroneously awarded incentive-based compensation in the event of an accounting restatement due to material noncompliance with financial reporting requirements[55] - Outside Director Compensation: $2,000 per month for services, plus reimbursement for all reasonable expenses[56] Board Structure and Independence Three directors are independent; Audit Committee is independent; Deswell is exempt from some NASDAQ governance rules - Independent Directors: Messrs. Hung-Hum Leung, Allen Yau-Nam Cham, and Wing-Ki Hui are each "independent" within the meaning of NASDAQ Stock Market Rules[57] - Audit Committee Composition: Consists of Messrs. Hung-Hum Leung, Allen Yau-Nam Cham, and Wing-Ki Hui, all independent directors[58] - Audit Committee Chairman & Financial Expert: Mr. Allen Yau-Nam Cham serves as Chairman and is an "audit committee financial expert" as defined by the SEC[58][59] - NASDAQ Compliance Exemption: As a "controlled company," Deswell does not have a compensation committee or a nominating committee consisting of independent directors, nor does it have a formal written charter for nominations or independent director determination of CEO/executive compensation[60] Board Diversity Deswell's Board has 5 directors (1 female, 4 male), meeting NASDAQ's diversity requirement with Vivian Wai-Ming Lau Board Diversity Matrix (As of September 30, 2024) | Category | Count | | :--- | :--- | | Total Number of Directors | 5 | | Female Directors | 1 | | Male Directors | 4 | | Non-Binary Directors | 0 | | Underrepresented Individual in Home Country Jurisdiction | 0 | | LGBTQ+ | 0 | - Diverse Director: As of March 31, 2024, Vivian Wai-Ming Lau was identified as one diverse director, meeting NASDAQ's requirement by December 31, 2024[63] - Country of Principal Executive Offices: PRC[63] Share Ownership and Related Party Transactions Beneficial Ownership As of June 30, 2024, Vivian Wai-Ming Lau holds 61.8% of Deswell's common shares, making her the largest beneficial owner, followed by Chin Pang Li with 10.1% Beneficial Ownership (As of June 30, 2024) | Name of beneficial owner | Shares beneficially owned | Percent | | :--- | :--- | :--- | | Wai Ming Lau | 9,841,851 | 61.8% | | Chin Pang Li | 1,625,750 | 10.1% | | Herman Wong Chi Wah | 30,000 | <1% | | Edward So Kin Chung | 50,000 | <1% | | Hung-Hum Leung | - | - | | Allen Yau-Nam Cham | - | - | | Wing-Ki Hui | - | - | - Total Shares Outstanding (June 30, 2024): 15,935,239 shares[73] Related Party Transactions Deswell had no related party transactions as specified in Form 20-F from April 1, 2019, through the Record Date - No Related Party Transactions: The Company had no transactions of the kind specified in Item 7.B. of Form 20-F from April 1, 2019, through the Record Date[64] Proposal 2: Ratification of Independent Registered Public Accountants Auditor Selection and Fees The Board selected BDO China Shu Lun Pan Certified Public Accountants LLP as independent auditors for FY2025, recommending ratification, with audit fees increasing from $206,000 in FY2023 to $420,000 in FY2024 - Selected Auditor: BDO China Shu Lun Pan Certified Public Accountants LLP for the fiscal year ending March 31, 2025[70] - Prior Engagements: BDO China acted as Deswell's principal accountants for the audits of financial statements for the years ended March 31, 2023, and 2024[71] Aggregate Fees for Professional Services by BDO China | Category | Year ended March 31, 2023 (In thousands) | Year ended March 31, 2024 (In thousands) | | :--- | :--- | :--- | | Audit fees | $206 | $420 | | Audit-related fees | - | - | | Tax fees | - | - | | All other fees | - | - | | Total | $206 | $420 | - Audit Fee Change: Audit fees increased from $206,000 in FY2023 to $420,000 in FY2024[72] Audit Committee Pre-approval Policies The Audit Committee pre-approves all audit and non-audit services from independent auditors, generally for one year, with management reporting - Policy: The Audit Committee's policy is to pre-approve all audit and permissible non-audit related services provided by the independent auditors[77] - Approval Period: Pre-approval is generally provided for up to one year and is detailed as to the particular service or category of services[77] - Reporting: Management periodically reports to the Audit Committee regarding the extent of services provided and fees[77] - Case-by-case Approval: The Audit Committee may also pre-approve particular services on a case-by-case basis[77] Other Business and Signatures Other Business The Board is unaware of other business; proxy holders have discretionary authority for any properly arising matters - No Other Known Business: The Board of Directors knows of no other business to be acted upon at the annual meeting[78] - Discretionary Authority: If any other matter properly comes before the annual meeting, the proxy holder will have discretionary authority to vote all proxies in accordance with his best judgment[78] Report Signatures Edward So Kin Chung, Chief Executive Officer, signed the report on September 30, 2024, confirming compliance with the Securities Exchange Act of 1934 - Signatory: Edward So Kin Chung[86] - Title: Chief Executive Officer[86] - Date: September 30, 2024[86]