What changed in this filing

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Item 1. Financial Statements

2024-05-13 compared with 2024-02-12 · 334 added, 343 removed, 809 unchanged (46% of the section changed)

21 unchanged sentences

CURRENT LIABILITIES:

Lines of credit

Accounts payable

17 unchanged sentences

Common stock, no par value, 15,000,000 shares authorized;

4,160,555 and 4,096,680 shares issued outstanding as at December 31 and June 30, 2023, respectively

4,210,305 and 4,096,680 shares issued outstanding as at March 31, 2024 and June 30, 2023, respectively

Paid-in capital

6 unchanged sentences

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / (LOSS)

UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)

Three Months Ended

Six Months Ended

Nine Months Ended

Manufacturing

8 unchanged sentences

Research and development

(Gain) / Loss on disposal of property, plant and equipment

Loss on disposal of property, plant and equipment

Total operating expense

Income from Operations

Other (Expenses) / Income

Income / (Loss) from Operations

Other Income / (Expenses)

Interest expense

Other (expense) / income, net

Other income / (expense), net

Government grant

Total other (expense) / income

Total other income / (expense)

Income from Continuing Operations before Income Taxes

2 unchanged sentences

Discontinued Operations

Income / (Loss) from discontinued operations, net of tax

net (loss) / income attributable to non-controlling interest

Net Income Attributable to Trio-Tech International Common Shareholders

(Loss) / Income from discontinued operations, net of tax

net income attributable to non-controlling interest

Net Income / (Loss) Attributable to Trio-Tech International Common Shareholders

Amounts Attributable to Trio-Tech International Common Shareholders:

Income from continuing operations, net of tax

Income / (Loss) from discontinued operations, net of tax

Net Income Attributable to Trio-Tech International Common Shareholders

Income / (Loss) from continuing operations, net of tax

(Loss) / Income from discontinued operations, net of tax

Net Income / (Loss) Attributable to Trio-Tech International Common Shareholders

Basic Earnings per Share:

11 unchanged sentences

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS)

UNAUDITED (IN THOUSANDS)

Three Months Ended

Six Months Ended

Comprehensive Income Attributable to Trio-Tech International Common Shareholders:

Nine Months Ended

Comprehensive (Loss) / Income Attributable to Trio-Tech International Common Shareholders:

Foreign currency translation, net of tax

Comprehensive Income

comprehensive (loss) / income attributable to non- controlling interest

Comprehensive Income Attributable to Trio-Tech International Common Shareholders

Comprehensive (Loss) / Income

comprehensive income / (loss) attributable to non- controlling interest

Comprehensive (Loss) / Income Attributable to Trio-Tech International Common Shareholders

See notes to condensed consolidated financial statements.

2 unchanged sentences

UNAUDITED (IN THOUSANDS)

Six months ended December 31, 2023

Nine months ended March 31, 2024

Comprehensive

5 unchanged sentences

Translation adjustment

Balance at Dec.

Six months ended December 31, 2022

Balance at Mar.

Nine months ended March 31, 2023

Comprehensive

Balance at June 30, 2022

Stock option expense

Stock option expenses

Exercise of stock option

Translation adjustment

Balance at Dec.

Balance at Mar.

See notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)

Six Months Ended

Nine Months Ended

Cash Flow from Operating Activities

1 unchanged sentence

Depreciation and amortization

Gain on sales of property, plant and equipment

Addition / (Reversal) of provision for obsolete inventories

Stock option expense

Stock compensation

Bad debt recovery

1 unchanged sentence

Payment of interest portion of finance lease

Loss on sale of property, plant and equipment - continuing operations

Warranty recovery, net

15 unchanged sentences

Proceeds from disposal of assets held-for-sale

Net Cash Provided by Investing Activities

Proceeds from disposal of property, plant and equipment

Net Cash Provided by / (Used in) Investing Activities

Cash Flow from Financing Activities

5 unchanged sentences

Proceeds from bank loans

Net Cash Provided by Financing Activities

Net Cash Used in Financing Activities

Effect of Changes in Exchange Rate

Net Increase / (Decrease) in Cash, Cash Equivalents, and Restricted Cash

Net Increase in Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period

6 unchanged sentences

Total Cash, Cash Equivalents, and Restricted Cash Shown in Statements of Cash Flows

See notes to condensed consolidated financial statements.

Restricted deposits represent the amount of cash pledged to secure loans payable or trade financing granted by financial institutions, serve as collateral for public utility agreements such as electricity and water, and performance bonds related to customs duty payable.

Restricted deposits are classified as current and non-current depending on whether they relate to long-term or short-term obligations.

Restricted deposits of $762 as at December 31, 2023 are classified as current assets as they relate to short-term trade financing.

On the other hand, restricted deposits of $1,778 as at December 31, 2023 are classified as non-current assets as they relate to long-term obligations and will become unrestricted only upon discharge of the obligations.

Restricted deposits of $754 as at March 31, 2024 are classified as current assets as they relate to short-term trade financing.

On the other hand, restricted deposits of $1,760 as at March 31, 2024 are classified as non-current assets as they relate to long-term obligations and will become unrestricted only upon discharge of the obligations.

See notes to condensed consolidated financial statements.

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

6 unchanged sentences

The Company also designs, develops, manufactures and markets a broad range of equipment and systems used in the manufacturing and testing of semiconductor devices and electronic components.

In the second quarter of the fiscal year ended June 30, 2024 (“Fiscal 2024”), TTI conducted business in four business segments:

In the third quarter of the fiscal year ended June 30, 2024 (“Fiscal 2024”), TTI conducted business in four business segments:

Manufacturing, Testing, Distribution and Real Estate.

44 unchanged sentences

The Company’s operating results are presented based on the translation of foreign currencies using the respective quarter’s average exchange rate.

The results of operations for the six months ended December 31, 2023 are not necessarily indicative of the results that may be expected for any other interim period or for the full year ending June 30, 2024.

The results of operations for the nine months ended March 31, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the full year ending June 30, 2024.

Use of Estimates — The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expense during the reporting period.

19 unchanged sentences

The Company is currently evaluating the impact of this ASU on annual income tax disclosures.

New pronouncements issued but not yet effective until after December 31, 2023, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

New pronouncements issued but not yet effective until after March 31, 2024, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

TERM DEPOSITS

11 unchanged sentences

Restricted deposits are classified as current and non-current depending on whether they relate to long-term or short-term obligations.

Restricted deposits of $ 762 as at December 31, 2023 are classified as current assets as they relate to short-term trade financing.

On the other hand, restricted deposits of $ 1,778 as at December 31, 2023 are classified as non-current assets as they relate to long-term obligations and will become unrestricted only upon discharge of the obligations.

Restricted deposits of $ 754 as at March 31, 2024 are classified as current assets as they relate to short-term trade financing.

On the other hand, restricted deposits of $ 1,760 as at March 31, 2024 are classified as non-current assets as they relate to long-term obligations and will become unrestricted only upon discharge of the obligations.

TRADE ACCOUNTS RECEIVABLE AND ALLOWANCE FOR EXPECTED CREDIT LOSSES

8 unchanged sentences

The following table presents Trio-Tech (Chongqing) Co.

Ltd (“TTCQ”)’s loan receivables from property development projects in China as of December 31, 2023.

Ltd (“TTCQ”)’s loan receivables from property development projects in China as of March 31, 2024.

Short-term loan receivables

9 unchanged sentences

Based on TTI’s financial policy, an allowance for expected credit losses of $ 282 on the investment in JiangHuai was recorded during the fiscal year ended June 30, 2014 (“Fiscal 2014”).

TTCQ did not generate other income from JiangHuai for the quarter ended December 31, 2023 or for Fiscal 2024.

TTCQ did not generate other income from JiangHuai for the quarter ended March 31, 2024 or for Fiscal 2024.

TTCQ is in the legal process of recovering the outstanding amount of approximately $ 282 .

14 unchanged sentences

INVESTMENT PROPERTIES

The following table presents the Company’s investment in properties in China as of December 31, 2023.

The exchange rate is based on the market rate as of December 31, 2023.

Investment Date

The following table presents the Company’s investment in properties in China as of March 31, 2024.

The exchange rate is based on the market rate as of March 31, 2024.

Reclassification

37 unchanged sentences

Pursuant to the agreement, monthly rental will increase by 5% each year.

Property purchased from MaoYe generated a rental income of $ 6 and $ 12 during the three and six months ended December 31, 2023, as compared to $ 2 and $ 8 for the same period in Fiscal 2023.

Depreciation expense for MaoYe was $ 4 and $ 8 during the three and six months ended December 31, 2023, as compared to $ 4 and $ 8 for the same period in Fiscal 2023.

Property purchased from MaoYe generated a rental income of $ 6 and $ 18 during the three and nine months ended March 31, 2024, as compared to $ nil and $ 8 for the same period in Fiscal 2023.

Depreciation expense for MaoYe was $ 4 and $ 12 during the three and nine months ended March 31, 2024, as compared to $ 4 and $ 12 for the same period in Fiscal 2023.

Rental Property II - JiangHuai

1 unchanged sentence

(“JiangHuai”) for a total purchase price of RMB 3,600 , or approximately $ 580 .

As of December 31, 2023, TTCQ had not received the title deed for properties purchased from JiangHuai.

As of March 31, 2024, TTCQ had not received the title deed for properties purchased from JiangHuai.

While the above is not expected to affect the property’s market value, the current economic situation is likely to cause delays in court to consummate the acquisition of properties.

Property purchased from JiangHuai did not generate any rental income for the three and six months ended December 31, 2023 and 2022.

Depreciation expense for JiangHuai was $ 6 and $ 12 for the three and six months ended December 31, 2023, as compared to $ 7 and $ 14 for the same period in last Fiscal 2023.

Property purchased from JiangHuai did not generate any rental income for the three and nine months ended March 31, 2024 and 2023.

Depreciation expense for JiangHuai was $ 6 and $ 18 for the three and nine months ended March 31, 2024, as compared to $ 7 and $ 20 for the same period in last Fiscal 2023.

Rental Property III – FuLi

4 unchanged sentences

TTCQ is actively searching for tenants to occupy the commercial properties, which are vacant as of the date of this Report.

Properties purchased from FuLi generated a rental income of $ Nil and $ 1 for the three and six months ended December 31, 2023, as compared to $ 2 and $ 4 for the same period in Fiscal 2023.

Depreciation expense for FuLi was $ 7 and $ 14 for the three and six months ended December 31, 2023, as compared to $ 7 and $ 15 for the same period in Fiscal 2023.

Total rental income for all investment properties in China was $ 6 and $ 13 for the three and six months ended December 31, 2023, as compared to $ 4 and $ 12 for the same period in Fiscal 2023.

Depreciation expense for all investment properties in China were $ 17 and $ 34 for the three and six months ended December 31, 2023, as compared to $ 18 and $ 36 for the same period in Fiscal 2023.

Properties purchased from FuLi generated a rental income of $ Nil and $ 1 for the three and nine months ended March 31, 2024, as compared to $ 3 and $ 7 for the same period in Fiscal 2023.

Depreciation expense for FuLi was $ 7 and $ 21 for the three and nine months ended March 31, 2024, as compared to $ 7 and $ 22 for the same period in Fiscal 2023.

Total rental income for all investment properties in China was $ 6 and $ 19 for the three and nine months ended March 31, 2024, as compared to $ 3 and $ 15 for the same period in Fiscal 2023.

Depreciation expense for all investment properties in China were $ 17 and $ 51 for the three and nine months ended March 31, 2024, as compared to $ 18 and $ 54 for the same period in Fiscal 2023.

Other assets consisted of the following:

30 unchanged sentences

The Company elected to take this non-cash impairment charge due to increased uncertainties regarding the project’s viability, given the developers weakening financial condition as well as uncertainties arising from the negative real-estate environment in China, implementation of control measures on real-estate lending in China and its relevant government policies, together with effects of the ongoing pandemic.

The local court is verifying the documents due to the sizable number of creditors as of December 31, 2023.

The local court is verifying the documents due to the sizable number of creditors as of March 31, 2024.

LINES OF CREDIT

1 unchanged sentence

The Company’s credit rating provides it with ready and adequate access to funds in global markets.

As of December 31, 2023, the Company had certain lines of credit that are collateralized by restricted deposits.

As of March 31, 2024, the Company had certain lines of credit that are collateralized by restricted deposits.

Trio-Tech International Pte.

34 unchanged sentences

Bank loans payable consisted of the following:

Note payable denominated in the Malaysian Ringgit for expansion plans in Malaysia, maturing in August 2028, bearing interest at the bank’s prime rate less 2.00 % ( 4.85 % and 4.6 % at December 31, 2023 and June 30, 2023) per annum, with monthly payments of principal plus interest through August 2028, collateralized by the acquired building with a carrying value of $ 2,246 and $ 2,208 , as at December 31, 2023 and June 30, 2023, respectively.

Note payable denominated in the Malaysian Ringgit for expansion plans in Malaysia, maturing in July 2028, bearing interest at the bank’s prime rate less 2.00 % ( 4.85 % and 4.6 % at March 31, 2024 and June 30, 2023) per annum, with monthly payments of principal plus interest through July 2028, collateralized by the acquired building with a carrying value of $ 2,151 and $ 2,208 , as at March 31, 2024 and June 30, 2023, respectively.

Financing arrangement at fixed interest rate 3.2 % per annum, with monthly payments of principal plus interest through July 2025.

8 unchanged sentences

Long-term portion of bank loans payable

Future minimum payments (excluding interest) as at December 31, 2023, were as follows:

Future minimum payments (excluding interest) as at March 31, 2024, were as follows:

Remainder of Fiscal 2024

3 unchanged sentences

COMMITMENTS AND CONTINGENCIES

The Company has capital commitments for capital expenditure amounting to $ 369 as at March 31, 2024, as compared to capital commitment of $ Nil as at June 30, 2023.

Deposits with banks are not fully insured by the local government or agency and are consequently exposed to risk of loss.

9 unchanged sentences

The cost of equipment, current year investment in new equipment and depreciation expense are allocated into respective segments based on the primary purpose for which the equipment was acquired.

Corporate expenses are allocated to the four segments on a combination of factors involving revenue, manpower costs and fixed assets investments, except the Malaysia and China operations, which is calculated based on actual sales.

Corporate expenses are allocated to the four segments on a combination of factors involving revenue, manpower costs and fixed assets investments.

The following segment information table includes segment operating income or loss after including corporate expense allocated to the segments, which gets eliminated in the consolidation.

The following segment Information is unaudited for the six months ended December 31, 2023, and December 31, 2022:

The following segment Information is unaudited for the nine months ended March 31, 2024, and March 31, 2023:

Business Segment Information:

3 unchanged sentences

Total Company

The following segment Information is unaudited for the three months ended December 31, 2023, and December 31, 2022:

The following segment Information is unaudited for the three months ended March 31, 2024, and March 31, 2023:

Business Segment Information:

5 unchanged sentences

As a result, it may divest one or more business segments in the future, including its Testing segment, to enable management to concentrate on segments where it anticipates opportunities for future revenue growth, thereby maximizing shareholder value.

OTHER (EXPENSES) / INCOME

Other (expense) / income consisted of the following:

OTHER INCOME / (EXPENSE)

Other income / (expense) consisted of the following:

Three Months Ended

Six Months Ended

Nine Months Ended

Interest income

Other rental income

Exchange loss

Exchange gain /(loss)

Other miscellaneous income

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

Government grant

In the three months ended December 31, 2023, the Company received government grants amounting to $ 4 , related to capital expenditure subsidy received from the China government.

In the three months ended March 31, 2024, the Company received government grants amounting to $ 12 , $ 7 of which was an incentive from the Singapore government for local resident recruitment, and $ 5 related to capital expenditure subsidy received from the China government.

During the same period in 2023, the Company received government grants amounting to $ 83 , $ 76 of which was an incentive from the Singapore government for local resident recruitment, and the remaining $ 7 related to capital expenditure subsidy received from the China government.

In the six months ended December 31, 2023, the Company received government grants amounting to $ 77 , $ 16 of which was an incentive from the Singapore government for local resident recruitment, and the $ 57 from the U.S.

In the nine months ended March 31, 2024, the Company received government grants amounting to $ 89 , $ 19 of which was an incentive from the Singapore government for local resident recruitment, $ 12 related to capital expenditure subsidy received from the China government and the $ 57 from the U.S.

government related to Employee Retention Credit (“ERC”).

During the same period in 2022, the Company received government grants amounting to $ 42 , with $ 10 from the Singapore government for Covid-19, $ 17 from the Singapore government for local resident recruitment and the remaining $ 15 related to capital expenditure subsidy received from the China government.

During the same period in 2023, the Company received government grants amounting to $ 108 , with $ 86 from the Singapore government for local resident recruitment and the remaining $ 22 related to capital expenditure subsidy received from the China government.

The provision for income taxes has been determined based upon the tax laws and rates in the countries in which we operate.

6 unchanged sentences

The Company has elected to account for GILTI as a period cost.

GILTI expense was $ 15 and $ 30 for the three and six months ended December 31, 2023, as compared to $ 41 and $ 83 for the same period in fiscal 2023.

The Company's income tax expense was $ 95 and $ 132 for the three and six months ended December 31, 2023, as compared to $ 241 and $ 466 for the same period in Fiscal 2023.

Our effective tax rate (“ETR”) from continuing operations was 16.5 % and 29.5 % for the quarters ended December 31, 2023 and December 31, 2022, respectively.

The decrease of income tax expense was attributable to the following:

The Singapore and Thailand operations incurred lower income tax due to lower income generated in period ended December 31,2023 compared to same period last fiscal year.

The Company recognized lower GILTI expense due to lower income derived from controlled foreign corporation.

GILTI expense was $ 15 and $ 30 for the three and nine months ended March 31, 2024, as compared to $ nil and $ 83 for the same period in Fiscal 2023.

The Company's income tax expense was $ 142 and $ 274 for the three and nine months ended March 31, 2024, as compared to $ 8 and $ 474 for the same period in Fiscal 2023.

Our effective tax rate (“ETR”) from continuing operations was 24.3 % and 22.8 % for nine months ended March 31, 2024 and March 31, 2023, respectively.

The Company accrues penalties and interest related to unrecognized tax benefits when necessary, as a component of penalties and interest expense, respectively.

The Company had no unrecognized tax benefits or related accrued penalties or interest expense at December 31, 2023 and December 31, 2022, respectively.

The Company had no unrecognized tax benefits or related accrued penalties or interest expense at March 31, 2024 and March 31, 2023, respectively.

In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

44 unchanged sentences

Generally, there is no other performance obligation other than what has been stated inside the sales order for each of these sales.

Terms of contract that may indicate potential variable consideration include warranty, late delivery penalty and reimbursement to solve nonconformance issues for rejected products.

Terms of contract that may indicate potential variable consideration include warranty, late delivery penalty and reimbursement to solve non-conformance issues for rejected products.

Based on historical and recent data trends, it is concluded that these terms of the contract do not represent potential variable consideration.

13 unchanged sentences

Remaining Performance Obligation

The Company had $ nil and $ 55 remaining performance obligations, which represents our obligation to deliver products and services as at December 31, 2023 and June 30, 2023 respectively.

The Company had $ nil and $ 55 remaining performance obligations, which represents our obligation to deliver products and services as at March 31, 2024 and June 30, 2023 respectively.

EARNINGS PER SHARE

Options to purchase 617,000 shares of Common Stock at exercise prices ranging from $ 2.53 to $ 7.76 per share were outstanding as of December 31, 2023.

284,500 stock options were excluded in the computation of diluted earnings per share (“EPS”) for the three months ended December 31, 2023, because they were anti-dilutive.

Options to purchase 636,375 shares of Common Stock at exercise prices ranging from $ 2.53 to $ 7.76 per share were outstanding as of December 31, 2022.

405,500 stock options were excluded in the computation of diluted EPS for the three months ended December 31, 2022, because they were anti-dilutive.

Options to purchase 741,750 shares of Common Stock at exercise prices ranging from $ 2.53 to $ 7.76 per share were outstanding as of March 31, 2024.

140,500 stock options were excluded in the computation of diluted earnings per share (“EPS”) for the three months and nine months ended March 31, 2024, because they were anti-dilutive.

Options to purchase 656,375 shares of Common Stock at exercise prices ranging from $ 2.53 to $ 7.76 per share were outstanding as of March 31, 2023.

285,500 stock options were excluded in the computation of diluted earnings per share (“EPS”) for the three and nine months ended March 31, 2023, because they were anti-dilutive.

The following table is a reconciliation of the weighted average shares used in the computation of basic and diluted EPS for the period presented herein:

Three Months Ended

Six Months Ended

Income attributable to Trio-Tech International common shareholders from continuing operations, net of tax

Income / (loss) attributable to Trio-Tech International common shareholders from discontinued operations, net of tax

Net income attributable to Trio-Tech International Common Shareholders

Nine Months Ended

Income / (loss) attributable to Trio-Tech International common shareholders from continuing operations, net of tax

(Loss) / Income attributable to Trio-Tech International common shareholders from discontinued operations, net of tax

Net income / (loss) attributable to Trio-Tech International Common Shareholders

Weighted average number of common shares outstanding - basic

26 unchanged sentences

Certain option awards provide for accelerated vesting if there is a change in control (as defined in the 2017 Employee Plan).

During the first two quarters of Fiscal 2024, 48,000 stock options were granted under the 2017 Employee Plan.

There were 63,875 stock options exercised during the six-month period ended December 31, 2023.

The Company recognized $ 90 in stock-based compensation expense during the six months ended December 31, 2023.

During the first two quarters of Fiscal 2023, 25,000 stock options were granted under the 2017 Employee Plan.

There were 5,000 stock options exercised during the six-month period ended December 31, 2022.

The Company recognized $ 54 in stock-based compensation expense during the six months ended December 31, 2022.

As of December 31, 2023, there were vested stock options granted under the 2017 Employee Plan covering a total of 88,250 shares of Common Stock.

During the nine-month period ended March 31, 2024, there were 122,500 stock options granted and 64,625 stock options exercised under 2017 Employee Plan.

The Company recognized $ 118 and $ 208 in stock-based compensation expense during the three and nine months ended March 31, 2024, respectively.

During the nine-month period ended March 31, 2023, there were 65,000 stock options granted and 5,000 stock options exercised under 2017 Employee Plan.

The Company recognized $ 70 and $ 124 in stock-based compensation expense during the three and nine months ended March 31, 2023, respectively.

As of March 31, 2024, there were vested stock options granted under the 2017 Employee Plan covering a total of 136,250 shares of Common Stock.

The weighted-average exercise price was $ 5.57 and the weighted average remaining contractual term was 3.12 years.

As of December 31, 2022, there were vested stock options granted under the 2017 Employee Plan covering a total of 134,500 shares of Common Stock.

As of March 31, 2023, there were vested stock options granted under the 2017 Employee Plan covering a total of 134,625 shares of Common Stock.

The weighted-average exercise price was $ 4.49 and the weighted average remaining contractual term was 2.52 years.

A summary of option activities under the 2017 Employee Plan during the six months period ended December 31, 2023, is presented as follows:

A summary of option activities under the 2017 Employee Plan during the nine months ended March 31, 2024, is presented as follows:

Outstanding at July 1, 2023

Forfeited or expired

Outstanding at December 31, 2023

Exercisable at December 31, 2023

A summary of the status of the Company’s non-vested employee stock options during the six months ended December 31, 2023, is presented below:

Outstanding at March 31, 2024

Exercisable at March 31, 2024

A summary of the status of the Company’s non-vested employee stock options during the nine months ended March 31, 2024, is presented below:

Non-vested at July 1, 2023

Non-vested at December 31, 2023

A summary of option activities under the 2017 Employee Plan during the six months period ended December 31, 2022, is presented as follows:

Non-vested at March 31, 2024

A summary of option activities under the 2017 Employee Plan during the nine months ended March 31, 2023, is presented as follows:

Outstanding at July 1, 2022

Forfeited or expired

Outstanding at December 31, 2022

Exercisable at December 31, 2022

A summary of the status of the Company’s non-vested employee stock options during the six months ended December 31, 2022, is presented below:

Outstanding at March 31, 2023

Exercisable at March 31, 2023

A summary of the status of the Company’s non-vested employee stock options during the nine months ended March 31, 2023, is presented below:

Non-vested at July 1, 2022

Non-vested at December 31, 2022

Non-vested at March 31, 2023

2017 Directors Equity Incentive Plan

4 unchanged sentences

The options have five -year contractual terms and are exercisable immediately as of the grant date.

During the first two quarters of Fiscal 2024, the Company did not grant any options pursuant to the 2017 Directors Plan.

There were no stock options exercised and the Company did not recognize any stock-based compensation expense during the six months ended December 31, 2023 and 2022.

As all the stock options granted under the 2017 Directors Plan vest immediately on the date of grant, there were no unvested stock options granted under the 2017 Directors Plan as of December 31, 2023, or December 31, 2022.

As of December 31, 2023, there were vested stock options granted under the 2017 Directors Plan covering a total of 420,000 shares of Common Stock.

During the nine-month period ended March 31, 2024, the Company granted 100,000 stock options and 49,000 stock options under 2017 Directors Plan.

The Company recognized $ 220 stock-based compensation expense during the three and nine months ended March 31, 2024, respectively.

During the nine-month period ended March 31, 2023, the Company granted 100,000 stock options and no stock options exercised under 2017 Directors Plan.

The Company recognized $ 213 stock-based compensation expense during the three and nine months ended March 31, 2023, respectively.

As of March 31, 2024, there were vested stock options granted under the 2017 Directors Plan covering a total of 471,000 shares of Common Stock.

The weighted average exercise price was $ 5.08 and the weighted average remaining contractual term was 2.87 years.

As of December 31, 2022, there were vested stock options granted under the 2017 Director Plan covering a total of 420,000 shares of Common Stock.

As of March 31, 2023, there were vested stock options granted under the 2017 Directors Plan covering a total of 440,000 shares of Common Stock.

The weighted average exercise price was $ 4.80 and the weighted average remaining contractual term was 2.68 years.

A summary of option activities under the 2017 Directors Plan during the six months ended December 31, 2023, is presented as follows:

A summary of option activities under the 2017 Directors Plan during the nine months ended March 31, 2024, is presented as follows:

Outstanding at July 1, 2023

Forfeited or expired

Outstanding at December 31, 2023

Exercisable at December 31, 2023

A summary of option activities under the 2017 Directors Plan during the six months period ended December 31, 2022, is presented as follows:

Outstanding at March 31, 2024

Exercisable at March 31, 2024

A summary of option activities under the 2017 Directors Plan during the nine months period ended March 31, 2023, is presented as follows:

Outstanding at July 1, 2022

Forfeited or expired

Outstanding at December 31, 2022

Exercisable at December 31, 2022

Outstanding at March 31, 2023

Exercisable at March 31, 2023

Company as Lessor

2 unchanged sentences

Depreciation expense for assets subject to operating leases is taken into account primarily on the straight-line method over a period of 20 years in amounts necessary to reduce the carrying amount of the asset to its estimated residual value.

Depreciation expense relating to the property held as investments in operating leases was $ 34 and $ 38 for the three months ended December 31, 2023, and December 31, 2022, respectively.

Future minimum rental income in China and Thailand to be received from Fiscal 2024 to the fiscal year ended June 30, 2027 (“Fiscal 2027”) on non-cancelable operating leases is contractually due as follows as of December 31, 2023:

Depreciation expense relating to the property held as investments in operating leases was $ 51 and $ 54 for the nine months ended March 31, 2024 and March 31, 2023, respectively.

Remainder of Fiscal 2024

11 unchanged sentences

Net financed sales receivables due after one year

As of December 31, 2023, the financed sale receivables had a weighted average effective interest rate of 11.16 % and weighted average remaining lease term of 0.25 years.

As of March 31, 2024, Company’s financed sale receivable has been fully collected.

As of June 30, 2023, the financed sale receivables had a weighted average effective interest rate of 11.16 % and weighted average remaining lease term of 0.75 years.

16 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Finance lease cost:

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Other information related to leases was as follows (in thousands except lease term and discount rate):

Six Months Ended

Nine Months Ended

Cash Paid for Amounts Included in the Measurement of Lease Liabilities

9 unchanged sentences

Operating leases

As of December 31, 2023, the maturities of the Company’s operating and finance lease liabilities are as follow:

As of March 31, 2024, the maturities of the Company’s operating and finance lease liabilities are as follow:

Remainder of Fiscal 2024

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In accordance with ASC Topics 825 and 820, the following presents assets and liabilities measured and carried at fair value and classified by level of fair value measurement hierarchy:

There were no transfers between Levels 1 and 2 during the six months ended December 31, 2023 and 2022.

There were no transfers between Levels 1 and 2 during the nine months ended March 31, 2024 and 2023.

Term deposits (Level 2) – The carrying amount approximates fair value because of the short maturity of these instruments.

4 unchanged sentences

The Company had three major customers that accounted for the following revenue and trade account receivables:

For the Six Months Ended

For the Nine Months Ended

Trade Account Receivables

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We act as a global one-stop solution for our customers by designing and building reliability test solutions and offering comprehensive testing services through our testing laboratories in Asia and the United States (“U.S.”).

During the six months ended December 31, 2023, TTI generated approximately 100% of its revenue from its three core business segments in the test and measurement industry, i.e., manufacturing of test equipment (“Manufacturing”), testing services (“Testing”) and distribution of test equipment and electronic components (“Distribution”).

During the nine months ended March 31, 2024, TTI generated approximately 100% of its revenue from its three core business segments in the test and measurement industry, i.e., manufacturing of test equipment (“Manufacturing”), testing services (“Testing”) and distribution of test equipment and electronic components (“Distribution”).

Management is currently evaluating the ongoing contributions of each of its business segments to its current and future revenue and prospects, including its Testing segment.

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We also support our customers as their extended research & development arm in product design, leveraging the expert skills of our component engineers and design engineers.

Our real estate segment generates rental income and investment income from real estate investments made in Chongqing, China.

Our real estate (“Real Estate”) segment generates rental income and investment income from real estate investments made in Chongqing, China.

Critical Accounting Estimates & Policies

6 unchanged sentences

In addition, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2023 for a complete description of our critical accounting policies and estimates.

Second Quarter Fiscal Year 2024 Highlights

Total revenue decreased by $188, or 1.5%, to $12,202 in the second quarter of Fiscal 2024, compared to $12,390 for the same period in Fiscal 2023.

Manufacturing segment revenue decreased by $254, or 5.0% to $4,790 for the second quarter of Fiscal 2024, compared to $5,044 for the same period in Fiscal 2023.

Testing segment revenue decreased by $1,002, or 17.7%, to $4,646 for the second quarter of Fiscal 2024, compared to $5,648 for the same period in Fiscal 2023.

Distribution segment revenue increased by $1,066, or 62.9%, to $2,760 for the second quarter of Fiscal 2024, compared to $1,694 for the same period in Fiscal 2023.

Real estate segment rental revenue increased by $2, or 50.0% to $6 for the second quarter of Fiscal 2024, compared to $4 for the same period in Fiscal 2023.

The overall gross profit margin decreased by 3.5% to 23.4% for the second quarter of Fiscal 2024, from 26.9% for the same period in Fiscal 2023.

General and administrative expense decreased by $102, or 5.3%, to $1,817 for the second quarter of Fiscal 2024, from $1,919 for the same period in Fiscal 2023.

Selling expense increased by $55, or 28.5%, to $248 for the second quarter of Fiscal 2024, from $193 for the same period in Fiscal 2023.

Other expense decreased by $182, or 68.9%, to $82 for the second quarter of Fiscal 2024, from other expense of $264 for the same period in Fiscal 2023.

Income from operations was $677 for the second quarter of Fiscal 2024, a decrease of $392 as compared to income from operations of $1,069 for the same period in Fiscal 2023.

Income tax expense was $95 in the second quarter of Fiscal 2024, a decrease of $146 as compared to $241 in the same period in Fiscal 2023.

During the second quarter of Fiscal 2024, income from continuing operations before non-controlling interest, net of tax was $482, as compared to income from continuing operations before non-controlling interest of $575 for the same period in Fiscal 2023.

Net loss attributable to non-controlling interest for the second quarter of Fiscal 2024 was $21, a decrease of $79 as compared to net profit of $58 in the same period in Fiscal 2023.

Basic earnings per share for the second quarter of Fiscal 2024 and Fiscal 2023 was $0.12.

Diluted earnings per share for the second quarter of Fiscal 2024 and Fiscal 2023 was $0.12.

Total assets increased by $4,412 to $46,598 as of December 31, 2023, compared to $42,186 as of June 30, 2023.

Total liabilities increased by $2,455 to $15,070 as of December 31, 2023, compared to $12,615 as of June 30, 2023.

Third Quarter Fiscal Year 2024 Highlights

Total revenue increased by $556, or 5.6%, to $10,398 in the third quarter of Fiscal 2024, compared to $9,842 for the same period in Fiscal 2023.

Manufacturing segment revenue increased by $1,850, or 62.4% to $4,813 for the third quarter of Fiscal 2024, compared to $2,963 for the same period in Fiscal 2023.

Testing segment revenue decreased by $1,901, or 33.4%, to $3,796 for the third quarter of Fiscal 2024, compared to $5,697 for the same period in Fiscal 2023.

Distribution segment revenue increased by $604, or 51.2%, to $1,783 for the third quarter of Fiscal 2024, compared to $1,179 for the same period in Fiscal 2023.

Real estate segment rental revenue increased by $3, or 100.0% to $6 for the third quarter of Fiscal 2024, compared to $3 for the same period in Fiscal 2023.

The overall gross profit margin increased by 1.0% to 26.0% for the third quarter of Fiscal 2024, from 25.0% for the same period in Fiscal 2023.

General and administrative expense increased by $103, or 4.6%, to $2,351 for the third quarter of Fiscal 2024, from $2,248 for the same period in Fiscal 2023.

Selling expense increased by $44, or 27.5%, to $204 for the third quarter of Fiscal 2024, from $160 for the same period in Fiscal 2023.

Other income increased by $212, or 530.0%, to $252 for the third quarter of Fiscal 2024, from other income of $40 for the same period in Fiscal 2023.

Income from operations was $59 for the third quarter of Fiscal 2024, an increase of $96 as compared to loss from operations of $37 for the same period in Fiscal 2023.

Income tax expense was $142 in the third quarter of Fiscal 2024, an increase of $134 as compared to $8 in the same period in Fiscal 2023.

During the third quarter of Fiscal 2024, income from continuing operations before non-controlling interest, net of tax was $164, as compared to income from continuing operations before non-controlling interest of $49 for the same period in Fiscal 2023.

Net income attributable to non-controlling interest for the third quarter of Fiscal 2024 was $93, an increase of $32 as compared to net profit of $61 in the same period in Fiscal 2023.

Basic earnings per share for the third quarter of Fiscal 2024 was $0.02, as compared to earnings per share of $nil in the same period in Fiscal 2023.

Diluted earnings per share for the third quarter of Fiscal 2024 was $0.02, as compared to earnings per share of $nil in the same period in Fiscal 2023.

Total assets increased by $901 to $43,087 as of March 31, 2024, compared to $42,186 as of June 30, 2023.

Total liabilities decreased by $980 to $11,635 as of March 31, 2024, compared to $12,615 as of June 30, 2023.

Results of Operations and Business Outlook

The following table sets forth our revenue components for both three and six months ended December 31, 2023 and 2022.

The following table sets forth our revenue components for both three and nine months ended March 31, 2024 and 2023.

Revenue Components

Three Months Ended

Six Months Ended

Nine Months Ended

Manufacturing

Testing Services

Revenue for the three and six months ended December 31, 2023, was $12,202 and $22,168, respectively, a decrease of $188 and $2,161, respectively, when compared to the revenue of $12,390 and $24,329 for the same period of Fiscal 2023.

As a percentage, revenue decreased by 1.5% and 8.9% for the three and six months ended December 31, 2023, when compared to revenue for the same period of Fiscal 2023.

Revenue within our four current segments for the three and six months ended December 31, 2023, is discussed below.

Revenue for the three and nine months ended March 31, 2024, was $10,398 and $32,566, respectively, an increase of $556 and a decrease of $1,605, respectively, when compared to the revenue of $9,842 and $34,171 for the same period of Fiscal 2023.

As a percentage, revenue increased by 5.6% and decreased by 4.7% for the three and nine months ended March 31, 2024, when compared to revenue for the same period of Fiscal 2023.

Revenue within our four current segments for the three and nine months ended March 31, 2024, is discussed below.

Manufacturing Segment

Revenue in the Manufacturing segment as a percentage of total revenue was 39.3% and 34.6% for the three and six months ended December 31, 2023, respectively, a decrease of 1.4% and 0.9% of total revenue when compared to 40.7% and 35.5% in the same period of Fiscal 2023.

The revenue decreased by $254 to $4,790 from $5,044 and decreased by $954 to $7,675 from $8,629 for the three and six months ended December 31, 2023, respectively.

Revenue in the Manufacturing segment as a percentage of total revenue was 46.3% and 38.3% for the three and nine months ended March 31, 2024, respectively, an increase of 16.2% and 4.4% of total revenue when compared to 30.1% and 33.9% in the same period of Fiscal 2023.

Total Manufacturing segment revenue increased by $1,850 to $4,813 from $2,963 and increased by $896 to $12,488 from $11,592 for the three and nine months ended March 31, 2024, respectively.

Revenue in the Manufacturing segment has been on a downward trend since the beginning of the calendar year 2023 due to a decline in semiconductor industry capital spending.

Demand recovery was noted in the first quarter of Fiscal 2024, resulting in a strong backlog in the Manufacturing segment.

Part of these orders has been delivered in the quarter ended December 31, 2023, and the balance is expected to be delivered in the next two quarters.

During the three and six months ended December 31, 2023, one customer contributed 26.5% and 24.0%, respectively, to the total Manufacturing segment revenue.

There was a demand recovery in the first quarter of Fiscal 2024, resulting in a strong backlog in the Manufacturing segment.

The fulfillment of part of this backlog has contributed to improved manufacturing revenue in the current quarter and the trend is expected to continue in the next quarter.

During the three and nine months ended March 31, 2024, one customer contributed 36.2% and 18.0%, respectively, to the total Manufacturing segment revenue.

Testing Segment

Revenue in the Testing segment as a percentage of total revenue was 38.1% for the three months ended December 31, 2023, representing a decrease of 7.5% compared to 45.6% in the same period of Fiscal 2023.

Revenue in the Testing segment was 44.2% as a percentage of total revenue for the six months ended December 31, 2023, a decrease of 5.2% compared to the same period of Fiscal 2023.

Total revenue decreased by $1,002 and $2,202 to $4,646 and $9,810 for the three and six months ended December 31, 2023, respectively, as compared to the same periods of Fiscal 2023.

The decrease in revenue in the Testing segment reflects the weak demand environment in the semiconductor industry in calendar year 2023.

The revenue in the Testing segment from one customer accounted for 34.1% and 40.9% of our revenue in the Testing segment for the three months ended December 31, 2023 and 2022, respectively, and 34.9% and 45.6% of our total revenue in the Testing segment for the six months ended December 31, 2023 and 2022, respectively.

The future revenue in the Testing segment will be affected by the demands of this customer if the customer base cannot be increased.

Revenue in the Testing segment as a percentage of total revenue was 36.5% and 41.8% for the three months and nine months ended March 31, 2024, respectively, a decrease of 21.4% and 10.0% of total revenue when compared to 57.9% and 51.8% in the same period of Fiscal 2023.

Total Testing segment revenue decreased by $1,901 and $4,103 to $3,796 and $13,606 for the three and nine months ended March 31, 2024, respectively, as compared to the same periods of Fiscal 2023.

The decrease in revenue in the Testing segment reflects the drop in volume amidst a challenging semiconductor market environment.

We see signs of recovery with increased volume in the fourth quarter of Fiscal 2024, compared to the current quarter.

The Revenue in the Testing segment from one customer accounted for 31.2% and 41.6% of our revenue in the Testing segment for the three months ended March 31, 2024 and 2023, respectively, and 33.9% and 44.3% of our total revenue in the Testing segment for the nine months ended March 31, 2024 and 2023, respectively.

Demand for testing services varies from country to country, depending on any changes taking place in the market and our customers’ forecasts.

1 unchanged sentence

Distribution Segment

Revenue in the Distribution segment was 22.6% and 21.1% as a percentage of total revenue for the three and six months ended December 31, 2023, respectively, an increase of 8.9% and 6.0%, compared to the same period of Fiscal 2023.

Total revenue increased by $1,066 to $2,760 and increased by $994 to $4,670 from $1,694 and $3,676 for the three and six months ended December 31, 2023, respectively, compared to the same period of Fiscal 2023.

In the Distribution segment, there has been a demand recovery in the electronics components and display products from our customers compared to the same period of Fiscal 2023.

The revenue in the Distribution segment from one customer accounted for 84.7% and 78.9% of our revenue in the Distribution segment for the three months ended December 31, 2023 and 2022, respectively, and 84.0% and 82.5% of our total revenue in the Distribution segment for the six months ended December 31, 2023 and 2022, respectively.

Revenue in the Distribution segment was 17.1% and 19.8% as a percentage of total revenue for the three and nine months ended March 31, 2024, respectively, an increase of 5.1% and 5.6%, compared to the same period of Fiscal 2023.

Total revenue increased by $604 to $1,783 and increased by $1,598 to $6,453 from $1,179 and $4,855 for the three and nine months ended March 31, 2024, respectively, compared to the same period of Fiscal 2023.

There has been a demand recovery in the Distribution segment, reflecting an increase in demand for electronics components and display products from our customers compared to the same period of Fiscal 2023.

The revenue in the Distribution segment from one customer accounted for 81.2% and 66.8% of our revenue in the Distribution segment for the three months ended March 31, 2024 and 2023, respectively, and 83.2% and 78.7% of our total revenue in the Distribution segment for the nine months ended March 31, 2024 and 2023, respectively.

Demand for the Distribution segment varies depending on the demand for our customers’ products, the changes taking place in the market, and our customers’ forecasts.

1 unchanged sentence

Real Estate Segment

Revenue increased to $6 and $13 from $4 and $12 for the three and six months ended December 31, 2023, compared to the same period of Fiscal 2023.

Our real estate (“Real Estate”) segment saw an increase in rental income due to occupancy in MaoYe properties.

Revenue increased to $6 and $19 from $3 and $15 for the three and nine months ended March 31, 2024, compared to the same period of Fiscal 2023.

Uncertainties and Remedies

19 unchanged sentences

Additionally, strengthening of foreign currencies may also increase the Company’s cost of product components denominated in those currencies, thus adversely affecting gross margins.

As of December 2023, although we have seen improvements in both our operations and those of our suppliers, we may continue to experience supply shortages as well as inflationary cost pressures in at least the near term.

As of March 2024, although we have seen improvements in both our operations and those of our suppliers, we may continue to experience supply shortages as well as inflationary cost pressures in at least the near term.

Risks and uncertainties related to supply chain challenges, and inflationary pressures may continue to negatively impact our revenue and gross margin.

4 unchanged sentences

As of date, we do not see any direct effect of the CHIPS Act on the Company in the foreseeable future.

Comparison of the Three Months Ended December 31, 2023, and December 31, 2022

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the three months ended December 31, 2023 and 2022 respectively:

Comparison of the Three Months Ended March 31, 2024, and March 31, 2023

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the three months ended March 31, 2024 and 2023 respectively:

Three Months Ended

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Research and development

Loss on disposal of property, plant and equipment

Total operating expense

Income from Operations

Income / (Loss) from Operations

Overall Gross Margin

Overall gross margin as a percentage of revenue decreased by 3.5% to 23.4% for the three months ended December 31, 2023, from 26.9% for the same period of Fiscal 2023.

Gross profits decreased by $481 to $2,854 for the three months ended December 31, 2023, from $3,335 for the same period in Fiscal 2023.

Gross profit margin as a percentage of revenue in the Manufacturing segment increased marginally by 1% to 24.7% for the three months ended December 31, 2023, as compared to 23.7% for the same period in Fiscal 2023.

In absolute dollar amounts, gross profit in the Manufacturing segment for the three months ended December 31, 2023, was $1,181, indicating a decrease of $14, compared to $1,195 in the same period in Fiscal 2023.

Gross profit margin as a percentage increased despite a decline in revenue due to a favourable sales mix.

Gross profit margin as a percentage of revenue in the Testing segment decreased by 8.3% to 25.4% for the three months ended December 31, 2023, compared to 33.7% in the same period in Fiscal 2023.

The decrease in gross profit margin percentage was mainly due to lower volume across all test operations.

Overall gross margin as a percentage of revenue increased by 1.0% to 26.0% for the three months ended March 31, 2024, from 25% for the same period of Fiscal 2023.

Gross profits increased by $245 to $2,703 for the three months ended March 31, 2024, from $2,458 for the same period in Fiscal 2023.

Gross profit margin as a percentage of revenue in the Manufacturing segment increased by 8% to 25.3% for the three months ended March 31, 2024, as compared to 17.3% for the same period in Fiscal 2023.

In absolute dollar amounts, gross profit in the Manufacturing segment for the three months ended March 31, 2024, was $1,219, indicating an increase of $707, compared to $512 in the same period in Fiscal 2023.

The increase in gross profit margin is attributed to increased sales coupled with higher proportion of system sales with higher margins.

Gross profit margin as a percentage of revenue in the Testing segment increased marginally by 0.7% to 31.5% for the three months ended March 31, 2024, compared to 30.8% in the same period in Fiscal 2023.

The company managed to maintain its gross profit margin at the same level despite a decline in revenue, attributed to effective cost control measures implemented across the company and reduced depreciation charges since some of the assets in China operations were fully depreciated as at end of previous quarter.

These assets continue to be used in business and derive economic benefits.

A significant portion of the cost of sales in Testing segment are fixed costs.

As the demand for services and factory utilization decrease, the fixed costs are spread over the decreased output, which decreases the gross profit margin.

In absolute dollar amounts, gross profit in the Testing segment decreased by $719 to $1,182 for the three months ended December 31, 2023, from $1,901 for the same period in Fiscal 2023.

As the demand for services and factory utilization decrease, the fixed costs are spread over the decreased output, which will impact adversely the gross profit margin.

In absolute dollar amounts, gross profit in the Testing segment decreased by $562 to $1,195 for the three months ended March 31, 2024, from $1,757 for the same period in Fiscal 2023.

Gross profit margin of the Distribution segment is not only affected by the market price of the products we distribute, but also the mix of products we distribute, which frequently changes because of fluctuations in market demand.

Gross profit margin as a percentage of revenue in the Distribution segment increased by 3.4% to 18.3% for the three months ended December 31, 2023, from 14.9% in the same period in Fiscal 2023.

In absolute dollar amounts, gross profit in the Distribution segment for the three months ended December 31, 2023, was $504, indicating an increase of $251, compared to $253 in the same period in Fiscal 2023.

The strong demand for electronics components and display products from our customers has contributed to the increase of gross profit margin.

In absolute dollar amounts, gross loss in the Real Estate segment was $13 for three months ended December 31, 2023, as compared to $14 for the same period in Fiscal 2023.

Gross profit margin as a percentage of revenue in the Distribution segment decreased marginally by 0.4% to 16.9% for the three months ended March 31, 2024, from 17.3% in the same period in Fiscal 2023.

In absolute dollar amounts, gross profit in the Distribution segment for the three months ended March 31, 2024, was $301, indicating an increase of $97, compared to $204 in the same period in Fiscal 2023.

The strong demand for electronics components and display products from our customers has contributed to the increase in gross profit margin.

In absolute dollar amounts, gross loss in the Real Estate segment was $12 for three months ended March 31, 2024, as compared to $15 for the same period in Fiscal 2023.

Operating Expense

Operating expense for the three months ended December 31, 2023 and 2022 was as follows:

Operating expense for the three months ended March 31, 2024 and 2023 was as follows:

Three Months Ended

2 unchanged sentences

Loss on disposal of property, plant and equipment

General and administrative expense decreased by $102, or 5.3%, from $1,919 to $1,817 for the three months ended December 31, 2023, compared to the same period in Fiscal 2023.

The decrease in general and administrative expense was mainly attributable to the lower remuneration related expense resulting from the unfavorable financial performance compared to same period of Fiscal 2023.

Selling expense increased by $55, or 28.5%, from $193 to $248 for the three months ended December 31, 2023, compared to the same period in Fiscal 2023.

The increase in selling expense was primarily attributable to an increase in commission costs in the Singapore and U.S.

operations because of an increase in commissionable revenue, and an increase in travel costs due to increased business travel in the second quarter of Fiscal 2024, compared to the same quarter of Fiscal 2023.

Income from Operations

Income from operations was $677 for the three months ended December 31, 2023, a decrease of $392, compared to income of $1,069 from operations for the same period in Fiscal 2023.

The decrease was mainly due to the decreased revenue and gross profit in absolute dollars amount in the Testing segment.

General and administrative expense increased by $103, or 4.6%, from $2,248 to $2,351 for the three months ended March 31, 2024, compared to the same period in Fiscal 2023.

The increase in general and administrative expense was mainly attributable to higher professional fee and remuneration related expenses compared to same period of Fiscal 2023.

Selling expense increased by $44, or 27.5%, from $160 to $204 for the three months ended March 31, 2024, compared to the same period in Fiscal 2023.

The increase in selling expense was primarily attributable to an increase in travel costs due to increased business travel in the third quarter of Fiscal 2024, compared to the same quarter of Fiscal 2023.

Income / (Loss) from Operations

Income from operations was $59 for the three months ended March 31, 2024, an increase of $96, compared to loss of $37 from operations for the same period in Fiscal 2023.

The increase was mainly due to the increased revenue and gross profit in absolute dollars amount in the Manufacturing segment.

Interest Expense

Interest expense for the three months ended December 31, 2023 and 2022 was as follows:

Interest expense for the three months ended March 31, 2024 and 2023 was as follows:

Three Months Ended

Interest expense

Interest expense was $22 for the three months ended December 31, 2023, an increase of $12, or 120.0%, compared to $10 for the same period of Fiscal 2023 due to utilization of credit facilities.

As of December 31, 2023, the Company had an unused line of credit of $5,256 as compared to $6,139 at December 31, 2022.

Other Expenses

Other expense for the three months ended December 31, 2023 and 2022 was as follows:

Interest expense was $17 for the three months ended March 31, 2024, a decrease of $12, or 41.4%, compared to $29 for the same period of Fiscal 2023 due to lower utilization of credit facilities.

As of March 31, 2024, the Company had an unused line of credit of $5,794 as compared to $5,608 at March 31, 2023.

Other Income for the three months ended March 31, 2024 and 2023 was as follows:

Three Months Ended

1 unchanged sentence

Other rental income

Exchange loss

Exchange gain / (loss)

Other miscellaneous income

Other expense decreased by $182 from $264 to $82 for the three months ended December 31, 2023 compared to the same period in Fiscal 2023.

The decrease was primarily contributed by lower negative foreign currency impact and an increase in interest income earned in the three months ended December 31, 2023 compared to the same period in Fiscal 2023.

Other income increased by $212 from $40 to $252 for the three months ended March 31, 2024 compared to the same period in Fiscal 2023.

The increase was primarily contributed by favorable foreign currency impact and an increase in interest income earned in the three months ended March 31, 2024 compared to the same period in Fiscal 2023.

Government Grant

1 unchanged sentence

Government Grant

In the three months ended December 31, 2023, the Company received government grants amounting to $4, related to capital expenditure subsidy received from the China government.

In the three months ended March 31, 2024, the Company received government grants amounting to $12, $7 of which was an incentive from the Singapore government for local resident recruitment, and $5 related to capital expenditure subsidy received from the China government.

During the same period in 2023, the Company received government grants amounting to $83, $76 of which was an incentive from the Singapore government for local resident recruitment, and the remaining $7 related to capital expenditure subsidy received from the China government.

Income Tax Expense

The Company's income tax expense was $95 and $241 for the three months ended December 31, 2023, and 2022, respectively.

Income tax expense decreased due to lower net income resulting from decrease in revenue discussed above.

The Company's income tax expense was $142 and $8 for the three months ended March 31, 2024, and 2023, respectively.

Income tax expense increased due to higher net income resulting from increase in revenue discussed above coupled with higher withholding tax incurred for the period.

Non-controlling Interest

As of December 31, 2023, we held a 55% interest in Trio-Tech (Malaysia) Sdn.

As of March 31, 2024, we held a 55% interest in Trio-Tech (Malaysia) Sdn.

Bhd., Trio-Tech (Kuala Lumpur) Sdn.

4 unchanged sentences

Bhd and 51% interest in Trio-tech JiangSu Co.

The share of non-controlling interest in the net loss from the subsidiaries for the three months ended December 31, 2023 was $21, a decrease of $79 compared to the share of non-controlling interest in the net income from the subsidiaries of $58 for the same period of Fiscal 2023.

The decrease in the net income shared by non-controlling interest in the subsidiaries was attributable to the decrease in net income generated by the Company’s Malaysia and China operations.

Net Income Attributable to Trio-Tech International Common Shareholders

Net income attributable to Company’s common shareholders were $507 for both the three months ended December 31, 2023 and December 31, 2022.

The share of non-controlling interest in the net gain from the subsidiaries for the three months ended March 31, 2024 was $93, an increase of $32 compared to the share of non-controlling interest in the net income from the subsidiaries of $61 for the same period of Fiscal 2023.

The increase in the net income shared by non-controlling interest in the subsidiaries was attributable to the increase in net income generated by the Company’s China operations.

Net Income / (Loss) Attributable to Trio-Tech International Common Shareholders

Net income attributable to Company’s common shareholders was $39 for the three months ended March 31, 2024, a change of $46, compared to a net loss of $7 for the same period in Fiscal 2023.

Earnings per Share

Basic earnings per share from continuing operations were $0.12 for both the three months ended December 31, 2023 and December 31, 2022.

Basic earnings per share from discontinued operations were $nil for both the three months ended December 31, 2023 and 2022.

Diluted earnings per share from continuing operations were $0.12 for both the three months ended December 31, 2023 and December 31, 2022.

Diluted earnings per share from discontinued operations were $nil for both the three months ended December 31, 2023 and 2022.

Basic earnings per share from continuing operations were $0.02 and $nil for three months ended March 31, 2024 and March 31, 2023 respectively.

Basic earnings per share from discontinued operations were $nil for three months ended March 31, 2024 and March 31, 2023 respectively.

Diluted earnings per share from continuing operations were $0.02 and $nil for three months ended March 31, 2024 and March 31, 2023.

Diluted earnings per share from discontinued operations were $nil for three months ended March 31, 2024 and March 31, 2023.

Segment Information

The revenue, gross margin, and income / (loss) from operations for each segment during the first quarter of Fiscal 2024 and Fiscal 2023 are presented below.

As the revenue and gross margin for each segment have been discussed in the previous section, only the comparison of income / (loss) from operations is discussed below.

The revenue, gross margin, and income / (loss) from operations for each segment during the third quarter of Fiscal 2024 and Fiscal 2023 are presented below.

As the revenue and gross margin for each segment were discussed in the previous section, only the comparison of income / (loss) from operations is discussed below.

Manufacturing Segment

The revenue, gross margin and income from operations for the Manufacturing segment for the three months ended December 31, 2023 and 2022 were as follows:

The revenue, gross margin and income / (loss) from operations for the Manufacturing segment for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

Income from operations

Income from operations from the Manufacturing segment was $191 compared to income from operations of $301 in the same period in Fiscal 2023.

The decrease in income from operations was mainly due to an increase in operating expense.

Operating expense was $990 and $892 for the three months ended December 31, 2023 and 2022, respectively.

The increase in operating expense was mainly due to higher commission expense resulting from higher commissionable revenue, and an increase in travel and entertainment expense incurred in three months ended December 31, 2023 compared to same period in Fiscal 2023.

Income / (Loss) from operations

Income from operations from the Manufacturing segment was $298 compared to loss from operations of $104 in the same period in Fiscal 2023.

The increase in income from operations was mainly due to an increase in gross margin attributable to higher system and equipment sales that generate higher margins.

Operating expense was $921 and $616 for the three months ended March 31, 2024 and 2023, respectively.

The increase in operating expense incurred in three months ended March 31, 2024 compared to the same period in Fiscal 2023 was mainly attributable to higher remuneration expenses due to improved performance, business travel and entertainment expenses, and an increased allocation of corporate expenses.

Testing Segment

The revenue, gross margin, and (loss)/ income from operations for the Testing segment for the three months ended December 31, 2023 and 2022 were as follows:

The revenue, gross margin, and (loss) / income from operations for the Testing segment for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

(Loss) / Income from operations

Loss from operations in the Testing segment for the three months ended December 31, 2023, was $152, a decrease of $699 from income from operations of $547 in the same period in Fiscal 2023.

Loss from operations in the Testing segment for the three months ended March 31, 2024, was $183, a decrease of $220 from income from operations of $37 in the same period in Fiscal 2023.

The decrease was mainly attributable to a decrease in gross profit due to lower revenue.

Operating expense was $1,334 and $1,354 for the three months ended December 31, 2023 and 2022, respectively.

Operating expense was $1,378 and $1,720 for the three months ended March 31, 2024 and 2023, respectively.

The decrease in operating expense incurred in three months ended March 31, 2024 compared to the same period in Fiscal 2023 was mainly due to effective cost control measures implemented across Test operations in response to drop in volume, coupled with lower corporate expenses allocated to the Testing segment due to drop in revenue.

Distribution Segment

The revenue, gross margin, and income from operations for the Distribution segment for the three months ended December 31, 2023 and 2022 were as follows:

The revenue, gross margin, and income from operations for the Distribution segment for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

Income from operations

Income from operations in the Distribution segment for three months ended December 31, 2023 was $401, compared to $217 for the same period in Fiscal 2023.

The increase of $184 was mainly due to an increase in gross profit margin.

Operating expense was $103 and $36 for the three months ended December 31, 2023 and 2022, respectively.

The increase in operating expense primarily resulted from an increase in business travel.

Income from operations in the Distribution segment for three months ended March 31, 2024 was $222, compared to $151 for the same period in Fiscal 2023.

The increase of $71 was mainly due to an increase in gross margin attributable to higher distribution revenue.

Operating expense was $78 and $53 for the three months ended March 31, 2024 and 2023, respectively.

The increase in operating expense primarily resulted from an increase in corporate expenses.

Real Estate Segment

The revenue, gross margin and loss from operations for the Real Estate segment for the three months ended December 31, 2023 and 2022 were as follows:

The revenue, gross margin and loss from operations for the Real Estate segment for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended

Loss from operations

Loss from operations in the Real Estate segment for the three months ended December 31, 2023, was $27 compared to $28 for the same period of Fiscal 2023.

Operating expense was $14 for both the three months ended December 31, 2023 and 2022.

The income from operations for corporate for the three months ended December 31, 2023, and 2022 was as follows:

Loss from operations in the Real Estate segment for the three months ended March 31, 2024, was $23 compared to $34 for the same period of Fiscal 2023.

Operating expense was $11 and $19 for three months ended March 31, 2024 and 2023 respectively.

The loss from operations for corporate for the three months ended March 31, 2024, and 2023 was as follows:

Three Months Ended

Income from operations

Corporate operating income was $264 for the three months ended December 31, 2023, compared to profit of $32 in the same period in Fiscal 2023.

Corporate expense is allocated to the four segments on a combination of factors involving revenue, manpower costs and fixed assets investments, except the Malaysia and China operations, which is calculated based on actual sales.

Corporate operating income was higher for the three months ended December 31, 2023 since the allocation to the individual segments was based on budgeted corporate expense for the quarter.

Any excess/under allocation to each segment is reviewed and adjusted over the last two quarters of the fiscal year.

Comparison of the Six Months Ended December 31, 2023, and December 31, 2022

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the six months ended December 31, 2023 and 2022, respectively:

Six Months Ended

Loss from operations

Corporate operating loss was $255 for the three months ended March 31, 2024, compared to loss of $87 in the same period in Fiscal 2023.

The increase in Corporate operating loss for the three months ended March 31, 2024 was due to higher stock compensation expenses and higher professional fee incurred in comparison to the same quarter of Fiscal 2023.

Comparison of the Nine Months Ended March 31, 2024, and March 31, 2023

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the nine months ended March 31, 2024 and 2023, respectively:

Nine Months Ended

Cost of sales

2 unchanged sentences

Research and development

(Gain) / Loss on disposal of property, plant and equipment

Loss on disposal of property, plant and equipment

Total operating expense

1 unchanged sentence

Overall Gross Margin

Overall gross margin as a percentage of revenue decreased by 4.4% to 24.2% for the six months ended December 31, 2023, compared to 28.6% in the same period of Fiscal 2023.

Gross profits decreased by $1,583 to $5,374 for the six months ended December 31, 2023, from $6,957 for the same period of Fiscal 2023.

Gross profit margin as a percentage of revenue in the Manufacturing segment increased marginally by 0.2% to 26.3% for the six months ended December 31, 2023, from 26.1% in the same period of Fiscal 2023.

Gross profit in absolute value decreased by $238 to $2,017 for the six months ended December 31, 2023 compared to $2,255 for the same period of Fiscal 2023.

The gross profit decrease was primarily due to a decrease in Manufacturing segment revenue in the six months ended December 31, 2023 compared to the same period of Fiscal 2023.

Gross profit margin as a percentage of revenue in the Testing segment decreased by 8.4% to 26.1% for the six months ended December 31, 2023, from 34.5% in the same period of Fiscal 2023.

Gross profit in the Testing segment decreased by $1,577 to $2,562 for the six months ended December 31, 2023, from $4,139 for the same period of Fiscal 2023 due to lower margins in the Testing segment resulting from lower demand.

Overall gross margin as a percentage of revenue decreased by 2.8% to 24.8% for the nine months ended March 31, 2024, compared to 27.6% in the same period of Fiscal 2023.

Gross profits decreased by $1,338 to $8,077 for the nine months ended March 31, 2024, from $9,415 for the same period of Fiscal 2023.

Gross profit margin as a percentage of revenue in the Manufacturing segment increased by 2% to 25.9% for the nine months ended March 31, 2024, from 23.9% in the same period of Fiscal 2023.

Gross profit in absolute value increased by $469 to $3,236 for the nine months ended March 31, 2024 compared to $2,767 for the same period of Fiscal 2023.

The gross profit increased primarily due to an increase in system and equipment sales that generates higher margins in the nine months ended March 31, 2024 compared to the same period of Fiscal 2023.

Gross profit margin as a percentage of revenue in the Testing segment decreased by 5.7% to 27.6% for the nine months ended March 31, 2024, from 33.3% in the same period of Fiscal 2023.

Gross profit in the Testing segment decreased by $2,139 to $3,757 for the nine months ended March 31, 2024, from $5,896 for the same period of Fiscal 2023 due to lower margins in the Testing segment resulting from lower demand.

The gross margin was negatively impacted by the decrease in revenue across all test operations where a significant portion of our cost of goods sold are fixed, and as the demand for services and factory utilization decrease, the fixed costs are spread over the decreased output, which reduces the gross profit margin.

Gross profit margin as a percentage of revenue in the Distribution segment was 17.5% for the six months ended December 31, 2023, compared to 16.0% in the same period of Fiscal 2023.

Gross profit in the Distribution segment for the six months ended December 31, 2023, was $818, an increase of $231 compared to $587 in the same period of Fiscal 2023.

The increase in gross profit was due to the increase in distribution sales, coupled with an increase in gross margin compared to the same period of Fiscal 2023.

Gross loss in the Real Estate segment decreased by $1 to $23 for the six months ended December 31, 2023, from $24 in the same period of Fiscal 2023.

Operating Expenses

Operating expense for the six months ended December 31, 2023 and 2022 was as follows:

Six Months Ended

Gross profit margin as a percentage of revenue in the Distribution segment was 17.3% for the nine months ended March 31, 2024, compared to 16.3% in the same period of Fiscal 2023.

Gross profit in the Distribution segment for the nine months ended March 31, 2024, was $1,119, an increase of $328 compared to $791 in the same period of Fiscal 2023.

The increase in gross profit was due to the increase in distribution sales compared to the same period of Fiscal 2023.

Gross loss in the Real Estate segment decreased by $4 to $35 for the nine months ended March 31, 2024, from $39 in the same period of Fiscal 2023.

Operating Expense

Operating expense for the nine months ended March 31, 2024 was as follows:

Nine Months Ended

General and administrative

Research and development

Gain on disposal of plant and equipment

General and administrative expense decreased by $249, or 5.9%, from $4,224 to $3975 for the six months ended December 31, 2023, compared to the same period of Fiscal 2023.

The decrease in general and administrative expense was mainly attributable to the implementation of the cost cutting initiative from Malaysia and China operation in view of lower testing demand, and lower remuneration related expense resulting from unfavorable financial performance in six months ended December 31, 2023.

Selling expense increased by $69, or 18.9%, for the six months ended December 31, 2023, from $366 to $435 compared to the same period of Fiscal 2023.

Loss on disposal of plant and equipment

General and administrative expense decreased by $146, or 2.2%, from $6,472 to $6,326 for the nine months ended March 31, 2024, compared to the same period of Fiscal 2023.

The decrease in general and administrative expense was mainly attributable to the lower remuneration related expenses in Malaysia and China operation which was partially offset by higher stock compensation expenses and professional fee incurred in nine months ended March 31, 2024.

Selling expense increased by $113, or 21.5%, for the nine months ended March 31, 2024, from $526 to $639 compared to the same period of Fiscal 2023.

The increase in selling expense was primarily attributable to an increase in commission because of an increase in commissionable revenue and increased business travel.

Income from Operations

Income from operations was $690 for the six months ended December 31, 2023, compared to $2,136 for the same period of Fiscal 2023.

Income from operations was $735 for the nine months ended March 31, 2024, compared to $2,099 for the same period of Fiscal 2023.

The decrease was mainly due to the decrease in revenue, coupled with a decrease in gross profit margin in the Testing segment, as discussed earlier.

Interest Expense

Interest expense for the six months ended December 31, 2023 and 2022 were as follows:

Six Months Ended

Interest expense decreased by $8 to $46 from $54 for the six months ended December 31, 2023, compared to the same period of Fiscal 2023.

Other Income / (Expenses)

Other income / (expense) for the six months ended December 31, 2023 and 2022 was as follows:

Six Months Ended

Interest expense for the nine months ended March 31, 2024 and 2023 were as follows:

Nine Months Ended

Interest expense

Interest expense decreased by $20 to $63 from $83 for the nine months ended March 31, 2024, compared to the same period of Fiscal 2023 due to lower utilization of credit facilities.

Other Income / (Expense)

Other income / (expense) for the nine months ended March 31, 2024 and 2023 was as follows:

Nine Months Ended

Interest income

2 unchanged sentences

Other miscellaneous income

Other income for the six months ended December 31, 2023 was $114, a decrease of $220 compared to other expense of $106 for the same period of Fiscal 2023.

The decrease was mainly contributed by lower negative foreign currency impact and an increase in interest income.

Other income for the nine months ended March 31, 2024 was $366, an increase of $415 compared to other expense of $49 for the same period of Fiscal 2023.

The increase was mainly contributed by favorable foreign currency impact and an increase in interest income.

Government Grant

Six Months Ended

Nine Months Ended

Government Grant

In the six months ended December 31, 2023, the Company received government grants amounting to $77, $16 of which was an incentive from the Singapore government for local resident recruitment, and the $57 from the U.S.

In the nine months ended March 31, 2024, the Company received government grants amounting to $89, $19 of which was an incentive from the Singapore government for local resident recruitment, $12 related to capital expenditure subsidy received from the China government and the $57 from the U.S.

government related to Employee Retention Credit (“ERC”).

During the same period in 2022, the Company received government grants amounting to $42, with $10 from the Singapore government for Covid-19, $17 from the Singapore government for local resident recruitment and the remaining $15 related to capital expenditure subsidy received from the China government.

During the same period in 2023, the Company received government grants amounting to $108, with $86 from the Singapore government for local resident recruitment and the remaining $22 related to capital expenditure subsidy received from the China government.

Income Tax Expenses

Income tax expense for the six months ended December 31, 2023 was $132, a decrease of $334 compared to of $466 for the same period of Fiscal 2023.

The decrease in income tax expense was primarily due to decrease in the taxable income across the Company in the six months ended December 31, 2023.

Income tax expense for the nine months ended March 31, 2024 was $274, a decrease of $200 compared to $474 for the same period of Fiscal 2023.

The decrease in income tax expense was primarily due to a decrease in the taxable income across the Company in the nine months ended March 31, 2024.

Non-controlling Interest

As of December 31, 2023, we held a 55% interest in Trio-Tech (Malaysia) Sdn.

As of March 31, 2024, we held a 55% interest in Trio-Tech (Malaysia) Sdn.

Bhd., Trio-Tech (Kuala Lumpur) Sdn.

4 unchanged sentences

Bhd and 51% interest in Trio-Tech JiangSu Co.

The net loss attributable to the non-controlling interest in these subsidiaries for the six months ended December 31, 2023, was $44, a change of $198, compared to a net income of $154 for the same period of Fiscal 2023.

The decrease was attributable to the decrease in net income generated by the China operation.

The net gain attributable to the non-controlling interest in these subsidiaries for the nine months ended March 31, 2024, was $49 a change of $166, compared to a net income of $215 for the same period of Fiscal 2023.

The decrease was attributable to the decrease in net income generated by the China operation in the first two quarters of the fiscal year.

Net Income Attributable to Trio-Tech International Common Shareholders

Net income was $751 for the six months ended December 31, 2023, a decrease of $638 compared to a net income of $1,389 for the same period of Fiscal 2023.

Net income was $776 for the nine months ended March 31, 2024, a decrease of $606 compared to a net income of $1,382 for the same period of Fiscal 2023.

The decrease was mainly due to the decrease in revenue and gross margin.

However, the decrease was partially offset by a decrease in operating expense and other expense.

However, the decrease was partially offset by an increase in other income.

Earnings per Share

Basic earnings per share from continuing operations was $0.18 for the six months ended December 31, 2023, compared to $0.34 for the same period in Fiscal 2023.

Basic earnings per share from discontinued operations were $nil for both the six months ended December 31, 2023 and 2022.

Diluted earnings per share from continuing operations was $0.17 for the six months ended December 31, 2023, compared to $0.33 for the same period of Fiscal 2023.

Diluted earnings per share from discontinued operations were $nil for both the six months ended December 31, 2023 and 2022.

Basic earnings per share from continuing operations was $0.19 for the nine months ended March 31, 2024, compared to $0.34 for the same period in Fiscal 2023.

Basic earnings per share from discontinued operations were $nil for both the nine months ended March 31, 2024 and 2023.

Diluted earnings per share from continuing operations was $0.19 for the nine months ended March 31, 2024, compared to $0.33 for the same period of Fiscal 2023.

Diluted earnings per share from discontinued operations were $nil for both the nine months ended March 31, 2024 and 2023.

Segment Information

The revenue, gross profit margin, and income / (loss) from operations in each segment for the six months ended December 31, 2023 and 2022, respectively, are presented below.

The revenue, gross profit margin, and income / (loss) from operations in each segment for the nine months ended March 31, 2024 and 2023, respectively, are presented below.

As the segment revenue and gross margin for each segment have been discussed in the previous section, only the comparison of income / (loss) from operations is discussed below.

Manufacturing Segment

The revenue, gross margin and income from operations for the Manufacturing segment for the six months ended December 31, 2023 and 2022 were as follows:

Six Months Ended

The revenue, gross margin and income from operations for the Manufacturing segment for the nine months ended March 31, 2024 and 2023 were as follows:

Nine Months Ended

Income from operations

Income from operations from the Manufacturing segment was $149 for the six months ended December 31, 2023, a decrease of $328 as compared to $477 in the same period of Fiscal 2023 due to a decrease in gross profit resulting from lower revenue and an increase in operating expense.

The Manufacturing segment's operating expense was $1,868 and $1,778 for the six months ended December 31, 2023 and 2022, respectively.

The increase in operating expense of $92 was primarily attributable to an increase in commission expense because of an increase in commissionable revenue.

Income from operations from the Manufacturing segment was $447 for the nine months ended March 31, 2024, an increase of $74 as compared to $373 in the same period of Fiscal 2023 due to an increase in gross profit resulting from higher revenue and partially offset by the increase in operating expense.

The Manufacturing segment's operating expense was $2,789 and $2,392 for the nine months ended March 31, 2024 and 2023, respectively.

The increase in operating expense incurred in three months ended March 31, 2024 compared to the same period in Fiscal 2023 was mainly attributable to higher remuneration expense due to improved performance, business travel and entertainment expenses, and an increased allocation of corporate expenses.

Testing Segment

The revenue, gross margin and (loss) / income from operations for the Testing segment for the six months ended December 31, 2023 and 2022 were as follows:

Six Months Ended

The revenue, gross margin and (loss) / income from operations for the Testing segment for the nine months ended March 31, 2024 and 2023 were as follows:

Nine Months Ended

(Loss) / Income from operations

Loss from operations in the Testing segment for the six months ended December 31, 2023, was $280, a decrease of $1,409 compared to an income from operations of $1,129 in the same period of Fiscal 2023 mainly due to lower gross profit resulting from lower revenue.

Loss from operations in the Testing segment for the nine months ended March 31, 2024, was $463, a decrease of $1,908 compared to an income from operations of $1,445 in the same period of Fiscal 2023 mainly due to lower gross profit resulting from lower revenue.

The decrease in gross profit of $2,139 was partially offset by a decrease in operating expense of $232.

Operating expense was $2,842 and $3,011 for the six months ended December 31, 2023 and 2022, respectively.

Operating expense was $4,220 and $4,452 for the nine months ended March 31, 2024 and 2023, respectively.

Distribution Segment

The revenue, gross margin and income from operations for the Distribution segment for the six months ended December 31, 2023 and 2022 were as follows:

Six Months Ended

The revenue, gross margin and income from operations for the Distribution segment for the nine months ended March 31, 2024 and 2023 were as follows:

Nine Months Ended

Income from operations

Income from operations in the Distribution segment for the six months ended December 31, 2023 was $646, an increase of $164 compared to $482 in the same period of Fiscal 2023.

Income from operations in the Distribution segment for the nine months ended March 31, 2024 was $868, an increase of $235 compared to $633 in the same period of Fiscal 2023.

The increase in operating income was primarily due to an increase in gross margin by $328, which was partially offset with an increase in operating expense of $95.

Operating expense was $172 and $106 for the six months ended December 31, 2023 and 2022, respectively.

The increase in operating expense was mainly contributed by increase in general and administrative expense by $48.

Operating expense was $251 and $156 for the nine months ended March 31, 2024 and 2023, respectively.

The increase in operating expense was mainly contributed by business travel and entertainment expenses, and an increased allocation of corporate expenses.

Real Estate Segment

The revenue, gross margin and loss from operations for the Real Estate segment for the six months ended December 31, 2023 and 2022 were as follows:

Six Months Ended

The revenue, gross margin and loss from operations for the Real Estate segment for the nine months ended March 31, 2024 and 2023 were as follows:

Nine Months Ended

Loss from operations

Loss from operations in the Real Estate segment for the six months ended December 31, 2023 was $53, an increase of $11 compared to $42 for the same period of Fiscal 2023.

The increase in operating loss was mainly due to an increase in operating expense.

Operating expense was $30 and $18 for the six months ended December 31, 2023 and 2022, respectively.

The income from operations for corporate for the six months ended December 31, 2023 and 2022 were as follows:

Six Months Ended

Income from operations

The improvement of $124 was mainly due to allocation of corporate expense to the individual segments was based on budgeted expense for the quarter as mentioned earlier.

Any excess/under allocation to each segment is reviewed and adjusted over the last two quarters of the fiscal year.

Loss from operations in the Real Estate segment for the nine months ended March 31, 2024 was $76 for both nine months ended Mar 31, 2024 and Mar 31, 2023.

The loss from operations for corporate for the nine months ended March 31, 2024 and 2023 were as follows:

Nine Months Ended

Loss from operations

Corporate operating loss was $41 for the nine months ended March 31, 2024, compared to loss of $276 in the same period in Fiscal 2023.

Annual budgeted corporate expenses are used for expense allocations in the first half of the fiscal year and any surplus or deficit in allocations are reviewed and adjusted over the third and fourth quarters of the fiscal year based on actual corporate expenses incurred for the year.

Financial Condition

During the six months ended December 31, 2023, total assets increased by $4,412 to $46,598 compared to $42,186 as of June 30, 2023.

The increase was primarily due to an increase in inventories, cash and cash equivalents, other receivables, other assets, trade account receivable, deferred tax assets and restricted term deposits partially offset by a decrease in short term deposits, prepaid expense, assets held for sale and operating right-of-use assets.

Cash and cash equivalents were $10,966 at December 31, 2023, reflecting an increase of $3,383 from $7,583 as at June 30, 2023.

This increase is attributed primarily due to cash generated from operations, and the collection of customer deposits in Singapore and China operations during the six months ended December 31, 2023.

Short-term deposits were $5,791 at December 31, 2023, reflecting a decrease of $836 from $6,627 as at June 30, 2023.

The decrease was mainly attributed to the maturity of short-term deposits in the Singapore operation during the six months ended December 31, 2023 which is reflected in the cash and cash equivalents.

The trade accounts receivable balance as of December 31, 2023 increased by $2,584 to $12,388, from $9,804 as at June 30, 2023, primarily due to an increase in revenue from customers that have longer credit term in Singapore, Malaysia and China operations.

The number of days’ sales outstanding in accounts receivables for the group was 116 days and 82 days at the end of the second quarter of Fiscal 2024 and the end of Fiscal 2023, respectively.

Other receivables at December 31, 2023, were $1,029, an increase of $90, compared to $939 as at June 30, 2023.

During the nine months ended March 31, 2024, total assets increased by $901 to $43,087 compared to $42,186 as of June 30, 2023.

The increase was primarily due to an increase in inventories, cash and cash equivalents, other receivables, trade account receivable, deferred tax assets, other assets and restricted term deposits partially offset by a decrease in property, plant and equipment, investment properties, short term deposits, prepaid expenses and other current assets, assets held for sale and operating right-of-use assets.

Cash and cash equivalents were $10,716 at March 31, 2024, reflecting an increase of $3,133 from $7,583 as at June 30, 2023.

This increase is attributed primarily due to cash generated from operations, and the collection of customer deposits in Singapore and China operations during the nine months ended March 31, 2024.

Short-term deposits were $6,309 at March 31, 2024, reflecting a decrease of $318 from $6,627 as at June 30, 2023.

The decrease was mainly attributed to the maturity of short-term deposits in the Singapore operation during the nine months ended March 31, 2024 which is reflected in the cash and cash equivalents.

The trade accounts receivable balance as of March 31, 2024 increased by $279 to $10,083, from $9,804 as at June 30, 2023, primarily due to an increase in revenue from customers that have longer credit term in Singapore operations.

The number of days’ sales outstanding in accounts receivables for the group was 95 days and 82 days at the end of the third quarter of Fiscal 2024 and the end of Fiscal 2023, respectively.

Other receivables at March 31, 2024, were $1,089, an increase of $150, compared to $939 as at June 30, 2023.

The increase was mainly due to higher advance payments made to suppliers and refundable services taxes in the Singapore operation.

Inventories at December 31, 2023, were $3,546, an increase of $1,395, compared to $2,151 as at June 30, 2023.

Inventories at March 31, 2024, were $2,742, an increase of $591, compared to $2,151 as at June 30, 2023.

The increase in inventories mainly attributed to the increased backlog in the Manufacturing segment attributable to our Singapore operations which are expected to be delivered over the next quarter.

Prepaid expense was $589 at December 31, 2023 compared to $105 at June 30, 2023.

This was mainly due to the prepayment for insurance, rental and software license fee.

Investment properties’ net in China was $461 at December 31, 2023 and $474 as at June 30, 2023.

The decrease was primarily due to the foreign currency exchange movement between June 30, 2023 and December 31, 2023.

Property, plant and equipment decreased by $1,743 from $8,344 at June 30, 2023, to $6,601 as at December 31, 2023, mainly due to the depreciation charged for the period and the foreign currency exchange movement between June 30, 2023 and December 31, 2023.

Other assets increased by $53 to $169 as at December 31, 2023 compared to $116 at June 30, 2023.

This was primarily due to an increase in utilities deposits in our Singapore operation.

Lines of credit increased to $384 at December 31, 2023 as compared to $Nil as at June 30, 2023.

The increase in lines of credit was due to a drawdown of the lines of credit in our Singapore operation for working capital purposes.

Accounts payable increased by $685 to $2,345 at December 31, 2023, compared to $1,660 at June 30, 2023 which was in line with the increase in inventories.

Accrued expense increased by $215 to $4,506 at December 31, 2023, as compared to $4,291 at June 30, 2023.

The increase in accrued expense was mainly due to an increase in the accrued purchases.

Contract liabilities increased by $2,531 to $3,808 at December 31, 2023 as compared to $1,277 at June 30, 2023 due to the increase in customers’ deposits received in the Singapore and China operations.

Bank loans payable decreased by $215 to $1,137 at December 31, 2023, as compared to $1,352 as of June 30, 2023.

Prepaid expense was $577 as at March 31, 2024.

This mainly related to the prepayment for insurance, rental and software license fee.

Investment properties’ net in China was $433 at March 31, 2024 and $474 as at June 30, 2023.

The decrease was primarily due to the foreign currency exchange movement between June 30, 2023 and March 31, 2024.

Property, plant and equipment decreased by $2,263 from $8,344 at June 30, 2023, to $6,081 as at March 31, 2024, mainly due to the depreciation charged for the period and the foreign currency exchange movement between June 30, 2023 and March 31, 2024.

Other assets increased by $33 to $149 as at March 31, 2024 compared to $116 at June 30, 2023.

Other assets mainly comprise of rental and utilities deposits.

The increase was mainly contributed by a downpayment made for building improvements in the Thailand operation.

Accounts payable increased by $746 to $2,406 at March 31, 2024, compared to $1,660 at June 30, 2023 which was in line with the increase in inventories.

Accrued expense decreased by $387 to $3,904 at March 31, 2024, as compared to $4,291 at June 30, 2023.

The decrease in accrued expense was mainly due to decrease in accrued purchases and decrease in payroll related accruals in Singapore and Malaysia operation.

Contract liabilities increased by $222 to $1,499 at March 31, 2024 as compared to $1,277 at June 30, 2023 due to the increase in customers’ deposits received in the Singapore and China operations.

Bank loans payable decreased by $368 to $984 as of March 31, 2024, as compared to $1,352 as of June 30, 2023.

The decrease in bank loans payable was mainly due to the repayment of bank loans in our Malaysia operations.

Finance leases decreased by $53 to $96 at December 31, 2023, as compared to $149 at June 30, 2023.

Finance leases decreased by $83 to $66 at March 31, 2024, as compared to $149 at June 30, 2023.

This was due to the repayments of leases in our Singapore and Malaysia operations.

Operating lease right-of-use assets and the corresponding lease liability decreased by $250 to $2,359 at December 31, 2023, as compared to $2,609 at June 30, 2023.

This was due to the repayment made and the operating lease expense charged for the period partially offset by a new lease arrangement entered by Malaysia operation.

Other non-current liabilities decreased by $564 to $30 as at December 31, 2022, as compared to $594 as at June 30, 2022.

Operating lease right-of-use assets and the corresponding lease liability decreased by $332 to $2,277 at March 31, 2024, as compared to $2,609 at June 30, 2023.

This was due to the repayment made and the operating lease expense charged for the period partially offset by a new lease arrangement entered by Malaysia and China operations.

Other non-current liabilities decreased by $567 to $27 as at March 31, 2024, as compared to $594 as at June 30, 2023.

The decrease was mainly due to a decrease in accruals relating to acquisition of property, plant and equipment in the China operations.

The remaining accrual has a term of less than 12 months as at December 31, 2022, thereby being reclassified to current liabilities.

The remaining accrual has a term of less than 12 months as at March 31, 2024, thereby being reclassified to current liabilities.

Liquidity Comparison

Net cash used in operating activities decreased by $2,503 to an inflow of $1,276 for the six months ended December 31, 2023, from an inflow of $3,779 for the same period in Fiscal 2023.

The decrease in net cash flow provided by operating activities was primarily due to lower net income generated of $693 compared to the same period of Fiscal 2023 and lower receipts from trade receivables and other receivables by $1,205, higher cash outflow for inventories by $521, lower prepaid expense by $459, and higher cash outflow from other non-current liabilities by $1,708.

Net cash provided by operating activities decreased by $3,898 to an inflow of $2,513 for the nine months ended March 31, 2024, from an inflow of $6,411 for the same period in Fiscal 2023.

The decrease in net cash flow provided by operating activities was primarily due to lower net income generated of $856 compared to the same period of Fiscal 2023 and lower receipts from trade receivables and other receivables by $1,148, higher cash outflow for inventories by $664, higher prepaid expense and other current assets by $314, and higher cash outflow from other non-current liabilities by $1,491.

These are partially offset by lower cash outflow for accounts payables, accrued expense and contract liabilities of $642.

Net cash provided by investing activities increased by $4,564 to $1,136 for the six months ended December 31, 2023 compared with the same period in Fiscal 2023.

The increase in cash inflow was primarily due to cash inflow of $634 from maturity of unrestricted term deposits coupled with lower capital expenditure of $3,836 for six months ended December 31, 2023.

Net cash provided by financing activities for the six months ended December 31, 2023, was $280, representing an increase of $1,312, compared to cash outflow of $1,032 during the six months ended December 31, 2022.

The increase was mainly attributable to increase in utilization of lines of credit by $476 during the six months ended December 31, 2022.

Furthermore, the Company also incurred higher cash outflow for settling lines of credit in the same period of Fiscal 2023.

Net cash provided by investing activities increased by $4,635 to $456 for the nine months ended March 31, 2024 compared with the same period in Fiscal 2023.

The increase in cash inflow was primarily due to cash inflow of $497 from maturity of unrestricted term deposits coupled with lower capital expenditure of $3,869 for nine months ended March 31, 2024.

Net cash used in financing activities for the nine months ended March 31, 2024, was $78, representing a decrease of $1,000, compared to cash outflow of $1,078 during the nine months ended March 31, 2023.

The decrease in cash outflow for financing activities was mainly due to settlement of lines of credit of $ 929 relating to the prior year in nine months ended March 31, 2023.

In the nine months ended March 31, 2024, lines of credit of $ 952 were availed and were settled within the same period.

Proceeds from exercising stock options during that period amounted to $375, which was $356 higher compared to the same period in Fiscal 2023.

The Company filed a shelf registration statement with the Securities and Exchange Commission, pursuant to which we may raise capital of $10,000,000 of any combination of securities (common stock, warrants, debt securities or units) for expansion of the Company’s testing capacity and working capital purposes if necessary.

2 unchanged sentences

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What changed 10-Q

Item 1. Financial Statements