UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~March 31,~~September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___ to ___

Commission File Number 1-14523

TRIO-TECH INTERNATIONAL

(Exact name of Registrant as specified in its ~~Charter~~Charter)

California		95-2086631
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

Block 1008 Toa Payoh North
Unit 03-09 Singapore		318996
(Address of principal executive offices)		(Zip Code)

Registrant's Telephone Number, Including Area Code: (65) 6265 3300

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange

Title of each class

Trading Symbol

~~Name of each exchange~~

Onon which registered

Common Stock, no par value

TRT

NYSE American

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-‐accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-‐2 of the Exchange Act. (Check one):

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~May~~November 1, 2023, there were ~~4,096,680~~4,097,430 shares of the issuer’s Common Stock, no par value, outstanding.

TRIO-TECH INTERNATIONAL

INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION, OTHER INFORMATION AND SIGNATURE

			Page
Part I.	Financial Information

Item 1.	Financial Statements		41
	(a)	Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2023 (Unaudited), and June 30, ~~2022~~ 2023	41
	(b)	Condensed Consolidated Statements of Operations and Comprehensive Income/(Loss) for the Three ~~and Nine~~ Months Ended ~~March 31,~~September 30, 2023 (Unaudited), and ~~March 31,~~September 30, 2022 (Unaudited)	52
	(c)	Condensed Consolidated Statements of Shareholders’ Equity for the ~~Nine~~Three Months Ended ~~March 31,~~September 30, 2023 (Unaudited), and ~~March 31,~~September 30, 2022 (Unaudited)	74
	(d)	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~March 31,~~September 30, 2023 (Unaudited), and ~~March 31,~~September 30, 2022 (Unaudited)	75
	(e)	Notes to Condensed Consolidated Financial Statements (Unaudited)	96
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2827
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		4137
Item 4.	Controls and Procedures		4137

Part II.	Other Information

Item 1.	Legal Proceedings		4238
Item 1A.	Risk Factors		4238
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		4238
Item 3.	Defaults upon Senior Securities		4238
Item 4.	Mine Safety Disclosures		4238
Item 5.	Other Information		4238
Item 6.	Exhibits		4238

Signatures			4339

2-i-

FORWARD-LOOKING STATEMENTS

The discussions of Trio-Tech International’s (the “Company”) business and activities set forth in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and in other past and future reports and announcements by the Company may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and assumptions regarding future activities and results of operations of the Company. In light of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the following factors, among others, could cause actual results to differ materially from those reflected in any forward-looking statements made by or on behalf of the Company: market acceptance of Company products and services; the divestiture of one or more business segments in response to, among other factors, changing business conditions or technologies and volatility in the semiconductor industry, which could affect demand for the Company’s products and services; the impact of competition; problems with technology; product development schedules; delivery schedules; changes in military or commercial testing specifications which could affect the market for the Company’s products and services; difficulties in profitably integrating acquired businesses, if any, into the Company; risks associated with conducting business internationally and especially in Asia, including currency fluctuations and devaluation, currency restrictions, local laws and restrictions and possible social, political and economic instability; changes in U.S. and global financial and equity markets, including market disruptions and significant interest rate fluctuations; ongoing public health issues related to the COVID-19 pandemic both nationally and internationally; the trade tension between U.S. and China; inflation; the war in Ukraine; other economic, financial and regulatory factors beyond the Company’s control and uncertainties relating to our ability to operate our business in China; uncertainties regarding the enforcement of laws and the fact that rules and regulation in China can change quickly with little advance notice, along with the risk that the Chinese government may intervene or influence our operation at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers could result in a material change in our operations, financial performance and/or the value of our common stock, no par value (“Common Stock”) or impair our ability to raise money. Other than statements of historical fact, all statements made in this Quarterly Report are forward-looking, including, but not limited to, statements regarding industry prospects, future results of operations or financial position, and statements of our intent, belief and current expectations about our strategic direction, prospective and future financial results and condition. In some cases, you can identify forward-looking statements by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential,” “believes,” “can impact,” “continue,” or the negative thereof or other comparable terminology. Forward-looking statements involve risks and uncertainties that are inherently difficult to predict, which could cause actual outcomes and results to differ materially from our expectations, forecasts and assumptions.

Unless otherwise required by law, we undertake no obligation to update forward-looking statements to reflect subsequent events, changed circumstances, or the occurrence of unanticipated events. You are cautioned not to place undue reliance on such forward-looking statements.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT NUMBER OF SHARES)

March 31,
2023

June 30,
2022

(Unaudited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents
$ 8,430 $ 7,698
Short-term deposits
5,703 5,420
Trade accounts receivable, less allowance for doubtful accounts of $223 and $243, respectively
11,004 11,592
Other receivables
757 998
Inventories, less provision for obsolete inventories of $743 and $674, respectively
2,324 2,258
Prepaid expenses and other current assets
731 1,215
Financed sales receivable
22 21
Restricted term deposits
755 -
Total current assets
29,726 29,202
NON-CURRENT ASSETS:

Deferred tax assets
91 169
Investment properties, net
517 585
Property, plant and equipment, net
9,987 8,481
Operating lease right-of-use assets
3,059 3,152
Other assets
232 137
Financed sales receivable
- 17
Restricted term deposits
1,762 1,678
Total non-current assets
15,648 14,219
TOTAL ASSETS
$ 45,374 $ 43,421

LIABILITIES

CURRENT LIABILITIES:

Lines of credit
$ 107 $ 929
Accounts payable
1,835 2,401
Accrued expenses
6,570 6,004
Income taxes payable
390 787
Current portion of bank loans payable
513 472
Current portion of finance leases
103 118
Current portion of operating leases
1,361 1,218
Total current liabilities
10,879 11,929
NON-CURRENT LIABILITIES:

Bank loans payable, net of current portion
1,054 1,272
Finance leases, net of current portion
43 119
Operating leases, net of current portion
1,698 1,934
Income taxes payable, net of current portion
255 137
Deferred tax liabilities
17 -
Other non-current liabilities
952 28
Total non-current liabilities
4,019 3,490
TOTAL LIABILITIES
$ 14,898 $ 15,419

EQUITY

TRIO-TECH INTERNATIONAL’S SHAREHOLDERS’ EQUITY:

Common stock, no par value, 15,000,000 shares authorized; 4,076,680 and 4,071,680 shares issued outstanding as at March 31, 2023 and June 30, 2022, respectively
$ 12,769 $ 12,750
Paid-in capital
5,045 4,708
Accumulated retained earnings
10,601 9,219
Accumulated other comprehensive income-translation adjustments
1,806 1,197
Total Trio-Tech International shareholders’ equity
30,221 27,874
Non-controlling interest
255 128
TOTAL EQUITY
$ 30,476 $ 28,002
TOTAL LIABILITIES AND EQUITY
$ 45,374 $ 43,421

~~See notes to condensed consolidated financial statements~~

~~TRIO-TECH INTERNATIONAL AND SUBSIDIARIES~~

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

~~UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)~~

Three Months Ended

Nine Months Ended

Mar. 31,

Mar. 31,

Mar. 31,

Mar. 31,

2023

2022

2023

2022

Revenue

Manufacturing
$ 2,963 $ 3,097 $ 11,592 $ 10,187
Testing services
5,697 4,417 17,709 13,983
Distribution
1,179 3,620 4,855 8,038
Real estate
3 4 15 23
9,842 11,138 34,171 32,231
Cost of Sales

Cost of manufactured products sold
2,451 2,530 8,825 7,838
Cost of testing services rendered
3,940 3,169 11,813 9,141
Cost of distribution
975 2,945 4,064 6,651
Cost of real estate
18 20 54 58
7,384 8,664 24,756 23,688

Gross Margin
2,458 2,474 9,415 8,543

Operating Expenses:

General and administrative
2,248 2,378 6,472 6,305
Selling
160 146 526 449
Research and development
87 80 311 293
Loss on disposal of property, plant and equipment
- - 7 -
Total operating expenses
2,495 2,604 7,316 7,047

(Loss) / Income from Operations
(37 ) (130
)
2,099 1,496

Other Income / (Expenses)

Interest expenses
(29 ) (31
)
(83 ) (87
)
Other income, net
123 127 59 669
Total other income / (expenses)
94 96 (24 ) 582

Income / (Loss) from Continuing Operations before Income Taxes
57 (34 ) 2,075 2,078

Income Tax Expenses
(8 ) (170
)
(474 ) (503
)

Income / (Loss) from Continuing Operations before Non-controlling Interest, Net of Tax
49 (204 ) 1,601 1,575

Discontinued Operations

Income / (loss) from discontinued operations, net of tax
5 - (4 ) 5
NET INCOME / (LOSS)
54 (204 ) 1,597 1,580

Less: net income / (loss) attributable to non-controlling interest
61 (37 ) 215 (25
)
Net (Loss) / Income Attributable to Trio-Tech International Common Shareholders
$ (7 ) $ (167
)
$ 1,382 $ 1,605

Amounts Attributable to Trio-Tech International Common Shareholders:

(Loss) / Income from continuing operations, net of tax
(10 ) (167
)
1,384 1,603
Income / (Loss) from discontinued operations, net of tax
3 - (2 ) 2
Net (Loss) / Income Attributable to Trio-Tech International Common Shareholders
$ (7 ) $ (167
)
$ 1,382 $ 1,605

Basic Earnings per Share:

Basic (loss) / earnings per share from continuing operations attributable to Trio-Tech International
$ - $ (0.04
)
$ 0.34 $ 0.40
Basic (loss) / earnings per share from discontinued operations attributable to Trio-Tech International
$ - $ - $ - $ -
Basic (Loss) / Earnings per Share from Net Income Attributable to Trio-Tech International
$ - $ (0.04
)
$ 0.34 $ 0.40

Diluted (Loss) / Earnings per Share:

Diluted (loss) / earnings per share from continuing operations attributable to Trio-Tech International
$ - $ (0.04
)
$ 0.33 $ 0.38
Diluted (loss) / earnings per share from discontinued operations attributable to Trio-Tech International
$ - $ - $ - $ -
Diluted (Loss) / Earnings per Share from Net Income Attributable to Trio-Tech International
$ - $ (0.04
)
$ 0.33 $ 0.38

Weighted average number of common shares outstanding

Basic
4,075 3,949 4,075 3,949
Dilutive effect of stock options
84 272 86 191
Number of shares used to compute earnings per share diluted
4,159 4,221 4,161 4,140

	September 30, 2023		June 30, 2023
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	8,333	$	7,583
Short-term deposits		5,946		6,627
Trade accounts receivable, less allowance for doubtful accounts of $212 and $217, respectively		10,973		9,804
Other receivables		1,671		939

Inventories, less provision for obsolete inventories of $648 and $648, respectively		4,023		2,151
Prepaid expenses and other current assets		660		694
Assets held for sale		-		274
Financed sales receivable		11		16
Restricted term deposits		737		739
Total current assets		32,354		28,827
NON-CURRENT ASSETS:
Deferred tax assets		152		100
Investment properties, net		458		474
Property, plant and equipment, net		7,290		8,344
Operating lease right-of-use assets		2,563		2,609
Other assets		163		116
Restricted term deposits		1,719		1,716
Total non-current assets		12,345		13,359
TOTAL ASSETS	$	44,699	$	42,186

LIABILITIES
CURRENT LIABILITIES:
Lines of credit	$	297	$	-
Accounts payable		2,556		1,660
Accrued expenses		7,507		5,568
Income taxes payable		393		418
Current portion of bank loans payable		423		475
Current portion of finance leases		97		107
Current portion of operating leases		1,190		1,098
Total current liabilities		12,463		9,326
NON-CURRENT LIABILITIES:
Bank loans payable, net of current portion		809		877
Finance leases, net of current portion		24		42
Operating leases, net of current portion		1,372		1,511
Income taxes payable, net of current portion		142		255
Deferred tax liabilities		7		10
Other non-current liabilities		227		594
Total non-current liabilities		2,581		3,289
TOTAL LIABILITIES	$	15,044	$	12,615

EQUITY
TRIO-TECH INTERNATIONAL’S SHAREHOLDERS’ EQUITY:
Common stock, no par value, 15,000,000 shares authorized; 4,096,680 shares issued outstanding as at September 30 and June 30, 2023	$	12,819		12,819
Paid-in capital		5,126		5,066
Accumulated retained earnings		10,993		10,763
Accumulated other comprehensive income-translation adjustments		554		758
Total Trio-Tech International shareholders’ equity		29,492		29,406
Non-controlling interest		163		165
TOTAL EQUITY	$	29,655	$	29,571
TOTAL LIABILITIES AND EQUITY	$	44,699	$	42,186

See notes to condensed consolidated financial statements.

5- 1 -

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

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

UNAUDITED (IN ~~THOUSANDS)~~THOUSANDS, EXCEPT EARNINGS PER SHARE)

Three Months Ended

Nine Months Ended

Mar. 31,

Mar. 31,

Mar. 31,

Mar. 31,

2023

2022

2023

2022

Comprehensive Income Attributable to Trio-Tech International Common Shareholders:

Net income / (loss)
$ 54 $ (204
)
$ 1,597 $ 1,580
Foreign currency translation, net of tax
166 16 521 (22
)
Comprehensive Income / (Loss)
220 (188
)
2,118 1,558
Less: comprehensive (loss) / income attributable to non- controlling interest
(85
)
(46
)
127 (40
)
Comprehensive Income / (Loss) Attributable to Trio-Tech International Common Shareholders
$ 305 $ (142
)
$ 1,991 $ 1,598

	Three Months Ended
	Sept. 30, 2023			Sept. 30, 2022
Revenue
Manufacturing	$	2,885		$	3,585
Testing services		5,164			6,364
Distribution		1,910			1,982
Real estate		7			8
		9,966			11,939
Cost of Sales
Cost of manufactured products sold		2,049			2,525
Cost of testing services rendered		3,784			4,126
Cost of distribution		1,596			1,648
Cost of real estate		17			18
		7,446			8,317

Gross Margin		2,520			3,622

Operating Expenses:
General and administrative		2,158			2,305
Selling		187			173
Research and development		85			73
Loss on disposal of property, plant and equipment		91			4
Total operating expenses		2,521			2,555

(Loss) / Income from Operations		(1	)		1,067

Other Income/(Expenses)
Interest expenses		(24	)		(44	)
Other income, net		196			158
Government Grant		73			21
Total other income		245			135

Income from Continuing Operations before Income Taxes		244			1,202

Income Tax Expenses		(37	)		(225	)

Income from Continuing Operations before Non-controlling Interest, Net of Tax		207			977

Discontinued Operations
Income from discontinued operations, net of tax		-			1
NET INCOME		207			978

Less: Net (loss) / income attributable to the non-controlling interest		(23	)		96
Net Income Attributable to Trio-Tech International Common Shareholders	$	230		$	882

Amounts Attributable to Trio-Tech International Common Shareholders:
Income from continuing operations, net of tax		227			882
Income from discontinued operations, net of tax		3			-
Net Income Attributable to Trio-Tech International Common Shareholders	$	230		$	882

Basic Earnings per Share:
Basic earnings per share from continuing operations attributable to Trio-Tech International	$	0.06		$	0.22
Basic earnings per share from discontinued operations attributable to Trio-Tech International	$	-		$	-
Basic Earnings per Share from Net Income Attributable to Trio-Tech International	$	0.06		$	0.22

Diluted Earnings per Share:
Diluted earnings per share from continuing operations attributable to Trio-Tech International	$	0.05		$	0.21
Diluted earnings per share from discontinued operations attributable to Trio-Tech International	$	-		$	-
Diluted Earnings per Share from Net Income Attributable to Trio-Tech International	$	0.05		$	0.21

Weighted average number of common shares outstanding
Basic		4,096			4,077
Dilutive effect of stock options		184			81
Number of shares used to compute earnings per share diluted	$	4,280		$	4,158

See notes to condensed consolidated financial statements.

6- 2 -

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/ (LOSS)

UNAUDITED (IN THOUSANDS)

	Three Months Ended
	Sept. 30,			Sept. 30,
	2023			2022
Comprehensive Income Attributable to Trio-Tech International Common Shareholders
Net income	$	207		$	978
Foreign currency translation, net of tax		(183	)		(1,213	)
Comprehensive Income / (Loss)		24			(235	)
Less: Comprehensive (loss) / income attributable to the non-controlling interests		(2	)		79
Comprehensive Income / (Loss) Attributable to Trio-Tech International Common Shareholders	$	26		$	(314	)

See notes to condensed consolidated financial statements.

- 3 -

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

UNAUDITED (IN THOUSANDS)

~~Nine~~Three months ended ~~March 31,~~September 30, 2023

	Common Stock				Paid-in		Accumulated Retained		Accumulated Other Comprehensive		Non- controlling					Common Stock				Paid-in		Accumulated Retained		Accumulated Other Comprehensive			Non- controlling
	Shares		Amount		Capital		Earnings		Income		Interest			Total		Shares		Amount		Capital		Earnings		Income/ (Loss)			Interest			Total
			$		$		$		$		$			$				$		$		$		$			$			$

Balance at June 30, 2022		4,072		12,750		4,708		9,219		1,197		128			28,002
Balance at June 30, 2023																	4,097		12,819		5,066		10,763		758			165			29,571
Stock option expenses		-		-		337		-		-		-			337		-		-		60		-		-			-			60
Net income		-		-		-		1,382		-		215			1,597
Net (loss) / income																	-		-		-		230		-			(23	)		207
Dividend declared by subsidiary																	-		-		-		-		-			-			-
Exercise of stock option		5		19		-		-		-		-			19		-		-		-		-		-			-			-
Translation adjustment		-		-		-		-		609		(88	)		521		-		-		-		-		(204	)		21			(183	)
Balance at Mar. 31, 2023		4,077		12,769		5,045		10,601		1,806		255			30,476
Balance at Sept 30, 2023																	4,097		12,819		5,126		10,993		554			163			29,655

~~Nine~~Three months ended ~~March 31,~~September 30, 2022

	Common Stock				Paid-in		Accumulated Retained		Accumulated Other Comprehensive			Non- controlling						Common Stock				Paid-in		Accumulated Retained		Accumulated Other Comprehensive			Non- controlling
	Shares		Amount		Capital		Earnings		Income			Interest			Total			Shares		Amount		Capital		Earnings		Income/ (Loss)			Interest			Total
			$		$		$		$			$			$					$		$		$		$			$			$

Balance at June 30, 2021		3,913		12,178		4,233		6,824		2,399			419			26,053
Balance at June 30, 2022																			4,072		12,750		4,708		9,219		1,197			128			28,002
Stock option expenses		-		-		459		-		-			-			459			-		-		32		-		-			-			32
Net income / (loss)		-		-		-		1,605		-			(25	)		1,580
Net income																			-		-		-		882		-			96			978
Dividend declared by subsidiary		-		-		-		-		-			(122	)		(122	)		-		-		-		-		-			-			-
Exercise of stock option		116		429		-		-		-			-			429			5		19		-		-		-			-			19
Translation adjustment		-		-		-		-		(7	)		(15	)		(22	)		-		-		-		-		(1,196	)		(17	)		(1,213	)
Balance at Mar. 31, 2022		4,029		12,607		4,692		8,429		2,392			257			28,377
Balance at Sept 30, 2022																			4,077		12,769		4,740		10,101		1			207			27,818

See notes to condensed consolidated financial statements.

7- 4 -

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(IN THOUSANDS)

	Nine Months Ended						Three Months Ended
	Mar. 31,			Mar. 31,			Sept. 30,			Sept. 30,
	2023			2022			2023			2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Cash Flow from Operating Activities
Net income	$	1,597		$	1,580		$	207		$	978
Adjustments to reconcile net income to net cash flow provided by operating activities
Depreciation and amortization		3,641			2,263			1,471			882
Stock compensation		337			459
Addition of provision for obsolete inventories		49			25
Bad debt recovery, net of allowance charged		(15	)		(61	)
Accrued interest expense, net (accrued interest income)		(14	)		85
Addition / (reversal) of provision for obsolete inventories								7			(38	)
Stock option expense								60			32
Bad debt recovery								(5	)		(17	)
Accrued interest expense, net accrued interest income								(49	)		43
Payment of interest portion of finance lease		(8	)		(20	)		(2	)		(3	)
Loss / (gain) on sale of property, plant and equipment - continuing operations								91			(15	)
Warranty recovery, net								7			2
Reversal of income tax provision		8			(18	)		(1	)		-
Warranty recovery, net		3			-
Deferred tax expenses / (benefit)		100			(7	)
Repayment of operating lease		(1,008	)		(801	)
Deferred tax (benefits) / expense								(56	)		20
Repayment of Operating lease								(346	)		(380	)
Changes in operating assets and liabilities, net of acquisition effects
Trade accounts receivable		613			(2,214	)		(1,158	)		(886	)
Other receivables		129			(688	)		(732	)		56
Other assets		-			134			(47	)		11
Inventories		64			(233	)		(1,914	)		(1,341	)
Prepaid expenses and other current assets		442			(312	)		36			537
Accounts payable and accrued expenses		(180	)		242			2,861			1,469
Other non-current liabilities								(367	)		-
Income taxes payable		(271	)		145			(120	)		211
Other non-current liabilities		924			-
Net Cash Provided by Operating Activities	$	6,411		$	579
Net Cash (Used in) / Provided by Operating Activities							$	(57	)	$	1,561

Cash Flow from Investing Activities
Withdrawal from unrestricted term deposits		4,888			3,761
Investment in unrestricted term deposits		(4,990	)		(2,079	)
Withdrawal from unrestricted term deposits, net								693			2,486
Additions to property, plant and equipment		(4,077	)		(1,144	)		(77	)		(1,156	)
Net Cash (Used in) / Provided by Investing Activities		(4,179	)		538
Proceeds from disposal of assets held-for-sale								198			-
Net Cash Provided by Investing Activities								814			1,330

Cash Flow from Financing Activities
Payment on lines of credit		(1,402	)		(1,025	)		(270	)		(938	)
Payment of bank loans		(359	)		(322	)		(116	)		(117	)
Payment of principal portion of finance leases		(92	)		(168	)
Dividends paid to non-controlling interest		-			(122	)
Payment of finance leases								(26	)		(36	)
Proceeds from exercising stock options		19			429			-			19
Proceeds from lines of credit		580			1,463			556			483
Proceeds from bank loans		176			255			-			175
Net Cash (Used in) / Provided by Financing Activities		(1,078	)		510
Net Cash Provided by /(Used in) Financing Activities								144			(414	)

Effect of Changes in Exchange Rate		417			9			(150	)		(793	)

Net Increase in Cash, Cash Equivalents, and Restricted Cash		1,571			1,636			751			1,684
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period		9,376			7,577			10,038			9,376
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	10,947		$	9,213		$	10,789		$	11,060

Supplementary Information of Cash Flows
Cash paid during the period for:
Interest	$	83		$	84		$	20		$	43
Income taxes	$	489		$	342		$	141		$	1

Reconciliation of Cash, Cash Equivalents, and Restricted Cash
Cash		8,430			7,478			8,333			9,428
Restricted Term-Deposits in Current Assets		755			-			737			698
Restricted Term-Deposits in Non-Current Assets		1,762			1,735			1,719			934
Total Cash, Cash Equivalents, and Restricted Cash Shown in Statements of Cash Flows	$	10,947		$	9,213		$	10,789		$	11,060

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 ~~deposit~~deposits of ~~$755 is~~$737 as at September 30, 2023 are classified as current assets as itthey relates to short-term trade financing. On the other hand, restricted deposits of ~~$1,762 is~~$1,719 as at September 30, 2023 are classified as non-current assets as they relate to long-term obligations and will become unrestricted only upon discharge of the obligations.

- 5 -

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT EARNINGS PER SHARE AND NUMBER OF SHARES)

1. ORGANIZATION AND BASIS OF PRESENTATION

Trio-Tech International (the “Company”, or “TTI”) was incorporated in fiscal year ended June 30, 1958 under the laws of the State of California. TTI provides third-party semiconductor testing and burn-in services primarily through its laboratories in Southeast Asia. In addition, TTI operates testing facilities in the United States (“U.S.”). 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 ~~third~~first quarter of the fiscal year ended June 30, ~~2023~~2024 (“Fiscal ~~2023”~~2024”), TTI conducted business in four business segments: Manufacturing, Testing, ~~Services,~~ Distribution and Real Estate. TTI has subsidiaries in the U.S., Singapore, Malaysia, Thailand, Indonesia, Ireland and China as follows:

	Ownership	Location
Express Test Corporation (Dormant)	100%	Van Nuys, California
Trio-Tech Reliability Services (Dormant)	100%	Van Nuys, California
KTS Incorporated, dba Universal Systems (Dormant)	100%	Van Nuys, California
European Electronic Test Centre (Dormant)	100%	Dublin, Ireland
Trio-Tech International Pte. Ltd.	100%	Singapore
Universal (Far East) Pte. Ltd.*	100%	Singapore
Trio-Tech International (Thailand) Co. Ltd. *	100%	Bangkok, Thailand
Trio-Tech (Bangkok) Co. Ltd. *	100%	Bangkok, Thailand
Trio-Tech (Malaysia) Sdn. Bhd. ~~(55%~~ (55% owned by Trio-Tech International Pte. Ltd.)	55%	Penang and Selangor, Malaysia
Trio-Tech (Kuala Lumpur) Sdn. Bhd. ~~(100% owned by Trio-Tech Malaysia Sdn. Bhd.)~~	55%	Selangor, Malaysia
(100% owned by Trio-Tech Malaysia Sdn. Bhd.)
Prestal Enterprise Sdn. Bhd. ~~(76%~~	76%	Selangor, Malaysia
(76% owned by Trio-Tech International Pte. Ltd.)	~~76%~~	~~Selangor, Malaysia~~
Trio-Tech (SIP) Co., Ltd. *	100%	Suzhou, China
Trio-Tech (Chongqing) Co. Ltd. *	100%	Chongqing, China
SHI International Pte. Ltd. (Dormant) ~~(55%~~ (55% owned by Trio-Tech International Pte. Ltd)	55%	Singapore
PT SHI Indonesia (Dormant) ~~(100%~~ (95% owned by SHI International Pte. Ltd.)	52%	Batam, Indonesia
Trio-Tech (Tianjin) Co., Ltd. *	100%	Tianjin, China
Trio-Tech (Jiangsu) Co., Ltd. ~~(51%~~ (51% owned by Trio-Tech (SIP) Co., Ltd.)	51%	Suzhou, China

* 100% owned by Trio-Tech International Pte. Ltd.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements are presented in U.S. dollars unless otherwise stated. The accompanying condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report for the fiscal year ended June 30, ~~2022~~2023 (“Fiscal ~~2022”~~2023”). 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 ~~nine~~three months ended ~~March 31,~~September 30, 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, ~~2023.~~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 expenses during the reporting period. Among the more significant estimates included in these consolidated financial statements are the estimated allowance for doubtful account receivables, reserve for obsolete inventory, impairments, provision of income tax, stock options and the deferred income tax asset allowance. Actual results could materially differ from those estimates.

Significant Accounting Policies. There have been no material changes to our significant accounting policies summarized in Note 1 “Basis of Presentation and Summary of Significant Accounting Policies” to our consolidated Financial Statements included in our Annual Report on Form 10-K for Fiscal ~~2022.~~2023.

2. NEW ACCOUNTING PRONOUNCEMENTS

In ~~March 2022,~~ ~~the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)~~ ~~2022~~-02 ~~updating Accounting Standards Codification (“ASC”) Topic~~ ~~326:~~~~Financial Instruments~~—~~Credit Losses~~ ~~(Topic~~ ~~326~~): ~~Troubled Debt Restructurings~~ ~~(“TDR")~~ ~~and Vintage Disclosures~~ ~~(“ASU~~ ~~2022~~-~~02”~~~~), which require that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic~~ ~~326~~-~~20.~~ ~~The Company has completed its assessment and concluded that ASU~~ ~~2022~~-02 ~~has~~ no ~~significant impact to the Company’s consolidated financial statements.~~

In ~~November 2021,~~ ~~FASB issued ASU~~ ~~2021~~-10 ~~ASC Topic~~ ~~832:~~~~Government Assistance~~ ~~(“Topic~~ ~~832”~~~~): Disclosures by Business Entities about Government Assistance~~ ~~(“ASU~~ ~~2021~~-~~10”~~~~), which expected to increase transparency in financial reporting by requiring business entities to disclose information about certain types of government assistance received. ASU~~ ~~2021~~-10 ~~is effective for financial statements issued for annual periods beginning after~~ ~~December 15, 2021~~ ~~for all entities except~~ ~~not~~~~-for-profit entities and employee benefit plans within the scope of Topics~~ ~~960,~~~~962,~~ ~~and~~ ~~965~~ ~~on plan accounting. The Company has completed its assessment and concluded that ASU~~ ~~2021~~-10 ~~is applicable to the Company as the Company received government grants. The Company will make the necessary disclosures in the financial statements for Fiscal~~ ~~2023.~~

In June 2016, FASB issued ASU 2016-13 ASC Topic ~~326,~~326: Financial Instruments — Credit Losses (“ASC Topic 326”~~) (“ASU~~ ~~2016~~-~~13”~~) for the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ~~Financial institutions and other organizations~~This guidance modifies the impairment model for certain financial assets by requiring use of an expected loss methodology, which will ~~now use forward-looking information to better inform their credit loss estimates. Many~~result in more timely recognition of ~~the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected~~ credit losses. ~~Topic~~Company adopted this guidance in the ~~326~~first ~~is effective for~~quarter in fiscal 2024 under the ~~Company for annual periods beginning after~~modified retrospective basis. The adoption of this guidance did ~~December 15, 2022.~~ ~~The Company has completed its assessment and concluded that ASU~~ ~~2016~~-03not ~~has~~ nohave a significant impact ~~to the Company’s~~on Company's consolidated condensed financial statements.

~~Other new~~New pronouncements issued but not yet effective until after ~~March 31,~~September 30, 2023, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

- 6 -

3. TERM DEPOSITS

	Mar. 31,		Jun. 30,			Sept. 30,			June 30,
	2023		2022			2023			2023
	(Unaudited)					(Unaudited)

Short-term deposits	$	5,669	$	5,619		$	5,968		$	6,901
Currency translation effect on short-term deposits		34		(199	)		(22	)		(274	)
Total short-term deposits		5,703		5,420			5,946			6,627
Restricted term deposits - Current		748		-			739			755
Currency translation effect on restricted term deposits		7		-			(2	)		(16	)
Total restricted term deposits - Current		755		-			737			739
Restricted term deposits - Non-Current		1,749		1,746
Restricted term deposits – Non-current							1,734			1,763
Currency translation effect on restricted term deposits		13		(68	)		(15	)		(47	)
Total restricted term deposits - Non-Current		1,762		1,678
Total restricted term deposits - Non-current							1,719			1,716
Total term deposits	$	8,220	$	7,098		$	8,402		$	9,082

Restricted deposits represent the amount of cash pledged to secure loans payable or trade financing granted by financial institutions, ~~and~~ 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 ~~deposit~~deposits of ~~$755 is~~$737 as at September 30, 2023 are classified as current assets as itthey relates to short-term trade financing. On the other hand, restricted deposits of ~~$1,762 is~~$1,719 as at September 30, 2023 are classified as non-current assets as they relate to long-term obligations and will become unrestricted only upon discharge of the obligations. ~~Short-term deposits represent bank deposits, which do~~ ~~not~~ ~~qualify as cash equivalents.~~

4. TRADE ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable are customer obligations due under normal trade terms. The Company performs continuing credit evaluations of its customers’ financial conditions, and although management generally does not require collateral, letters of credit may be required from the customers in certain circumstances.

~~Senior management reviews accounts~~The allowance for trade receivable ~~on a periodic basis to determine if any~~represents management’s estimate of probable losses in our trade receivables ~~will potentially be uncollectible. Management includes any accounts receivable balances~~as of the date of the financial statements. The allowance provides for probable losses that ~~are determined~~have been identified with specific customer relationships and for probable losses believed to be ~~uncollectible~~inherent in the ~~allowance for doubtful accounts. After all reasonable attempts to collect a receivable~~trade receivables, but that have ~~failed, the receivable is written off against the allowance. Based on the information available, management believed the allowance for doubtful accounts as of~~ ~~March 31, 2023,~~ not~~and~~ ~~June 30, 2022,~~ ~~was adequate.~~ been specifically identified.

The following table represents the changes in the allowance for doubtful accounts:

	Mar. 31,			Jun. 30,			Sept. 30,			June 30,
	2023			2022			2023			2023
	(Unaudited)						(Unaudited)

Beginning	$	243		$	311		$	217		$	243
Additions charged to expenses		2			48			10			9
Recovered		(15	)		(106	)		(15	)		(20	)
Currency translation effect		(7	)		(10	)		-			(15	)
Ending	$	223		$	243		$	212		$	217

- 7 -

5. LOANS RECEIVABLE FROM PROPERTY DEVELOPMENT PROJECTS

The following table presents Trio-Tech (Chongqing) Co. Ltd (“TTCQ”)’s loan receivables from property development projects in China as of ~~March 31,~~September 30, 2023.

	Loan Expiry	Loan Amount			Loan Amount			Loan Expiry	Loan Amount			Loan Amount
	Date	(RMB)			(U.S. Dollars)			Date	(RMB)			(U.S. Dollars)
Short-term loan receivables
JiangHuai (Project – Yu Jin Jiang An)	May 31, 2013		2,000			291		May 31, 2013		2,000			276
Less: allowance for doubtful receivables			(2,000	)		(291	)			(2,000	)		(276	)
Net loan receivables from property development projects			-			-				-			-

Long-term loan receivables
Jun Zhou Zhi Ye	Oct 31, 2016		5,000			728		Oct 31, 2016		5,000			691
Less: transfer – down-payment for purchase of investment property			(5,000	)		(728	)			(5,000	)		(691	)
Net loan receivables from property development projects			-			-				-			-

The short-term loan receivables amounting to renminbi (“RMB”) 2,000, or approximately ~~$291~~$276 arose due to TTCQ entering into a Memorandum Agreement with JiangHuai Property Development Co. Ltd. (“JiangHuai”) to invest in their property development projects (Project - Yu Jin Jiang An) located in Chongqing City, China ~~during~~in the fiscal year ended June 30, ~~2011.~~ 2011 (“Fiscal 2011”). Based on TTI’s financial policy, a provision for doubtful receivables of $276 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 ~~March 31,~~September 30, 2023 or for Fiscal 2023. TTCQ is in the legal process of recovering the outstanding amount of approximately ~~$291.~~$276.

The ~~long-term~~ loan amounting to RMB 5,000, or approximately ~~$728,~~$691, arose ~~from~~due to TTCQ entering into a Memorandum Agreement with JiaSheng Property Development Co. Ltd. (“JiaSheng”) to invest in ~~JiaSheng’s~~their property development projects (Project B-48 Phase 2) located in Chongqing City, China ~~during the year ended~~in Fiscal ~~June 30,~~ 2011.The ~~loan receivable~~amount was unsecured and repayable at the end of the term. During the fiscal year ended June 30, 2015, the loan receivable was transferred to down payment for purchase of investment property that is being developed in the Singapore Themed Resort Project (See Note 8).

6. INVENTORIES

Inventories consisted of the following:

	Mar. 31, 2023			Jun. 30, 2022			Sept. 30, 2023			June 30, 2023
	(Unaudited)						(Unaudited)

Raw materials	$	1,356		$	1,764		$	1,737		$	1,389
Work in progress		836			683			2,506			1,132
Finished goods		727			238			470			178
Less: provision for obsolete inventories		(743	)		(674	)		(648	)		(648	)
Currency translation effect		148			247			(42	)		100
	$	2,324		$	2,258		$	4,023		$	2,151

The following table represents the changes in provision for obsolete inventories:

	Mar. 31, 2023			Jun. 30, 2022			Sept. 30, 2023			June 30, 2023
	(Unaudited)						(Unaudited)

Beginning	$	674		$	679		$	648		$	674
Additions charged to expenses		60			17			8			61
Usage – disposition		(11	)		(34	)		(1	)		(40	)
Currency translation effect		20			12			(7	)		(47	)
Ending	$	743		$	674		$	648		$	648

- 8 -

7. INVESTMENT PROPERTIES

The following table presents the Company’s investment in properties in China as of ~~March 31,~~September 30, 2023. The exchange rate is based on the market rate as of ~~March 31,~~September 30, 2023.

	Investment Date / Reclassification	Investment Amount			Investment Amount			Investment Date / Reclassification	Investment Amount			Investment Amount
	Date	(RMB)			(U.S. Dollars)			Date	(RMB)			(USD)

Purchase of rental property – Property I – MaoYe Property	Jan 04, 2008		5,554			894		Jan 04, 2008		5,554			894
Currency translation			-			(87	)	Currency translation		-			(87	)
Reclassification as “Assets held for sale”	July 01, 2018		(5,554	)		(807	)	July 01, 2018		(5,554	)		(807	)
Reclassification from “Assets held for sale”	Mar 31, 2019		2,024			301		Mar 31, 2019		2,024			301
			2,024			301				2,024			301
Purchase of rental property – Property II - JiangHuai	Jan 06, 2010		3,600			580		Jan 06, 2010		3,600			580
Purchase of rental property – Property III - FuLi	Apr 08, 2010		4,025			648		Apr 08, 2010		4,025			648
Currency translation			-			(125	)	Currency translation		-			(196	)
Gross investment in rental property			9,649			1,404		Gross investment in rental property		9,649			1,333

Accumulated depreciation on rental property	Mar 31, 2023		(7,884	)		(1,153	)	Sep 30, 2023		(8,005	)		(1,141	)
Reclassified as “Assets held for sale”- MaoYe Property	July 01, 2018		2,822			410		July 01, 2018		2,822			410
Reclassification from “Assets held for sale”- MaoYe Property	Mar 31, 2019		(1,029	)		(143	)	Mar 31, 2019		(1,029	)		(144	)
			(6,091	)		(886	)			(6,212	)		(875	)
Net investment in property – China			3,558			517		Net investment in property – China		3,437			458

The following table presents the Company’s investment in properties in China as of June 30, ~~2022.~~2023. The exchange rate is based on the market rate as of June 30, ~~2022.~~2023.

		Investment Date / Reclassification	Investment Amount			Investment Amount			Investment Date / Reclassification	Investment			Investment Amount
		Date	(RMB)			(U.S. Dollars)			Date	Amount (RMB)			(U.S. Dollars)

Purchase of rental property – Property I – MaoYe Property	Purchase of rental property – Property I – MaoYe Property	Jan 04, 2008		5,554			894		Jan 04, 2008		5,554			894
Currency translation	Currency translation			-			(87	)	Currency translation		-			(87	)
Reclassification as “Assets held for sale”	Reclassification as “Assets held for sale”	July 01, 2018		(5,554	)		(807	)	July 01, 2018		(5,554	)		(807	)
Reclassification from “Assets held for sale”	Reclassification from “Assets held for sale”	Mar 31, 2019		2,024			301		Mar 31, 2019		2,024			301
				2,024			301				2,024			301
Purchase of rental property – Property II - JiangHuai	Purchase of rental property – Property II - JiangHuai	Jan 06, 2010		3,600			580		Jan 06, 2010		3,600			580
Purchase of rental property – Property III - FuLi	Purchase of rental property – Property III - FuLi	Apr 08, 2010		4,025			648		Apr 08, 2010		4,025			648
Currency translation	Currency translation			-			(89	)	Currency translation		-			(199	)
Gross investment in rental property	Gross investment in rental property			9,649			1,440		Gross investment in rental property		9,649			1,330

Accumulated depreciation on rental property	Accumulated depreciation on rental property	Jun 30, 2022		(7,523	)		(1,122	)	Jun 30, 2023		(7,884	)		(1,123	)
Reclassified as “Assets held for sale”- MaoYe Property	Reclassified as “Assets held for sale”- MaoYe Property	July 01, 2018		2,822			410		July 01, 2018		2,822			410
Reclassification from “Assets held for sale”- MaoYe Property	Reclassification from “Assets held for sale”- MaoYe Property	Mar 31, 2019		(1,029	)		(143	)	Mar 31, 2019		(1,029	)		(143	)
				(5,730	)		(855	)			(6,091	)		(856	)
Net investment in property – China	Net investment in property – China			3,919			585		Net investment in property – China		3,558			474

- 129 -

Rental Property I - MaoYe Property

InDuring the fiscal year ended June 30, 2008, TTCQ purchased an office in Chongqing, China from MaoYe Property Ltd. (“MaoYe”) for a total cash purchase price of RMB 5,554, or approximately $894. During the year ended June 30, 2019, the Company sold thirteen of the fifteen units constituting the MaoYe Property. Management has decided not to sell the remaining two units of MaoYe properties in the near future, due to current conditions of the property market in China. A new ~~tenancy~~lease agreement ~~has been secured for the property during the quarter and will be effective from~~was entered into on February 1, 2023 for a period of 4 years at a monthly rate of ~~RMB15,~~RMB14, or approximately ~~$2.~~$2, after termination of the previous agreement. Pursuant to the agreement, monthly rental will increase by 5% each ~~year from the~~ ~~third~~ ~~year onwards.~~year.

Property purchased from MaoYe generated a rental income of ~~$nil~~ ~~and $8~~$6 during the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, ~~as compared to~~ ~~$nil~~and ~~$4 for the same period in Fiscal~~ 2022.

Depreciation expense for MaoYe was $4 ~~and $12 during~~for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, ~~as compared to $4~~ and ~~$12 for the same period in Fiscal~~ 2022.

Rental Property II - JiangHuai

During the year ended June 30, 2010 (“Fiscal 2010”), TTCQ purchased eight units of commercial property in Chongqing, China from Chongqing JiangHuai Real Estate Development Co. Ltd. (“JiangHuai”) for a total purchase price of RMB 3,600, or approximately $580. As of ~~March 31,~~September 30, 2023, 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 ~~COVID-~~19 ~~pandemic and~~ current economic situation is likely to cause delays in court to consummate the ~~execution~~acquisition of ~~the sale.~~properties.

Property purchased from JiangHuai did not generate any rental income for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023 and 2022.

Depreciation expense for JiangHuai was ~~$7 and $20 during~~$6 for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, as compared to $7 ~~and $21~~ for the same period in last Fiscal ~~2022.~~2023.

Rental Property III – FuLi

In Fiscal 2010, TTCQ entered into a Memorandum Agreement with Chongqing FuLi Real Estate Development Co. Ltd. (“FuLi”) to purchase two commercial properties totaling 311.99 square meters (“Office Space”) located in Jiang Bei District Chongqing. The total purchase price committed and paid was RMB 4,025, or approximately $648. The development was completed, the property was transferred to TTCQ in April 2013 and the title deed was received during the third quarter of Fiscal 2014.

In ~~August 2022,~~ ~~TTCQ signed a new tenancy agreement for~~ ~~one~~ ~~of the~~ ~~two~~ ~~commercial properties for a period of~~ 1 ~~year at a monthly rate of~~ ~~RMB6,~~ ~~or approximately $1.~~ TTCQ is actively searching for tenants to occupy the ~~other~~ commercial ~~property,~~properties, which isare vacant as of the date of this Report.

Properties purchased from FuLi generated a rental income of ~~$3 and $7 during~~$1 for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, as compared to ~~$4 and $19~~$2 for the same period in Fiscal ~~2022.~~2023.

Depreciation expense for FuLi was $7 ~~and $22 during~~for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, ~~as compared to $8~~ and ~~$23 for the same period in Fiscal~~ 2022.

Summary

Total rental income for all investment properties in China was ~~$3 and $15 during~~$7 for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, as compared to ~~$4 and $23~~$8 for the same period in Fiscal ~~2022.~~2023.

Depreciation expenses for all investment properties in China ~~were $18 and $54 during~~was $17 for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, as compared to ~~$19 and $54~~$18 for the same period in Fiscal ~~2022.~~2023.

- 1310 -

8. OTHER ASSETS

Other assets consisted of the following:

	Mar. 31,			Jun. 30,			Sept. 30,		June 30,
	2023			2022			2023		2023
	(Unaudited)						(Unaudited)
Down payment for purchase of investment properties *	$	-		$	-
Deposits for rental and utilities and others		243			142			163		117
Currency translation effect		(11	)		(5	)		-		(1	)
Total	$	232		$	137		$	163	$	116

*Down payment for purchase of investment properties included:

							2023
	RMB			U.S. Dollars			RMB			U.S. Dollars
Original Investment (10% of Junzhou equity)	$	10,000		$	1,606		$	10,000		$	1,606
Less: Management Fee		(5,000	)		(803	)		(5,000	)		(803	)
Net Investment		5,000			803			5,000			803
Less: Share of Loss on Joint Venture		(137	)		(22	)		(137	)		(22	)
Net Investment as Down Payment (Note *a)		4,863			781			4,863			781
Loans Receivable		5,000			728			5,000			691
Interest Receivable		1,250			182			1,250			173
Less: Impairment of Interest		(906	)		(132	)		(906	)		(125	)
Transferred to Down Payment (Note *b)		5,344			778			5,344			739
* Down Payment for Purchase of Investment Properties		10,207			1,486			10,207			1,520
Add: Effect of foreign currency exchange		-			94			-			60
Less: Provision of Impairment loss on other assets		(10,207	)		(1,580	)		(10,207	)		(1,580	)
* Down Payment for Purchase of Investment Properties	$	-		$	-		$	-		$	-

In Fiscal 2011, the Company signed a Joint Venture agreement (the “Agreement”) with Jia Sheng Property Development Co. Ltd. (the “Developer”) to form a new company, Junzhou Co. Limited (“Joint Venture” or “Junzhou”), to jointly develop the “Singapore Themed Park” project (the “Project”). The Company paid RMB10,000 for the 10% investment in the Joint Venture. The Developer paid the Company a management fee of ~~RMB 5,000~~RMB5,000 in cash upon signing of the Agreement, with a remaining fee of ~~RMB 5,000~~RMB5,000 payable upon fulfilment of certain conditions in accordance with the Agreement. The Company further reduced its investment by ~~RMB 137,~~RMB137, or approximately $22, through the losses from operations incurred by the Joint Venture.

In Fiscal 2014, the Company disposed of its entire 10% interest in the Joint Venture but, to date, has not received payment in ~~full.~~full therefor. The Company recognized a disposal based on the recorded net book value of ~~RMB 5,000,~~RMB5,000, or equivalent to ~~$803,~~$803, from net considerations paid, in accordance with GAAP under ASC Topic 845 Non-monetary ~~Consideration.~~Consideration. It is presented under “Other Assets” as non-current assets to defer the recognition of the gain on the disposal of the 10% interest in the Joint Venture investment until such time that the consideration is paid, so the gain can be ascertained.

Amounts of ~~RMB 5,000,~~RMB5,000, or approximately ~~$728,~~$691, as disclosed in Note 5, plus the interest receivable on long-term loan receivable of ~~RMB 1,250,~~RMB1,250, or approximately ~~$182,~~$173, and impairment on interest of ~~RMB 906,~~RMB906, or approximately ~~$132.~~$125.

The shop lots are to be delivered to TTCQ upon completion of the construction of the shop lots in ~~the~~Singapore Themed Resort Project. The initial targeted date of completion was in ~~the fiscal year ended~~Fiscal ~~June 30,~~ 2017.However, ~~the~~ progress has been delayed as the developer is currently undergoing an asset reorganization process, to re-negotiate with ~~their~~its creditors to complete the project.

During the fourth quarter of Fiscal 2021, the Company accrued an impairment charge of $1,580 related to the doubtful recovery of the down payment on property in the Singapore Theme Resort Project in Chongqing, China. The Company ~~recorded a~~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 ~~March 31,~~September 30, 2023.

- 11 -

9. LINES OF CREDIT

~~Carrying~~The carrying value of the Company’s lines of credit approximates its fair value because the interest rates associated with the lines of credit are adjustable in accordance with market situations when the Company borrowed funds with similar terms and remaining maturities.

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

As of ~~March 31,~~September 30, 2023, the Company had certain lines of credit that are collateralized by restricted deposits.

Entity with	Type of	Interest			Credit		Unused		Type of	Interest	Credit		Unused
Facility	Facility	Rate			Limitation		Credit		Facility	Rate	Limitation		Credit
Trio-Tech International Pte. Ltd., Singapore	Lines of Credit	Ranging from 1.85%	to	5.5%	$	3,991	$	3,781	Lines of Credit	Cost of Funds Rate +1.25%	$	3,880	$	3,643
Universal (Far East) Pte. Ltd.	Lines of Credit	Ranging from 1.85%	to	5.5%	$	1,883	$	1,486	Lines of Credit	Cost of Funds Rate +1.25%	$	1,830	$	2,243
Trio-Tech Malaysia Sdn. Bhd.	Revolving credit Bank guarantee	Cost of Funds Rate +2% 0.15% per month			$	485	$	341	Revolving credit	Cost of Funds Rate +2%	$	319	$	319

As of June 30, ~~2022,~~2023, the Company had certain lines of credit that are collateralized by restricted deposits.

Entity with	Type of	Interest			Credit		Unused		Type of	Interest	Credit		Unused
Facility	Facility	Rate			Limitation		Credit		Facility	Rate	Limitation		Credit
Trio-Tech International Pte. Ltd., Singapore	Lines of Credit	Ranging from 1.85%	to	5.5%	$	4,090	$	3,651	Lines of Credit	Cost of Funds Rate +1.25% to +1.3%	$	3,907	$	3,701
Universal (Far East) Pte. Ltd.	Lines of Credit	Ranging from 1.85%	to	5.5%	$	1,076	$	586	Lines of Credit	Cost of Funds Rate +1.25% to +1.3%	$	1,843	$	1,559
Trio-Tech Malaysia Sdn. Bhd.	Revolving credit	Cost of Funds Rate +2%			$	338	$	338	Revolving credit	Cost of Funds Rate +2%	$	319	$	319

10. ACCRUED EXPENSE

Accrued expense consisted of the following:

	Mar. 31,		Jun. 30,			Sept. 30,			June 30,
	2023		2022			2023			2023
	(Unaudited)					(Unaudited)

Payroll and related costs	$	1,850	$	2,158		$	2,085		$	1,880
Commissions		158		116			164			158
Legal and audit		293		320			337			280
Sales tax		156		531			61			140
Utilities		200		273			200			236
Warranty		24		16			34			24
Accrued purchase of materials and property, plant and equipment		1,694		905			1,758			1,214
Provision for reinstatement		298		308			373			380
Contract liabilities		1,501		988			2,233			1,275
Other accrued expense		216		581			299			50
Currency translation effect		180		(192	)		(37	)		(69	)
Total	$	6,570	$	6,004		$	7,507		$	5,568

- 12 -

11. ASSURANCE WARRANTY ACCRUAL

The Company provides for the estimated costs that may be incurred under its warranty program at the time the sale is recorded. The warranty period of the products manufactured by the Company is generally one year or the warranty period agreed upon with the customer. The Company estimates the warranty costs based on the historical rates of warranty returns. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary.

	Mar. 31,			Jun. 30,			Sept. 30,			June 30,
	2023			2022			2023			2023
	(Unaudited)						(Unaudited)

Beginning	$	16		$	14		$	24		$	16
Additions charged to cost and expense		27			7			8			32
Utilisation / Reversal		(20	)		(4	)
Utilisation								(1	)		(25	)
Currency translation effect		1			-1			3			1
Ending	$	24		$	16		$	34		$	24

12. BANK LOANS PAYABLE

Bank loans payable consisted of the following:

	Mar. 31,			Jun. 30,			Sept. 30,		June 30,
	2023			2022			2023		2023
	(Unaudited)						(Unaudited)

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% (4.6% and 3.791% at March 31, 2023 and June 30, 2022) per annum, with monthly payments of principal plus interest through August 2028, collateralized by the acquired building with a carrying value of $2,355 and $2,372 as at March 31, 2023 and June 30, 2022.	$	1,117		$	1,392
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 September 30, 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 $2,197 and $2,208, as at September 30, 2023 and June 30, 2023, respectively.							$	866	$	957
Financing arrangement at fixed interest rate 3.2% per annum, with monthly payments of principal plus interest through July 2025.		99			128			74		84
Financing arrangement at fixed interest rate 3.0% per annum, with monthly payments of principal plus interest through December 2026.		191			224			158		169
Financing arrangement at fixed interest rate 3.0% per annum, with monthly payments of principal plus interest through August 2027.		160			-			134		142
Total bank loans payable	$	1,567		$	1,744		$	1,232	$	1,352

Current portion of bank loans payable		517			503			411		503
Currency translation effect on current portion of bank loans		(4	)		(31	)		12		(28	)
Current portion of bank loans payable		513			472			423		475
Long-term portion of bank loans payable		1,059			1,357			785		933
Currency translation effect on long-term portion of bank loans		(5	)		(85	)		24		(56	)
Long-term portion of bank loans payable	$	1,054			1,272		$	809		877

Future minimum payments (excluding interest) as ofat ~~March 31,~~September 30, 2023, were as follows:

Remainder of Fiscal 2023	$	126
2024		509
Remainder of Fiscal 2024			$	356
2025		280		262
2026		247		231
2027		228		212
Thereafter		177		171
Total obligations and commitments	$	1,567	$	1,232

- 13 -

Future minimum payments (excluding interest) as ofat June 30, ~~2022,~~2023, were as follows:

2023	$	472
2024		481	$	475
2025		246		262
2026		214		231
2027		190		212
Thereafter		141		172
Total obligations and commitments	$	1,744	$	1,352

13. COMMITMENTS AND CONTINGENCIES

Deposits with banks are not ~~fully~~ insured by the local government or agency and are consequently exposed to risk of loss. The Company believes that the probability of bank failure, causing loss to the Company, is remote.

The Company is, from time to time, the subject of litigation claims and assessments arising out of matters occurring in its normal business operations. In the opinion of management, resolution of these matters will not have a material adverse effect on the Company’s consolidated financial statements.

14. BUSINESS SEGMENTS

The Company operated in four segments; the testing service industry (which performs structural and electronic tests of semiconductor devices), the designing and manufacturing of equipment (assembly of equipment that tests the structural integrity of integrated circuits and other products), distribution of various products from other manufacturers in Singapore and Asia and the real estate segment in China.

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.

~~All intersegment sales were sales from the manufacturing segment to the testing and distribution segment. Total intersegment sales were $64 and $733 for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~March 31, 2023,~~ ~~as compared to $232 and $1,052 for the same period in fiscal~~ ~~2022.~~ ~~Corporate assets consisted primarily of cash and prepaid expenses. Corporate expenses consisted primarily of stock option expense, salaries, insurance, professional expenses and directors' fees.~~ Corporate expenses are allocated to the four segments on a ~~predetermined~~combination of factors involving revenue, manpower costs and fixed ~~amount calculated based on the annual budgeted sales,~~assets investments, except the Malaysia ~~operation,~~and China operations, which is calculated based on actual sales. The following segment information table includes segment operating income or loss after including corporate expenses allocated to the segments, which gets eliminated in the consolidation.

~~The following segment Information is unaudited for the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2023,~~ ~~and~~ ~~March 31, 2022:~~

~~Business Segment Information:~~

Nine Months

Operating

Ended

Income /

Total

Depr. And

Capital

Mar. 31,

Revenue

(Loss)

Assets

Amort.

Expenditures

Manufacturing
2023
$ 11,592 $ 373 $ 15,056 $ 365 $ 18

2022
$ 10,187 $ 108 $ 14,204 $ 318 $ 103

Testing Services
2023
17,709 1,445 26,522 3,218 4,033

2022
13,983 999 24,030 1,884 1,040

Distribution
2023
4,855 633 1,283 - -

2022
8,038 1,107 1,601 - -

Real Estate
2023
15 (76
)
1,872 58 -

2022
23 (86
)
1,730 61 1

Corporate & Unallocated
2023
- (276
)
641 - 26

2022
- (632
)
238 - -

Total Company
2023
$ 34,171 $ 2,099 $ 45,374 $ 3,641 $ 4,077

2022
$ 32,231 $ 1,496 $ 41,803 $ 2,263 $ 1,144

The following segment Information is unaudited for the three months ended ~~March 31,~~September 30, 2023, and ~~March 31,~~September 30, 2022:

Business Segment Information:

Three Months

Operating

Ended

Income /

Total

Depr. And

Capital

Mar. 31,

Revenue

(Loss)

Assets

Amort.

Expenditures

Manufacturing
2023
$ 2,963 $ (104
)
$ 15,056 $ 135 $ 3

2022
$ 3,097 $ (145
)
$ 14,204 $ 110 $ 8

Testing Services
2023
5,697 37 26,522 1,343 66

2022
4,417 (124
)
24,030 633 341

Distribution
2023
1,179 151 1,283 - -

2022
3,620 576 1,601 (2
)
-

Real Estate
2023
3 (34
)
1,872 20 -

2022
4 (35
)
1,730 20 -

Corporate & Unallocated
2023
- (87
)
641 - 14

2022
- (402
)
238 - -

Total Company
2023
$ 9,842 $ (37
)
$ 45,374 $ 1,498 $ 83

2022
$ 11,138 (130
)
41,803 761 349

	Three Months			Operating
	Ended	Net		Income /			Total		Depr. And		Capital
	Sept. 30,	Revenue		(Loss)			Assets		Amort.		Expenditures
Manufacturing	2023	$	2,885	$	(42	)	$	18,996	$	114	$	19
	2022	$	3,585	$	176		$	12,791	$	97	$	-

Testing Services	2023		5,164		(128	)		21,312		1,326		58
	2022		6,364		861			27,770		767		1,156

Distribution	2023		1,910		245			1,958		-		-
	2022		1,982		265			1,603		-		-

Real Estate	2023		7		(26	)		2,059		19		-
	2022		8		(14	)		1,490		18		-

Corporate & Unallocated	2023		-		(50	)		374		12		-
	2022		-		(221	)		151		-		-

Total Company	2023	$	9,966	$	(1	)	$	44,699	$	1,471	$	77
	2022	$	11,939	$	1,067		$	43,805	$	882	$	1,156

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. As a result, we 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.

- 14 -

15. OTHER INCOME

Other income consisted of the following:

													Three Months Ended
	Three Months Ended						Nine Months Ended						September 30,
	Mar. 31,			Mar. 31,			Mar. 31,			Mar. 31,			2023		2022
	2023			2022			2023			2022			(Unaudited)		(Unaudited)
	Unaudited			Unaudited			Unaudited			Unaudited
Interest income	$	49		$	13		$	104		$	51		$	78	$	18
Other rental income		30			30			85			88			36		27
Exchange gain / (loss)		(47	)		(9	)		(326	)		(13	)
Bad debt recovery		-			-			-			104
Commission income		-			-			-			200
Government grant		83			62			108			160
Exchange gain														59		70
Other miscellaneous income		8			31			88			79			23		43
Total	$	123		$	127		$	59		$	669		$	196	$	158

~~16.~~16. GOVERNMENT GRANTS

	Three Months Ended
	September 30,
	2023		2022
	(Unaudited)		(Unaudited)

Government grants	$	73	$	21

In the three months ended September 30, 2023, the Company received government grants amounting to $73, $16 of which was financial assistance received from the Singapore government, and the remaining $57 from the US government related to Employee Retention Credit (”ERC”).

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) passed by the United States Congress, provided an ERC scheme which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the “Appropriations Act”) extended and expanded the availability of the ERC through December 31, 2021. The Appropriations Act amended the ERC to be equal to 70% of qualified wages paid to employees during Fiscal 2021.

The Company qualified for the ERC beginning in April 30, 2021 for qualified wages through September 30, 2021 and filed a cash refund claim during the three months ended December 31, 2021. To date, the Company has received $57 during the three months ended September 30, 2023.

17. INCOME TAX

The provision for income taxes has been determined based upon the tax laws and rates in the countries in which we operate. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgment is required in determining the provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. ~~The statute of limitations, in general, is open for years~~ ~~2016~~ to ~~2022~~ for tax authorities in those jurisdictions to audit or examine income tax returns. The Company is under annual review by the tax authorities of the respective jurisdiction to which the subsidiaries belong.

Due to the enactment of the Tax Cuts and Jobs Act, the Company is subject to a tax on global intangible low-taxed income (“GILTI”). GILTI is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Companies subject to GILTI have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for temporary differences including outside basis differences expected to reverse as GILTI. The Company has elected to account for GILTI as a period cost. GILTI expense was $~~Nil~~ ~~and $83 for~~ ~~three~~15 and ~~nine~~ ~~months~~$43 for the period ended ~~March 31,~~September 30, 2023, ~~as compared to~~ ~~$Nil~~ ~~for the same period in fiscal~~and ~~2022.~~2022, respectively.

The Company's income tax expense was ~~$8 and $474~~$37 for the three ~~and~~ ~~nine~~ months ended ~~March 31,~~September 30, 2023, as compared to ~~$170 and $503~~$225 for the same period in Fiscal ~~2022.~~2023. Our effective tax rate (“ETR”) from continuing operations was ~~14%~~15% and ~~500%~~19% for the quarters ended ~~March 31,~~September 30, 2023 and ~~March 31,~~September 30, 2022, respectively. The decrease inof income tax ~~expense and effective tax rate was due~~expenses attributable to ~~the following:~~lower chargeable income derived from controlled foreign corporation.

~~A $81 reduction relating~~The Singapore operations incurred lower income tax due to ~~GILTI tax provisions pursuant~~lower income generated in period ended September 30,2023 compared to ~~final tax filings for Fiscal~~ ~~2022.~~same period last fiscal year.

~~Tax expense for~~ ~~three~~ ~~months ending~~ ~~March 31, 2022~~ ~~included additional tax arising~~The Company recognized lower GILTI expenses due to lower income derived from ~~tax assessments of prior periods.~~controlled foreign corporation.

- 15 -

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 ~~March 31,~~September 30, 2023.

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. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on these criteria, management believes it is more likely than not the Company will not realize the benefits of the federal, state, and foreign deductible differences. Accordingly, a valuation allowance has been established against deferred tax assets recorded in the U.S. and various foreign jurisdictions.

~~17.~~18.  REVENUE

The Company generates revenue primarily from 3three different segments: ~~Manufacturing, Testing~~manufacturing, testing and ~~Distribution.~~distribution. The Company accounts for a contract with a customer when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company’s revenues are measured based on consideration stipulated in the arrangement with each customer, net of any sales incentives and amounts collected on behalf of third parties, such as sales taxes. The revenues are recognized as separate performance obligations that are satisfied by transferring control of the product or service to the customer.

Significant Judgments

The Company’s arrangements with its customers include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. A product or service is considered distinct if it is separately identifiable from other deliverables in the arrangement and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

The Company allocates the transaction price to each performance obligation on a relative standalone selling price basis (“SSP”). Determining the SSP for each distinct performance obligation and allocation of consideration from an arrangement to the individual performance obligations and the appropriate timing of revenue recognition are significant judgments with respect to these arrangements. The Company typically establishes the SSP based on observable prices of products or services sold separately in comparable circumstances to similar clients. The Company may estimate SSP by considering internal costs, profit objectives and pricing practices in certain circumstances.

18

Warranties, discounts and allowances are estimated using historical and recent data trends. The Company includes estimates in the transaction price only to the extent that a significant reversal of revenue is not probable in subsequent periods. The Company’s products and services are generally not sold with a right of return, nor has the Company experienced significant returns from or refunds to its customers.

Manufacturing

The Company primarily derives revenue from the sale of both front-end and back-end semiconductor test equipment and related peripherals, maintenance, and support of all these products, installation and training services and the sale of spare parts. The Company’s revenues are measured based on consideration stipulated in the arrangement with each customer, net of any sales incentives and amounts collected on behalf of third parties, such as sales taxes.

- 16 -
The Company recognizes revenue at a point in time when the Company has satisfied its performance obligation by transferring control of the product to the customer. The Company uses judgment to evaluate whether the control has transferred by considering several indicators, ~~including:~~including whether:

●
~~whether~~ the Company has a present right to payment;

●
the customer has legal title;

●
the customer has physical possession;

●
the customer has significant risk and rewards of ownership; and

●
the customer has accepted the product, or whether customer acceptance is considered a formality based on history of acceptance of similar products (for example, when the customer has previously accepted the same equipment, with the same specifications, and when we can objectively demonstrate that the tool meets all the required acceptance criteria, and when the installation of the system is deemed perfunctory).

Not all indicators need to be met for the Company to conclude that control has transferred to the customer. In circumstances in which revenue is recognized prior to the product acceptance, the portion of revenue associated with its performance obligations of product installation and training services are deferred and recognized upon acceptance.

~~The majority~~Majority of sales under the ~~Manufacturing~~manufacturing segment include a ~~standard~~ 12-month warranty. The Company generally provides a limited warranty ~~which~~that our products comply with applicable specifications at the time of delivery. Under our standard terms and conditions of sale, liability for certain failures of product during a stated warranty period is usually limited to repair or replacement of defective parts. The Company has concluded that the warranty provided for standard products are ~~mainly~~ assurance ~~warranty~~type warranties and are not separate performance obligations.
Customized products are generally more complex and, as a result, may contain unforeseen faults that could lead to additional costs for us, including increased servicing or the need to provide product modifications. Warranty provided for ~~some~~ customized products ~~may~~ ~~be classified as~~are service warranties and are separate performance obligations. Transaction prices are allocated to this performance obligation using cost plus method. The portion of revenue associated with warranty service is deferred and recognized as revenue over the warranty period, as the customer simultaneously receives and consumes the benefits of warranty services provided by the Company.

Testing

The Company renders testing services to manufacturers and purchasers of semiconductors and other entities who either lack testing capabilities or whose in-house screening facilities are insufficient. The Company primarily derives testing revenue from burn-in services, manpower supply and other associated services. SSP is directly observable from the sales orders. Revenue is allocated to performance obligations satisfied at a point in time depending upon terms of the sales order. 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. Based on historical and recent data trends, it is concluded that these terms of the contract do not represent potential variable consideration. The transaction price is not contingent on the occurrence of any future event.

Distribution

The Company distributes complementary products, made by manufacturers around the world. The Company recognizes revenue from product sales at a point in time when the Company has satisfied its performance obligation by transferring control of the product to the customer. The Company uses judgment to evaluate whether control has transferred by considering several indicators discussed above. The Company recognizes the revenue at a point in time, generally upon shipment or delivery of the products to the customer or distributors, depending upon terms of the sales order.

- 17 -
Contract Balances

The timing of revenue recognition, billings and collections may result in billed accounts receivable, unbilled receivables, contract assets, customer advances, deposits and contract liabilities. The Company’s payment terms and conditions vary by contract type, although terms generally include a requirement of payment of 70% to 90% of total contract consideration within 30 to 60 days of shipment with the remainder payable within 30 days of acceptance. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant financing component.

19

The following table is the reconciliation of contract balances.

Mar. 31,

Jun. 30,

Sept. 30

June 30

2023

2022

2023

2023

(Unaudited)

(Unaudited)

Trade Accounts Receivable
$ 11,004 $ 11,592 10,973 9,804
Accounts Payable
1,835 2,401 2,556 1,660
Contract Liabilities
1,501 988 2,233 1,275

Remaining Performance Obligation

~~As at~~ ~~March 31, 2023,~~ ~~the~~The Company had ~~$170 of~~nil and $55 remaining performance obligations, which represents our obligation to deliver products and services ~~within~~ ~~two~~ ~~years.~~
Asas atSeptember 30, 2023 and June 30, ~~2022,~~2023 ~~the Company had $326 of remaining performance obligations, which represents our obligation to deliver products and services.~~
respectively.

~~18.~~19.  EARNINGS PER SHARE

Options to purchase ~~656,375~~684,375 shares of Common Stock at exercise prices ranging from $2.53 to $7.76 per share were outstanding as of ~~March 31,~~September 30, 2023. ~~285,500~~111,500 stock options were excluded in the computation of diluted earnings per share (“EPS”) for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, because they were anti-dilutive.

Options to purchase ~~698,875~~636,375 shares of Common Stock at exercise prices ranging from ~~$3.28~~$2.53 to $7.76 per share were outstanding as of ~~March 31,~~September 30, 2022. ~~140,500~~84,625 stock options were excluded in the computation of diluted EPS for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2022, because they were anti-dilutive.

- 18 -
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

Nine Months Ended

Mar. 31,

Mar. 31,

Mar. 31,

Mar. 31,

2023

2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Loss) / Income attributable to Trio-Tech International common shareholders from continuing operations, net of tax
$ (10
)
$ (167
)
$ 1,384 $ 1,603
Income / (loss) attributable to Trio-Tech International common shareholders from discontinued operations, net of tax
3 - (2 ) 2
Net (loss) / income attributable to Trio-Tech International Common Shareholders
$ (7
)
$ (167
)
$ 1,382 $ 1,605

Weighted average number of common shares outstanding - basic
4,075 3,949 4,075 3,949

Dilutive effect of stock options
84 272 86 191
Number of shares used to compute earnings per share - diluted
4,159 4,221 4,161 4,140

Basic (loss) / earnings per share from continuing operations attributable to Trio-Tech International
$ - (0.04
)
0.34 0.40
Basic earnings per share from discontinued operations attributable to Trio-Tech International
- - - -
Basic (loss) / earnings per share from net income attributable to Trio-Tech International
$ - $ (0.04
)
$ 0.34 $ 0.40

Diluted (loss) / earnings per share from continuing operations attributable to Trio-Tech International
$ - (0.04
)
0.33 0.38
Diluted earnings per share from discontinued operations attributable to Trio-Tech International
- - - -
Diluted (loss) / earnings per share from net income attributable to Trio-Tech International
$ - $ (0.04
)
$ 0.33 $ 0.38

20

Three Months Ended

September 30,

2023

2022

(Unaudited)

(Unaudited)

Income attributable to Trio-Tech International common shareholders from continuing operations, net of tax
$ 227 $ 882
Income attributable to Trio-Tech International common shareholders from discontinued operations, net of tax
3 -
Net Income attributable to Trio-Tech International common shareholders
$ 230 $ 882

Weighted average number of common shares outstanding – basic
4,096 4,077
Dilutive effect of stock options
184 81
Number of shares used to compute earnings per share – diluted
4,280 4,158

Basic earnings per share from continuing operations attributable to Trio-Tech International
0.06 0.22
Basic earnings per share from discontinued operations attributable to Trio-Tech International
- -
Basic earnings per share from net income attributable to Trio-Tech International
$ 0.06 $ 0.22

Diluted earnings per share from continuing operations attributable to Trio-Tech International
0.05 0.21
Diluted earnings per share from discontinued operations attributable to Trio-Tech International
- -
Diluted earnings per share from net income attributable to Trio-Tech International
$ 0.05 $ 0.21

~~19.~~20.  STOCK OPTIONS
On ~~September 24, 2007,~~ ~~the Company’s Board of Directors unanimously adopted the~~ ~~2007~~ ~~Employee Stock Option Plan (the~~ ~~“2007~~ ~~Employee Plan”) and the~~ ~~2007~~ ~~Directors Equity Incentive Plan (the~~ ~~“2007~~ ~~Directors Plan” and, together with the~~ ~~2007~~ ~~Employee Plan, the~~ ~~“2007~~ ~~Plans”), each of which was approved by the shareholders on~~ ~~December 3, 2007.~~ ~~Each of the~~ ~~2007~~ ~~Plans were amended during the term of such plan to increase the number of shares covered thereby. Each of the~~ ~~2007~~ ~~Plans terminated by their respective terms on~~ ~~September 24, 2017.~~

On September 14, 2017, the Company’s Board of Directors unanimously adopted the 2017 Employee Stock Option Plan (the “2017 Employee Plan”) and the 2017 Directors Equity Incentive Plan (the “2017 Directors Plan”) each of which was approved by the shareholders on December 4, 2017.

Assumptions

The fair value for the stock options granted to both employees and directors was estimated using the Black-Scholes option pricing model with the following weighted average assumptions, assuming:

●
An expected life varying from 2.50 to 3.25 years, calculated in accordance with the guidance provided in SEC Staff bulletin No. 110 for plain vanilla options using the simplified method, since our equity shares have been publicly traded for only a limited period of ~~time and we did~~ ~~not~~ ~~have sufficient historical exercise data at the grant date of the options;~~
time;
●
A risk-free interest rate varying from 0.11% to ~~4.17%~~4.59% (~~2022:~~2023: 0.11% to ~~2.35%~~4.17%);
●
No expected dividend ~~payments and;~~payments; and
●
Expected volatility of 47.3% to 73.85% (~~2022:~~2023: ~~45.38%~~47.3% to ~~55.59%~~73.85%).

- 19 -
2017 Employee Stock Option Plan

The Company’s 2017 Employee Plan permits the grant of stock options to its employees covering up to an aggregate of 300,000 shares of Common Stock. ~~The~~In December 2021, the Company’s Board of Directors approved an amendment to the 2017 Employee Plan in ~~December, 2021~~ to increase the shares covered thereby from 300,000 shares to an aggregate of 600,000 shares, which amendment was approved by the Company’s shareholders at the annual meeting held in December 2021.
Under the 2017 Employee Plan, all options must be granted with an exercise price of ~~not~~no less than fair value as of the grant date and the options granted must be exercisable within a maximum of ten years after the date of grant, or such lesser period of time as is set forth in the stock option agreements. The options may be exercisable (a) immediately as of the effective date of the stock option agreement granting the option, or (b) in accordance with a schedule related to the date of the grant of the option, the date of first employment, or such other date as may be set by the Compensation Committee. Generally, options granted under the 2017 Employee Plan are exercisable within five years after the date of grant and vest over the period as follows: 25% vesting on the grant date and the remaining balance vesting in equal installments on the next three succeeding anniversaries of the grant date. The share-based compensation will be recognized in terms of the grade method on a straight-line basis for each separately vesting portion of the award. Certain option awards provide for accelerated vesting if there is a change in control (as defined in the 2017 Employee Plan).

During the ~~third~~first quarter of Fiscal 2024, 48,000 stock options were granted under the 2017 Employee Plan. No stock options were exercised during the three-month period ended September 30, 2023. The Company recognized $60 in stock-based compensation expense during the three months ended September 30, 2023.
During the first quarter of Fiscal 2023, ~~40,000~~25,000 stock options were granted under the 2017 Employee Plan. There were 5,000 stock options exercised during the ~~nine~~three-month period ended ~~March 31, 2023.~~September 30, 2022. The Company recognized ~~$70 and $124~~$32 in stock-based compensation expense during the three ~~and~~ ~~nine~~months ended ~~March 31, 2023.~~
~~During the~~ ~~third~~ ~~quarter of Fiscal~~ ~~2022,~~ ~~there were 40,500 stock options granted under the~~ ~~2017~~ ~~Employee Plan. There were 41,125 stock options exercised during the~~ ~~nine~~~~-month period ended~~ ~~March 31, 2022.~~ ~~The Company recognized $84 and $106 in stock-based compensation expenses during the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~March 31,~~September 30, 2022.

As of ~~March 31,~~September 30, 2023, there were vested stock options granted under the 2017 Employee Plan covering a total of ~~134,625~~152,875 shares of Common Stock. The weighted-average exercise price was ~~$4.49~~$4.55 and the weighted average remaining contractual term was ~~2.52~~2.31 years.

As of ~~March 31,~~September 30, 2022, there were vested stock options granted under the 2017 Employee Plan covering a total of ~~170,500~~131,750 shares of Common Stock. The weighted-average exercise price was ~~$4.81~~$4.80 and the weighted average remaining contractual term was ~~2.24~~1.95 years.

21

A summary of option activities under the 2017 Employee Plan during the ~~nine~~three months period ended ~~March 31,~~September 30, 2023, is presented as follows:

Weighted
Average

Weighted
Average
Remaining
Contractual

Aggregate

Weighted

Weighted
Average
Remaining

Aggregate

Exercise

Term

Intrinsic

Average

Contractual

Intrinsic

Options

Price

(Years)

Value

Options

Exercise Price

Term (Years)

Value

Outstanding at July 1, 2022
236,375 $ 5.21 2.61 $ 87
Outstanding at July 1, 2023
216,375 $ 4.89 2.92 $ 140
Granted
65,000 4.84 - - 48,000 4.88
Exercised
(5,000
)
3.75 - - - - - -
Forfeited or expired
(80,000
)
- - - - - - -
Outstanding at March 31, 2023
216,375 $ 4.89 3.17 $ 117
Exercisable at March 31, 2023
134,625 $ 4.49 2.52 $ 109
Outstanding at September 30, 2023
264,375 $ 4.88 3.05 $ 590
Exercisable at September 30, 2023
152,875 $ 4.55 2.30 $ 390
- 20 -
A summary of the status of the Company’s non-vested employee stock options during the three months ended September 30, 2023, is presented below:

Weighted
Average

Options

Grant-Date
Fair Value

Non-vested at July 1, 2023
81,750 $ 5.53
Granted
48,000 4.81
Vested
(18,250
)
-
Non-vested at September 30, 2023
111,500 $ 5.34
A summary of option activities under the 2017 Employee Plan during the three months period ended September 30, 2022, is presented as follows:

Weighted

Weighted
Average
Remaining

Aggregate

Average

Contractual

Intrinsic

Options

Exercise Price

Term (Years)

Value

Outstanding at July 1, 2022
236,375 $ 5.21 2.61 $ 87
Granted
25,000 5.18 - -
Exercised
(5,000
)
3.75 - -
Forfeited or expired
(40,000
)
- - -
Outstanding at September 30, 2022
216,375 $ 5.16 $ 2.74 $ 106
Exercisable at September 30, 2022
131,750 $ 4.80 $ 1.95 $ 80

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

Weighted
Average

Options

Grant-Date
Fair Value

Non-vested at July 1, 2022
75,875 $ 5.98
Granted
65,000 4.77
Vested
(49,125 ) -
Forfeited
(10,000 ) -
Non-vested at March 31, 2023
81,750 $ 5.53
~~A summary of option activities under the~~ ~~2017~~ ~~Employee Plan during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022,~~ ~~is presented as follows:~~

Weighted
Average

Weighted
Average
Remaining
Contractual

Aggregate

Exercise

Term

Intrinsic

Options

Price

(Years)

Value

Outstanding at July 1, 2021
267,000 $ 4.21 3.22 $ 290
Granted
40,500 - - -
Exercised
(41,125
)
2.86 - -
Forfeited or expired
- - - -
Outstanding at March 31, 2022
266,375 $ 4.96 2.80 $ 621
Exercisable at March 31, 2022
170,500 $ 4.81 2.24 $ 415
~~A summary of the status of the Company’s non-vested employee stock options during the~~ ~~nine~~ ~~months ended~~ ~~March 31,~~September 30, 2022, is presented below:

Weighted Average

Options

Grant-Date Fair
Value

Non-vested at July 1, 2021
102,250 $ 2.29
Granted
40,500 -
Vested
(46,875
)
-
Forfeited
- -
Non-vested at March 31, 2022
95,875 $ 2.29

Weighted
Average

Options

Grant-Date
Fair Value

Non-vested at July 1, 2022
75,875 $ 5.98
Granted
25,000 5.18
Vested
(16,250
)
-
Non-vested at September 30, 2022
84,625 $ 5.72

- 2221 -

~~2007~~ ~~Employee Stock Option Plan~~
~~The Company’s~~ ~~2007~~ ~~Employee Plan permitted the issuance of options to employees. As of the last amendment thereof, the~~ ~~2007~~ ~~Employee Plan covered an aggregate of 600,000 shares of the Company’s Common Stock. The~~ ~~2007~~ ~~Employee Plan terminated by its terms on~~ ~~September 24, 2017~~ ~~and no further options~~ ~~may~~ ~~be granted thereunder. Options outstanding thereunder continue to remain outstanding and in effect in accordance with their terms.~~
~~There were no options exercised during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2023,~~ ~~and~~ ~~March 31, 2022.~~ ~~The Company did~~ ~~not~~ ~~recognize any stock-based compensation expense during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2023,~~ ~~and~~ ~~March 31, 2022.~~
~~As of~~ ~~July 1, 2022~~ ~~and~~ ~~March 31, 2023,~~ ~~there were no vested or unvested stock options outstanding under the~~ ~~2007~~ ~~Employee Plan.~~
~~As of~~ ~~March 31, 2022,~~ ~~there were no vested or unvested stock options granted under the~~ ~~2007~~ ~~Employee Plan.~~
~~A summary of option activities under the~~ ~~2007~~ ~~Employee Plan during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022,~~ ~~is presented as follows:~~

Weighted
Average

Weighted
Average
Remaining
Contractual

Aggregate

Exercise

Term

Intrinsic

Options

Price

(Years)

Value

Outstanding at July 1, 2021
37,500 $ 4.14 0.75 $ 34
Granted
- - - -
Exercised
(37,500
)
4.14 - -
Forfeited or expired
- - - -
Outstanding at March 31, 2022
- $ - - $ -
2017 Directors Equity Incentive Plan

The 2017 Directors Plan permits the grant of options to its directors in the form of non-qualified options and restricted stock, and initially covered up to an aggregate of 300,000 shares of Common Stock. In September 2020, the ~~Company’s common stock. The~~ Company’s Board of Directors approved an amendment to the 2017 Directors Plan in ~~September 2020~~ to increase the shares covered thereby from 300,000 shares to an aggregate of 600,000 shares, which amendment was approved by the Company’s shareholders at the annual meeting held in December 2020.~~The~~
Under the 2017 ~~Directors~~ Plan, ~~permits~~ the ~~grant of options to its directors in the form of nonqualified options and restricted stock. The~~ exercise price of the ~~nonqualified~~non-qualified options is required to be 100% of the fair value of the underlying shares on the grant date. The options have five-year contractual terms and are exercisable immediately as of the grant date.

During the ~~third~~first quarter of Fiscal 2024 and Fiscal 2023, the Company ~~granted~~did not grant any options ~~to purchase 100,000 shares of its Common Stock~~ pursuant to the 2017 Directors Plan. There were no stock options exercised ~~during~~and the ~~nine~~ ~~months ended~~ ~~March 31, 2023.~~ ~~The~~ Company ~~recognized $213~~did not recognize any stock-based compensation expense during the three ~~and~~ ~~nine~~months ended ~~March 31, 2023.~~September 30, 2023
~~During the~~ ~~third~~ ~~quarter of Fiscal~~ ~~2022,~~ ~~the Company granted options to purchase 100,000 shares of its Common Stock pursuant to the~~ ~~2017~~ ~~Directors Plan. There were~~ no ~~stock options exercised during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022.~~ ~~The Company recognized $353 stock-based compensation expenses during the~~ ~~three~~and ~~nine~~ ~~months ended~~ ~~March 31,~~ 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 ~~March 31,~~September 30, 2023, ~~and~~or ~~March 31,~~September 30, 2022.

As of ~~March 31,~~September 30, 2023, there were vested stock options granted under the 2017 Directors Plan covering a total of ~~440,000~~420,000 shares of Common Stock. The weighted average exercise price was ~~$4.80~~$4.91 and the weighted average remaining contractual term was ~~2.68~~2.66 years.

As of ~~March 31,~~September 30, 2022, there were vested stock options granted under the 2017 Directors Plan covering a total of 420,000 shares of Common Stock. The ~~weighted-average~~weighted average exercise price was $5.10 and the weighted average remaining contractual term was ~~3.10~~2.57 years.

A summary of option activities under the 2017 Directors Plan during the ~~nine~~three months ended ~~March 31,~~September 30, 2023, is presented as follows:

Weighted
Average

Weighted
Average
Remaining
Contractual

Aggregate

Weighted

Weighted
Average
Remaining

Aggregate

Exercise

Term

Intrinsic

Average

Contractual

Intrinsic

Options

Price

(Years)

Value

Options

Exercise Price

Term (Years)

Value

Outstanding at July 1, 2022
420,000 $ 5.10 2.85 $ 228
Outstanding at July 1, 2023
420,000 $ 4.91 2.91 $ 309
Granted
100,000 4.51 - - - -
Exercised
- - - - - - - -
Forfeited or expired
(80,000 ) 5.98 - - - - - -
Outstanding at March 31, 2023
440,000 $ 4.80 $ 2.68 $ 303
Exercisable at March 31, 2023
440,000 $ 4.80 $ 2.68 $ 303
Outstanding at September 30, 2023
420,000 $ 4.91 2.66 $ 954
Exercisable at September 30, 2023
420,000 $ 4.91 2.66 $ 954

23

A summary of option activities under the 2017 Directors Plan during the ~~nine~~three months ended ~~March 31,~~September 30, 2022, is presented as follows:

Weighted
Average

Weighted
Average
Remaining
Contractual

Aggregate

Weighted

Weighted
Average
Remaining

Aggregate

Exercise

Term

Intrinsic

Average

Contractual

Intrinsic

Options

Price

(Years)

Value

Options

Exercise Price

Term (Years)

Value

Outstanding at July 1, 2021
320,000 $ 4.27 3.22 $ 340
Outstanding at July 1, 2022
420,000 $ 5.10 2.85 $ 228
Granted
100,000 7.76 - - - - -
Exercised
- - - - - - - -
Forfeited or expired
- - - - - - - -
Outstanding at March 31, 2022
420,000 5.10 0.60 942
Exercisable at March 31, 2022
420,000 5.10 3.07 942
Outstanding at September 30, 2022
420,000 $ 5.10 $ 2.57 $ 278
Exercisable at September 30, 2022
420,000 $ 5.10 $ 2.57 $ 278

- ~~2007~~22 ~~Directors Equity Incentive Plan~~
~~The Company’s~~ ~~2007~~ ~~Directors Plan permitted the grant of stock options to its directors in the form of nonqualified options and restricted stock. As of the last amendment thereof, the~~ ~~2007~~ ~~Directors Plan covered an aggregate of 500,000 shares of the Company’s Common Stock. The~~ ~~2007~~ ~~Directors Plan terminated by its terms on~~ ~~September 24, 2017,~~ ~~and~~ no ~~further options~~ ~~may~~ ~~be granted thereunder. Options outstanding thereunder continue to remain outstanding and in effect in accordance with their terms.~~
~~There were no stock options exercised during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2023.~~ ~~The Company did~~ ~~not~~ ~~recognize any stock-based compensation expense during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2023.~~
~~50,000 stock options were exercised during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022.~~ ~~The Company did~~ ~~not~~ ~~recognize any stock-based compensation expenses during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022.~~
~~As of~~ ~~March 31, 2023~~ ~~and~~ ~~March 31, 2022,~~ ~~there were no vested stock options granted under the~~ ~~2007~~ ~~Directors Plan.~~
~~A summary of option activities under the~~ ~~2007~~ ~~Directors Plan during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022~~ ~~is presented as follows:~~

Weighted
Average

Weighted
Average
Remaining
Contractual

Aggregate

Exercise

Term

Intrinsic

Options

Price

(Years)

Value

Outstanding at July 1, 2021
50,000 $ 4.14 0.75 $ 45
Granted
- - - -
Exercised
(50,000
)
4.14 - -
Forfeited or expired
- - - -
Outstanding at March 31, 2022
- $ - - $ -
Exercisable at March 31, 2022
- $ - - $ -
-

~~20.~~21.  LEASES

Company as Lessor

Operating leases under which the Company is the lessor arise from leasing the Company’s commercial real estate investment property to third parties. Initial lease terms generally range from 12 to 60 months. Depreciation expense for assets subject to operating leases is taken into account primarily on the straight-line method over a period of ~~twenty~~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 ~~were $54~~was $17 and ~~$58~~$18 for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, and ~~March 31,~~September 30, 2022, respectively.

24

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

Remainder of Fiscal 2023
$ 36
Fiscal 2024
141
Fiscal 2025
141
Fiscal 2026
46
Fiscal 2027
16
$ 380
Remainder of Fiscal 2024
$ 115
2025
137
2026
45
2027
15
$ 312

Future minimum rental income in China and Thailand to be received from Fiscal ~~2023~~2024 to Fiscal 2027 on non-cancelable operating leases is contractually due as follows as of June 30, ~~2022:~~2023:

2023
$ 6
2024
27 $ 141
2025
28 141
2026
29 46
2027
10 16
$ 100 $ 344

Sales-type leases under which the Company is the lessor arise from the lease of four units of chiller systems. The Company classifies its lease arrangements at inception of the arrangement. The lease term is three years, contains an automatic transfer of title at the end of the lease term and a guarantee of residual value at the end of the lease term. The customer is required to pay for executory ~~costs~~cost such as taxes.

- 23 -
Financing receivables, consisting of net investment in sales-type leases and receivables from financed sales of ~~four~~4 units of chiller systems are as follows:

Components of Lease Balances

Mar. 31,

Sept. 30,

June 30,

2023

2023

2023

(Unaudited)

Assets

Gross financial sales receivable
$ 23 $ 11 $ 17
Unearned finance income
(1 ) - (1
)
Financed sales receivable
$ 22 $ 11 $ 16

Net financed sales receivables due within one year
$ 22
Net financed sales receivables due after one year
$ -
Current portion of finance leases
$ 11 $ 16
Net of current portion of finance leases
$ - $ -
11 16

As of ~~March 31,~~September 30, 2023, the financed sale receivables had a weighted average effective interest rate of 11.2% and weighted average remaining lease term of 0.5 years.
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 ~~1 year.~~0.75 years.

Company as Lessee

The Company is the lessee under operating leases for corporate offices and research and development facilities with remaining lease terms of one year to four years and finance leases for plant and equipment.

Supplemental balance sheet information related to leases was as follows (in thousands):

Mar. 31,

Jun. 30,

Sept. 30,

June 30,

2023

2022

2023

2023

(Unaudited)

(Unaudited)

Finance Leases (Plant and Equipment)

Plant and equipment, at cost
$ 1,749 $ 1,727 $ 1,685 $ 1,734
Accumulated depreciation
(1,214
)
(1,179
)
(1,164
)
(1,075
)
Plant and Equipment, Net
$ 535 $ 548 $ 521 $ 659

Current portion of finance leases
$ 103 $ 118 $ 97 $ 107
Net of current portion of finance leases
43 119 24 42
Total Finance Lease Liabilities
$ 146 $ 237 $ 121 $ 149

Operating Leases (Corporate Offices, Research and Development Facilities)

Operating lease right-of-use assets
$ 3,059 $ 3,152 $ 2,563 $ 2,609
Operating lease right-of-use assets, Net
$ 3,059 $ 3,152 $ 2,563 $ 2,609

Current portion of operating leases
1,361 1,218 1,190 1,098
Net of current portion of operating leases
1,698 1,934 1,372 1,511
Total Operating Lease Liabilities
$ 3,059 $ 3,152 $ 2,562 $ 2,609

- 2524 -

Three Months Ended

Nine Months Ended

Mar. 31,

Mar. 31,

Mar. 31,

Mar. 31,

Three Months Ended

2023

2022

2023

2022

Sept. 30,

Sept. 30,

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

2023

2022

(Unaudited)

(Unaudited)

Lease Cost

Finance lease cost:

Interest on finance lease
$ 2 $ 9 $ 8 $ 20 $ 13 $ 16
Amortization of right-of-use assets
46 60 138 150 55 48
Total finance lease cost
48 69 146 170 68 64

Operating Lease Costs
$ 384 $ 331 $ 1,133 $ 801
Operating lease cost
$ 362 $ 380

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

Nine Months Ended

Three Months Ended

Mar. 31,

Mar. 31,

Sept. 30,

Sept. 30,

2023

2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Cash Paid for Amounts Included in the Measurement of Lease Liabilities

Operating cash flows from finance leases
$ (8 ) $ (20
)
$ (2
)
$ (3
)
Operating cash flows from operating leases
(1,008 ) (801
)
(346
)
(380
)
Finance cash flows from finance leases
(92 ) (168
)
(26
)
(36
)
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities
932 132

Weighted-Average Remaining Lease Term:

Finance leases
1.59 3.62 1.61 1.79
Operating leases
2.58 3.23 2.25 2.83
Weighted-Average Discount Rate:

Finance leases
3.22
%
3.60
%
2.99
%
3.23
%
Operating leases
5.68
%
4.83
%
5.61
%
5.52
%

As of ~~March 31,~~September 30, 2023, the maturities of the Company’s operating and finance lease liabilities are as follow:

Operating Lease
Liabilities

Finance Lease
Liabilities

Operating
Lease
Liabilities

Finance
Lease
Liabilities

Fiscal Year

Remainder of Fiscal 2023
$ 449 $ 27
2024
1,376 105
Remainder of Fiscal 2024
1,075 83
2025
876 21 944 33
2026
531 - 611 11
Thereafter
67 - 86 -
Total future minimum lease payments
$ 3,299 $ 153 2,716 127
Less: amount representing interest
(240 ) (7 ) (154 ) (6
)
Present value of net minimum lease payments
$ 3,059 $ 146 2,562 121

Presentation on statement of financial position

Current
1,361 103 1,190 97
Non-Current
1,698 43 1,372 24

- 25 -
As of June 30, ~~2022,~~2023, future minimum lease payments under finance leases and noncancelable operating leases were as follows:

Operating Lease
Liabilities

Finance Lease
Liabilities

Operating
Lease
Liabilities

Finance
Lease
Liabilities

Fiscal Year

2023
$ 1,357 $ 129
2024
1,032 104 1,321 112
2025
554 20 846 33
2026
423 - 570 12
Thereafter
69 - 64 -
Total future minimum lease payments
$ 3,435 $ 253 2,801 157
Less: amount representing interest
(283
)
(16
)
(192
)
(8
)
Present value of net minimum lease payments
$ 3,152 $ 237 2,609 149

Presentation on statement of financial position

Current
1,218 118 1,098 107
Non-Current
1,934 119 1,511 42

26

~~21.~~22.  FAIR VALUE OF FINANCIAL INSTRUMENTS APPROXIMATE CARRYING VALUE

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 ~~nine~~three months ended ~~March 31,~~September 30, 2023 and 2022.

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

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

Lines of credit (Level 3) – The carrying value of the lines of credit approximates fair value due to the short-term nature of the obligations.

Bank loans payable (Level 3) – The carrying value of the Company’s bank loans payable approximates its fair value as the interest rates associated with long-term debt is adjustable in accordance with market situations when the Company borrowed funds with similar terms and remaining maturities.

~~22.~~23. CONCENTRATION OF CUSTOMERS

The Company had two major customers ~~mainly contributed to manufacturing and testing segments~~ that accounted for the following revenue and trade account receivables:

Nine Months Ended

For the Period Ended Sept. 30,

Mar. 31,
2023

Mar. 31,
2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue

- Customer A
34.0 % 41.5 % 25.2
%
30.9 %
- Customer B
14.0 % 5.5 % 15.9
%
14.2 %
- Customer C
11.2 % 19.4 % 14.8
%
15.6 %
Trade Account Receivables

- Customer A
35.8 % 36.4 % 23.6
%
28.3 %
- Customer B
19.2 % 6.0 % 24.9
%
21.7 %
- Customer C
7.8 % 26.4 % 18.2
%
15.0 %

- 2726 -

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Overview

The following should be read in conjunction with the condensed consolidated financial statements and notes in Item I above and with the audited consolidated financial statements and notes, the information under the headings “Management’s discussion and analysis of financial condition and results of operations” in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2022.~~2023 (“Fiscal 2023”).

Trio-Tech International (“TTI”) was incorporated in 1958 under the laws of the State of California. As used herein, the term “Trio-Tech” or “Company” or “we” or “us” or “Registrant” includes Trio-Tech International and its subsidiaries unless the context otherwise indicates. Our mailing address and executive offices are located at Block 1008 Toa Payoh North, Unit 03-09 Singapore 318996, and our telephone number is (65) 6265 3300.

The Company is a provider of reliability test equipment and services to the semiconductor industry. Our customers rely on us to verify that their semiconductor components meet or exceed the rigorous reliability standards demanded for automotive electronics, industrial electronics, computing and data storage, consumer electronics, and communication markets. 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 ~~nine~~three months ended ~~March 31,~~September 30, 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”). Management is currently evaluating the ongoing contribution of each of its business segments to its current and future revenue and prospects, including its Testing segment. As a result, we may divest one or more business segments in the future, including its Testing segment, to allow management to focus on segments where it believes the opportunity exists to more accurately predict future revenue growth and therefore maximize shareholder value.

Manufacturing

TTI develops and manufactures an extensive range of test equipment used in the “front-end” and the “back-end” manufacturing processes of semiconductors. Our equipment includes leak detectors, autoclaves, centrifuges, burn-in systems and boards, HAST testers, temperature-controlled chucks, wet benches and more. We also act as an extended development team of Integrated Device Manufacturers ~~(IDMs)~~(“IDMs”) and Fabless semiconductor companies in the testing ~~processes~~process with our expert technical skills, especially in the New Product Introduction ~~(NPI)~~(“NPI”) process.

Testing

TTI provides comprehensive electrical, environmental, and burn-in testing services to semiconductor manufacturers in our testing laboratories in Asia and the ~~United States (“~~U.S.~~”).~~ Our customers include both manufacturers and end users of ~~semiconductors~~semiconductor and electronic components who look to us when they decide to outsource their testing process. We also support the asset-light strategy of our customers by setting up test facilities and providing component level, package level and system level testing services with expert technology that improves the productivity of our customers. The independent tests are performed to industry and customer specific standards.

Distribution

In addition to marketing our proprietary products, we distribute complementary products made by manufacturers around the world. The products include environmental chambers, mechanical shock &and vibration testers, and other semiconductor equipment. ~~Besides equipment, we~~We also distribute a wide range of components such as connectors, sockets, cables, LCD ~~display~~displays and touch screen panels. We act as value-added resellers by enhancing the value of the distributed products by customizing ~~them~~each to the needs of our customers through our expert engineering, integration, and sub-assembly services. We also support our customers as their extended research & development arm in product ~~designing, by~~design, leveraging the expert skills of our component engineers and design engineers.

Real Estate

Our real estate segment generates rental income and investment income from ~~the~~real estate investments made ~~and rental revenue received from real estate that we purchased~~ in Chongqing, China.
- 27 -

Critical Accounting Estimates & Policies

The preparation of our Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in applying our accounting policies that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base these estimates and assumptions on historical experience and evaluate them on an ongoing basis to ensure that they remain reasonable under current conditions. Actual results could differ from those estimates. We discuss the development and selection of the critical accounting estimates with the Audit Committee of our Board of Directors on a quarterly basis, and the Audit Committee has reviewed our related disclosure in this Quarterly Report on Form 10-Q.

28

There have been no material changes in our critical accounting estimates and policies since our Annual Report on Form 10-K for ~~the fiscal year ended June 30, 2022.~~Fiscal 2023. Refer to Note 1 “Basis of Presentation and Summary of ~~significant~~Significant Accounting Policies” to our Condensed Consolidated Financial Statements for additional details. 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 ~~our fiscal year ended June 30, 2022~~Fiscal 2023 for a complete description of our critical accounting policies and estimates.

~~Third~~First Quarter Fiscal Year ~~2023~~2024 Highlights

●
Total revenue decreased by ~~$1,296,~~$1,973, or ~~11.6%~~16.5%, to ~~$9,842~~$9,966 in the ~~third~~first quarter of ~~our fiscal year ending June 30, 2023 (“~~Fiscal ~~2023”),~~2024, compared to ~~$11,138~~$11,939 for the same period in ~~the fiscal year ended June 30, 2022 (“~~Fiscal ~~2022”).~~2023.
●
Manufacturing segment revenue decreased by ~~$134,~~$700, or ~~4.3%,~~19.5% to ~~$2,963 in~~$2,885 for the ~~third~~first quarter of Fiscal ~~2023,~~2024, compared to ~~$3,097~~$3,585 for the same period in Fiscal ~~2022.~~2023.
●
Testing segment revenue ~~increased~~decreased by ~~$1,280,~~$1,200, or ~~29.0%~~18.9%, to ~~$5,697 in~~$5,164 for the ~~third~~first quarter of Fiscal ~~2023,~~2024, compared to ~~$4,417~~$6,364 for the same period in Fiscal ~~2022.~~2023.
●
Distribution segment revenue decreased by ~~$2,441,~~$72, or ~~67.4%~~3.6%, to ~~$1,179 in~~$1,910 for the ~~third~~first quarter of Fiscal ~~2023,~~2024, compared to ~~$3,620~~$1,982 for the same period in Fiscal ~~2022.~~2023.
●
Real estate segment rental revenue decreased by $1, or ~~25%,~~12.5% to ~~$3 in~~$7 for the ~~third~~first quarter of Fiscal ~~2023,~~2024, compared to $4$8 for the same period in Fiscal ~~2022.~~2023.
●
The overall gross profit margin decreased by ~~$16, or 0.6%,~~5% to ~~$2,458 in~~25.3% for the ~~third~~first quarter of Fiscal ~~2023,~~2024, from ~~2,474~~30.3% for the same period in Fiscal ~~2022.~~2023.
●
General and administrative expense decreased by ~~$130,~~$147, or ~~5.5%~~6.4%, to ~~$2,248 in~~$2,158 for the ~~third~~first quarter of Fiscal ~~2023,~~2024, from ~~$2,378~~$2,305 for the same period in Fiscal ~~2022.~~2023.
●
Selling expense increased by ~~increased by~~ $14, or ~~9.6%~~8.1%, to ~~$160 in~~$187 for the ~~third~~first quarter of Fiscal ~~2023,~~2024, from ~~$146~~$173 for the same period in Fiscal ~~2022.~~2023.
●
Other income ~~decreased~~increased by ~~$4,~~$38, or ~~3.1%~~24.1%, to ~~$123 in~~$196 for the ~~third~~first quarter of Fiscal ~~2023,~~2024, from ~~other income of $127~~$158 for the same period in Fiscal ~~2022.~~2023.
●
Loss from operations was ~~$37~~$1 for the ~~third~~first quarter of Fiscal ~~2023,~~2024, a decrease of ~~$93~~$1,068 as compared to ~~loss~~income from operations ~~of $130~~$1,067 for the same period in Fiscal ~~2022.~~2023.
●
Income tax expense was ~~$8 for~~$37 in the ~~third~~first quarter of Fiscal ~~2023,~~2024, a decrease of ~~$162~~$188 as compared to ~~$170~~$225 in the same period in Fiscal ~~2022.~~2023.
●
During the ~~third~~first quarter of Fiscal ~~2023,~~2024, income from continuing operations before non-controlling interest, net of tax was ~~$49,~~$207, as compared to ~~loss~~income from continuing operations before non-controlling interest of ~~$204~~$977 for the same period in Fiscal ~~2022.~~2023.
●
Net ~~income~~loss attributable to non-controlling interest for the ~~second~~first quarter of Fiscal ~~2023~~2024 was ~~$61, an increase~~$23, a decrease of ~~$98~~$119 as compared to net ~~loss attributable to non-controlling interest~~profit of ~~$37~~$96 in the same period in Fiscal ~~2022.~~2023.
●
Basic earnings per share for the ~~third~~first quarter of Fiscal ~~2023~~2024 was ~~$Nil,~~$0.06, as compared to ~~loss~~earnings per share of ~~$0.04~~$0.22 for the same period in Fiscal ~~2022.~~2023.
●
Diluted earnings per share for the ~~third~~first quarter of Fiscal ~~2023~~2024 was ~~$Nil,~~$0.05, as compared to ~~loss~~earnings per share of ~~$0.04~~$0.21 for the same period in Fiscal ~~2022.~~2023.
●
Total assets increased by ~~$1,953~~$2,513 to ~~$45,374~~$44,699 as of ~~March 31,~~September 30, 2023, compared to ~~$43,421~~$42,186 as of June 30, ~~2022.~~2023.
●
Total liabilities ~~decreased~~increased by ~~$521~~$2,429 to ~~$14,898~~$15,044 as of ~~March 31,~~September 30, 2023, compared to ~~$15,419~~$12,615 as of June 30, ~~2022.~~2023.
- 28 -

Results of Operations and Business Outlook

The following table sets forth our revenue components for ~~both~~ three ~~and nine~~ months ended ~~March 31,~~September 30, 2023 and 2022.

Revenue Components

Three Months Ended

Nine Months Ended

Three Months Ended

Mar. 31,

Mar. 31,

Mar. 31,

Mar. 31,

Sept. 30,

2023

2022

2023

2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Manufacturing
30.1
%
27.8
%
33.9
%
31.6
%
28.9
%
30.0
%
Testing Services
57.9
%
39.6
%
51.8
%
43.4
%
Testing
51.8
%
53.3
%
Distribution
12.0
%
32.5
%
14.2
%
24.9
%
19.2 % 16.6 %
Real Estate
0.0
%
0.1
%
0.0
%
0.1
%
0.1
%
0.1
%

Total
100.0.
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%

Revenue for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, was ~~$9,842 and $34,171, respectively,~~$9,966, a decrease of ~~$1,296 and an increase of $1,940, respectively,~~$1,973 from $11,939, when compared to ~~the~~ revenue for the same period of ~~Fiscal 2022.~~the prior fiscal year. As a percentage, revenue decreased by ~~11.6% and increased by 6 %~~16.5% for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, when compared to revenue for the same period ~~of Fiscal 2022.~~in the prior year.

For the three months ended ~~March 31,~~September 30, 2023, there was ~~an increase~~a decrease in revenue in the Testing segment when compared to the same period of Fiscal 2022. The Manufacturing and Distribution segment’s revenue decreased compared to the same period of Fiscal 2022. For the nine months ended March 31, 2023, there was an increase in revenue in the Manufacturing and Testingacross all segments when compared to the same period of Fiscal ~~2022. The Distribution segment’s revenue decreased compared to the same period of Fiscal 2022.~~2023.
29

Total revenue into and within China, the Southeast Asia regions and other countries (except revenue into and within the U.S.) decreased by ~~$1,208 (or 11%)~~$1,938, or 16.9%, to ~~$9,719 and increased by $1,970 (or 6.3%) to $33,232~~$9,508 for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, ~~respectively,~~ as compared with ~~$10,927 and $31,262~~$11,446 for the same period of Fiscal ~~2022, respectively.~~2023.

Total revenue into and within the U.S. was ~~$123 and $937~~$457 for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, ~~respectively,~~ a decrease of ~~$99 and $51~~$36 from ~~$222 and $988~~$493 for the same ~~periods~~period of ~~Fiscal 2022, respectively.~~the prior year.

~~Revenue~~An analysis of the decline in revenue within our four current segments for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, is discussed below.

Manufacturing Segment

Revenue in the Manufacturing segment as a percentage of total revenue was ~~30.1% and 33.9%~~28.9% for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, ~~respectively,~~ an increase of ~~2.3%~~1.1% of total revenue when compared to ~~27.8% and 31.6%~~30.0% in the same period ofin Fiscal ~~2022.~~2023. The absolute amount of revenue decreased by ~~$134~~$700 to ~~$2,963 from $3,097~~$2,885 for the three months ended ~~March 31,~~September 30, 2023, compared to $3,585, in the same period of Fiscal 2023. The decrease was principally due to decrease in burn-in-board sales in Singapore operation. On the other hand, the absolute amount of revenue increased by $1,405 to $11,592 from $10,187 for the nine months ended March 31, 2023 mainly attributed to increasedlower board and system sales in the first ~~half~~quarter of Fiscal ~~2023~~2024 compared to the same period ofin Fiscal ~~2022.~~2023.

Revenue in the Manufacturing segment from one customer accounted for ~~44.6%~~18.7% and ~~55.8%~~16.3% of our total revenue in the Manufacturing segment for the three months ended ~~March 31, 2023, and 2022, respectively, and 32.4% and 46.2% of our total revenue in the Manufacturing segment for the nine months ended March 31,~~September 30, 2023, and 2022, respectively.

Testing ~~Services~~ Segment

The Testing segment's revenue was ~~57.9%~~51.8% for the three months ended ~~March 31,~~September 30, 2023, representing ~~an increase~~a decrease of ~~18.3%~~1.5%, compared to ~~39.6% for~~53.3% in the same period of Fiscal ~~2022. Revenue in the Testing segment was 51.8% as a percentage~~2023. The absolute amount of ~~total~~ revenue decreased by $1,200 to $5,164 from $6,364 for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, ~~an increase of 8.4%~~as compared to the same period of Fiscal ~~2022.~~2023. The absolute amount of revenue increased by $1,280 to $5,697 and increased by $3,726 to $17,709 from $4,417 and $13,983 for the three and nine months ended March 31, 2023, respectively, as compared to the same periods of Fiscal 2022. The increase is mainly attributed to the new subsidiary in China whichdecrease was ~~not yet operational in the same period of Fiscal 2022. The increase was partially offset by a drop in volume in other test plants~~principally due to ~~the~~ lower demand resulting from a weakening of the global semiconductor industry.

~~The revenue~~Revenue in the Testing segment from one customer accounted for ~~41.6%~~40.4% and ~~59.5%~~49.8% of our revenue in the Testing segment for the three months ended ~~March 31, 2023 and 2022, respectively, and 44.3% and 62.1% of our total revenue in the Testing segment for the nine months ended March 31,~~September 30, 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. Demand for testing services varies from country to country, depending on any changes taking place in the market and our customers’ forecasts. As it is challenging to forecast fluctuations in the market accurately, management believes it is necessary to maintain testing facilities in close proximity to the customers in order to make it convenient for them to send us their newly manufactured parts for testing and to enable us to maintain a share of the market.

- 29 -
Distribution Segment

Revenue in the Distribution segment was ~~12.0% and 14.2%~~19.2% as a percentage of total revenue for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, ~~respectively, a decrease~~an increase of ~~20.5% and 10.7%~~2.6%, compared to the same period ofin Fiscal ~~2022.~~2023. The absolute amount of revenue decreased by ~~$2,441~~$72 to ~~$1,179 and by $3,183 to $4,855~~$1,910 from ~~$3,620 and $8,038~~$1,982 for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, ~~respectively,~~ compared to the same period ofin Fiscal 2022. The decrease is mainly due to inventory adjustments made by our end customers who are currently carrying excess inventory, due to which demand is weak and deliveries are being pushed out to next fiscal year.2023.

The revenue in the Distribution segment from one customer accounted for ~~66.8%~~83% and ~~82.2%~~100% of our revenue in the Distribution segment for the three months ended ~~March 31, 2023 and 2022, respectively, and 78.7% and 77.9% of our total revenue in the Distribution segment for the nine months ended March 31,~~September 30, 2023 and 2022, 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. Hence it is difficult to forecast fluctuations in the market accurately.

Real Estate Segment

The Real Estate segment accounted for 0.1% of total revenue ~~decreased to $3 and $15 from $4 and $23~~ for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023 and 2022. The absolute amount of revenue decreased by $1 to $7 from $8 and remained comparable for the three months ended September 30, 2023, compared to the same period of Fiscal ~~2022.~~2023. Our Real Estate segment saw a decrease in rental income due principally to the low occupancy rate in the MaoYe and FuLi properties due to slower post-pandemic recovery in China.
30

Uncertainties and Remedies

There are several influencing factors which create uncertainties when forecasting performance, such as the ~~constantly~~ changing nature of technology, specific customer requirements, ~~from the customer,~~ decline in demand for certain types of burn-in devices or equipment, decline in demand for testing services and fabrication services, and other ~~similar~~ factors. One factor that influences uncertainty is the highly competitive nature of the semiconductor industry. ~~Another is that some~~Additionally, certain customers are unable to provide a forecast of the products required in the upcoming ~~weeks; hence~~weeks, rendering it, is difficult to plan ~~for the~~adequate resources needed to meet these customers’ requirements ~~due to~~because of short lead time and last-minute order confirmation. This will normally result in a lower margin for these products as it is often more expensive to purchase materials in a short time frame. However, the Company has taken certain actions and formulated certain plans to deal with and to help mitigate these unpredictable factors. For example, ~~in order~~ to meet manufacturing customers’ demands upon short notice, the Company maintains higher inventories but continues to work closely with its customers to avoid stockpiling. We believe that we have improved customer service through our efforts to keep our staff up to date on the newest technology and stressing the importance of understanding and meeting the stringent requirements of our customers. Finally, the Company is exploring new markets and products, looking for new customers, and upgrading and improving burn-in technology while at the same time searching for improved testing methods for higher technology chips.

The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar-denominated sales and operating expense in its subsidiaries. Strengthening of the United States dollar (“U.S. Dollar”) relative to foreign currencies adversely affects the U.S. Dollar value of the Company’s foreign currency-denominated sales and earnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company’s products. Margins on sales of the Company’s products in foreign countries and on sales of products that include components obtained from foreign suppliers could be materially adversely affected by foreign currency exchange rate fluctuations. In some circumstances, for competitive or other reasons, the Company may decide not to raise local prices to fully offset the U.S. Dollar’s strengthening, or at all, which would adversely affect the U.S. Dollar value of the Company’s foreign currency-denominated sales and earnings. Conversely, a strengthening of foreign currencies relative to the U.S. Dollar, while generally beneficial to the Company’s foreign currency denominated sales and earnings, could cause the Company to reduce international pricing, thereby limiting the benefit. 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 ~~March~~September 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. Risks and uncertainties related to ~~the COVID-19 pandemic,~~ supply chain challenges, and inflationary pressures may continue to negatively impact our revenue and gross margin. We continue to monitor and evaluate the business impact to react proactively.

On August 9, 2022, the CHIPS and Science Act of 2022 (CHIPS Act) was enacted in the United States. The CHIPS Act will provide financial incentives to the semiconductor industry which are primarily directed at manufacturing activities within the ~~United States.~~U.S. We continue to evaluate the business impact and potential opportunities related to the CHIPS Act. As of date, we do not see any direct effect of the CHIPS Act on the Company in the foreseeable future.
There are legal and operational risks associated with having operations in China. These risks could result in a material change in our operations and/or the value of our common stock or could limit or hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. In recent past, the Peoples Republic of China (“PRC”) government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.
The Company and its subsidiaries do not have any variable interest entities based in China. Our business primarily consists of semiconductor testing and burn-in services for the automotive industry, avionics, and others. Our businesses are not impacted by anti-monopoly policies, variable interest entities policies, or data security policies, nor are our businesses subject to extraordinary oversight from the Chinese government.

- 30 -

Comparison of the Three Months Ended ~~March 31,~~September 30, 2023, and ~~March 31,~~September 30, 2022

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the three months ended ~~March 31,~~September 30, 2023 and 2022 respectively:

Three Months Ended

Three Months Ended

March 31,

Sept. 30,

2023

2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue
100.0
%
100.0
%
100.0
%
100.0
%
Cost of sales
75.0
%
77.8
%
74.7
%
69.7
%
Gross Margin
25.0
%
22.2
%
25.3
%
30.3
%
Operating expense

General and administrative
22.8
%
21.4
%
21.6
%
19.3
%
Selling
1.6
%
1.3
%
1.9
%
1.4
%
Research and development
0.9
%
0.7
%
0.9
%
0.6
%
Loss on disposal of property, plant and equipment
0.9
%
0.0
%
Total operating expense
25.3
%
23.4
%
25.3
%
21.3
%
Income from Operations
(0.3 )% (1.2
)%
0.0
%
9.0
%

Overall Gross Margin

Overall gross margin as a percentage of revenue ~~increased~~decreased by ~~2.8%~~5.0% to ~~25%~~25.3% for the three months ended ~~March 31,~~September 30, 2023, from ~~22.2% for the same period of Fiscal 2022. Gross profits decreased by $14 to $2,458 for the three months ended March 31, 2023, from $2,474~~30.3% for the same period in Fiscal ~~2022.~~2023.

Gross profit margin as a percentage of revenue in the Manufacturing segment decreased by ~~1.0%~~0.6% to ~~17.3%~~29.0% for the three months ended ~~March 31,~~September 30, 2023, as compared to ~~18.3%~~29.6% for the same period in Fiscal ~~2022. Gross profits~~2023. In absolute dollar amounts, gross profit in the Manufacturing segment decreased by ~~$55~~$224 to ~~$512~~$836 for the three months ended ~~March 31,~~September 30, 2023, from ~~$567~~$1,060 for the same period in Fiscal ~~2022.~~2023. The decrease in gross profit margin was primarily due to a lower Burn-in-board and system sales ~~for the~~in three months ended ~~March 31,~~September 30, 2023 compared to the same period ofin Fiscal ~~2022.~~2023.

Gross profit margin as a percentage of revenue in the Testing segment ~~increased~~decreased by ~~2.5%~~8.5% to ~~30.8%~~26.7% for the three months ended ~~March 31,~~September 30, 2023, compared to ~~28.3%~~35.2% in the same period ofin Fiscal ~~2022.~~2023. The ~~increase~~decrease in gross profit margin percentage was mainly due to ~~higher proportion~~drop in revenue resulting from a weakening of ~~high-margin services coupled with effective cost control measures, mainly in Malaysia, China, and Thailand operations.~~global semiconductor industry. In absolute dollar amounts, gross profit in the ~~testing~~Testing segment ~~increased~~decreased by ~~$519~~$858 to ~~$1,757~~$1,380 for the three months ended ~~March 31,~~September 30, 2023, from ~~$1,248~~$2,238 for the same period ofin Fiscal ~~2022.~~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 as a result of fluctuations in market demand. Gross profit margin as a percentage of revenue in the Distribution segment decreased by ~~1.3%~~0.5% to ~~17.3%~~16.4% for the three months ended ~~March 31,~~September 30, 2023, from ~~18.6%~~16.9% in the same period ofin Fiscal ~~2022. Gross~~2023. In absolute dollar amounts, gross profit in the Distribution segment for the three months ended ~~March 31,~~September 30, 2023, was ~~$204,~~$314, indicating a decrease of ~~$472,~~$20, compared to ~~$675~~$334 in the same period ofin Fiscal ~~2022. The decrease in gross profit was primarily due to a lower sales for the three months ended March 31, 2023 compared to the same period of Fiscal 2022, due to inventory adjustments by customers.~~2023.

~~For the three months ended March 31, 2023,~~In absolute dollar amounts, gross loss in the Real Estate segment was ~~$15, as compared to $16~~$10 for three months ended September 30, 2023 and for the same period ofin Fiscal ~~2022.~~2023.
- 31 -

Operating Expense

Operating ~~expense~~Expense for the three months ended ~~March 31,~~September 30, 2023 and 2022 was as follows:

Three Months Ended

Three Months Ended

March 31,

Sept. 30,

2023

2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

General and administrative
$ 2,248 $ 2,378 $ 2,158 $ 2,305
Selling
160 146 187 173
Research and development
87 80 85 73
Gain on disposal of property, plant and equipment
- -
Loss on disposal of property, plant and equipment
91 4
Total
$ 2,495 $ 2,604 $ 2,521 $ 2,555

General and administrative expense decreased by ~~$130~~$147, or ~~5.5%~~6.4%, from ~~$2,378~~$2,305 to ~~$2,248~~$2,158 for the three months ended ~~March 31,~~September 30, 2023, compared to the same period ofin Fiscal ~~2022.~~2023. The decrease in general and administrative expense was mainly attributable to the ~~decrease~~implementation of cost cutting initiatives from Malaysia and China operations in ~~stock compensation costs and effective cost control in China operations.~~view of lower testing demand.
32

Selling expense increased by $14, or ~~9.6%~~8.1%, from ~~$146~~$187 to ~~$160~~$173 for the three months ended ~~March 31,~~September 30, 2023, compared to the same period ofin Fiscal ~~2022.~~2023. The increase in selling expense was primarily attributable to an increase in commission costs in the ~~Manufacturing~~manufacturing segment of the Singapore operations as a result of an increase in commissionable revenue, and an increase in travel costs due to increased business travel in the ~~third~~first quarter of Fiscal ~~2023,~~2024, compared to the same quarter ofin Fiscal ~~2022.~~2023.

~~Loss~~(Loss) / Income from Operations

~~Loss~~(Loss) / Income from operations was ~~$37~~$1 for the three months ended ~~March 31,~~September 30, 2023, a decrease of ~~$93,~~$1,068, compared to ~~loss~~profit of ~~$130~~$1,067 from operations for the same period ofin Fiscal ~~2022. This~~2023. The result was mainly due to ~~a decrease~~the decreased revenue and gross profit margin in ~~general and administrative expenses.~~absolute dollars amount.

Interest Expense

Interest expense for the three months ended ~~March 31,~~September 30, 2023 and 2022 ~~were~~was as follows:

Three Months Ended

March 31,

2023

2022

(Unaudited)

(Unaudited)

Interest expense
$ 29 $ 31

Three Months Ended

Sept. 30,

2023

2022

(Unaudited)

(Unaudited)

Interest expense
$ 24 $ 44

Interest expense was ~~$29~~$24 for the three months ended ~~March 31,~~September 30, 2023, a decrease of ~~$2,~~$20, or ~~6.4%~~45.4%, compared to ~~$31~~$44 for the same period of Fiscal ~~2022.~~2023 due to lower utilization of credit facilities. As of ~~March 31,~~September 30, 2023, the Company had an unused line of credit of ~~$5,806~~$5,379 as compared to ~~$5,158~~$5,289 at ~~March 31,~~September 30, 2022.
- 32 -

Other Income
Other income for the three months ended ~~March 31,~~September 30, 2023 and 2022 ~~were~~was as follows:

Three Months Ended

March 31,

Three Months Ended

2023

2022

September 30,

(Unaudited)

(Unaudited)

2023

2022

(Unaudited)

(Unaudited)

Interest income
$ 49 $ 13 $ 78 $ 18
Other rental income
30 30 36 27
Exchange loss
(47 ) (9
)
Government grant
83 62
Exchange gain
59

70
Other miscellaneous income
8 31 23 43
Total
$ 123 $ 127 $ 196 $ 158

Other income ~~decreased marginally~~increased by $4$38 from ~~$127~~$158 to ~~other expenses of $123~~$196 for the three months ended ~~March 31,~~September 30, 2023 compared to the same period in Fiscal ~~2022.~~2023. The ~~decrease~~increase was ~~mainly~~primarily contributed by ~~a negative foreign currency impact in the third quarter of Fiscal 2023, partially offset by an~~ increase in interest ~~income compared~~income.
Government Grant
In the three months ended September 30, 2023, the Company received government grants amounting to $73, $16 of which was financial assistance received from the ~~same period~~Singapore government, and the remaining $57 from the US government related to Employee Retention Credit (”ERC”).
In the three months ended September 30, 2022, the Company received government grants amounting to $21 from the local government in its China and Singapore operations.
The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) passed by the U.S. Congress, provided an ERC scheme which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the “Appropriations Act”) extended and expanded the availability of the ERC through December 31, 2021. The Appropriations Act amended the ERC to be equal to 70% of qualified wages paid to employees during Fiscal ~~2022.~~2021.
The Company qualified for the ERC beginning in April 30, 2021 for qualified wages through September 30, 2021 and filed a cash refund claim during the three months ended December 31, 2021. To date, the Company has received $57 during the three months ended September 30, 2023.

Income Tax Expense

The Company's income tax expense was $8$37 and ~~$170~~$225 for the three months ended ~~March 31,~~September 30, 2023, and 2022, respectively. ~~The decrease was primarily~~Income tax expense decreased due to ~~tax provision adjustments made pursuant to tax filings for Fiscal 2022.~~lower net income resulting from decrease in revenue mentioned earlier.

Non-controlling Interest

As of ~~March 31,~~September 30, 2023, we held a 55% interest in Trio-Tech (Malaysia) Sdn. Bhd., Trio-Tech (Kuala Lumpur) Sdn. Bhd., SHI International Pte. Ltd., and 52% interest in PT. SHI Indonesia. We also held a 76% interest in Prestal Enterprise Sdn. Bhd and 51% interest in ~~Trio-Tech~~Trio-tech JiangSu Co. Ltd. The share of non-controlling interest in the net ~~profit~~loss from the subsidiaries for the three months ended ~~March 31,~~September 30, 2023 was ~~$61, an increase~~$23, a decrease of ~~$98~~$119 compared to the share of non-controlling interest in the net ~~loss~~income from the subsidiaries of ~~$37~~$96 for the same period of ~~Fiscal 2022.~~the previous fiscal year. The ~~increase~~decrease in the net income shared by non-controlling interest in the subsidiaries was attributable to the ~~increase~~decrease in net income generated by the Company’s China ~~operation.~~
~~Net Loss Attributable to Trio-Tech International Common Shareholders~~
Net loss attributable to Trio-Tech International common shareholders for the three months ended March 31, 2023, was $7, a change of $160, compared to a net loss of $167 for the same period in Fiscal 2022.
33

~~Earnings / (Losses) per Share~~
Basic earnings per share from continuing operations were $nil for the three months ended March 31, 2023, compared to basic losses per share from continuing operations of $0.04 for the same period in Fiscal 2022. Basic earnings per share from discontinued operations were $nil for both the three months ended March 31, 2023, and ~~2022.~~
Diluted earnings per share from continuing operations were $nil for the three months ended March 31, 2023, as compared to diluted losses per share from continuing operations of $0.04 for the same period in Fiscal 2022. Diluted earnings per share from discontinued operations were $nil for both the three months ended March 31, 2023, and 2022.
~~Segment Information~~
The revenue, gross margin and income or loss from operations for each segment during the third quarter of Fiscal 2023 and Fiscal 2022 are presented below. As the revenue and gross margin for each segment have been discussed in the previous section, only the comparison of income or loss from operations is discussed below.
~~Manufacturing Segment~~
~~The revenue, gross margin and loss from operations for the Manufacturing segment for the three months ended March 31, 2023 and 2022 were as follows:~~

Three Months Ended

March 31,

2023

2022

(Unaudited)

(Unaudited)

Revenue
$ 2,963 $ 3,097
Gross margin
17.3
%
18.3
%
Loss from operations
$ (104
)
$ (145
)
Loss from operations from the Manufacturing segment was $104 compared to loss from operations of $145 in the same period of Fiscal 2022, primarily due to decrease in operating expense of $97. Operating expense for the Manufacturing segment were $615 and $712 for the three months ended March 31, 2023 and 2022, respectively. The decrease in operating expense was mainly due to a decrease of $216 in corporate overhead expense partially offset by an increase in general and administrative and selling expenses.
~~Testing Segment~~
~~The revenue, gross margin and income / (loss) from operations for the Testing segment for the three months ended March 31, 2023 and 2022 were as follows:~~

Three Months Ended

March 31,

2023

2022

(Unaudited)

(Unaudited)

Revenue
$ 5,697 $ 4,417
Gross margin
30.8
%
28.3
%
Income / (Loss) from operations
$ 37 $ (124
)
Income from operations in the Testing segment for the three months ended March 31, 2023 was $37 compared to loss from operations of $124 in the same period of Fiscal 2022. It was mainly attributable to an increase in revenue coupled with effective cost control. Operating expense was $1,720 and $1,372 for the three months ended March 31, 2023 and 2022, respectively. The increase of $348 in operating expenses was due to increase in general and administrative expenses and corporate expenses mainly relating to the new subsidiary in China, while offset by decrease in selling expenses.

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

Three Months Ended

March 31,

2023

2022

(Unaudited)

(Unaudited)

Revenue
$ 1,179 $ 3,620
Gross margin
17.3
%
18.6
%
Income from operations
$ 151 $ 576
Income from operations in the Distribution segment for three months ended March 31, 2023 was $151, compared to $576 for the same period of Fiscal 2022. The decrease of $425 was mainly due to lower sales. Operating expense were $53 and $99 for the three months ended March 31, 2023 and 2022, respectively.
~~Real Estate Segment~~
~~The revenue, gross margin and loss from operations for the Real Estate segment for the three months ended March 31, 2023 and 2022 were as follows:~~

Three Months Ended

March 31,

2023

2022

(Unaudited)

(Unaudited)

Revenue
$ 3 $ 4
Gross margin
(500
)%
(400
)%
Loss from operations
$ (34
)
$ (35
)
Loss from operations in the Real Estate segment was $34 for the three months ended March 31, 2023 compared to $35 for the same period of Fiscal 2022. Operating expense was $19 for the three months ended March 31, 2023 and 2022.
~~Corporate~~
~~The loss from operations for Corporate for the three months ended March 31, 2023 and 2022 was as follows:~~

Three Months Ended

March 31,

2023

2022

(Unaudited)

(Unaudited)

Loss from operations
$ (87
)
$ (402
)
~~Corporate operating loss was $87 for the three months ended March 31, 2023, compared to loss of $402 in the same period of Fiscal 2022.~~
35

~~Comparison of the Nine Months Ended March 31, 2023 and March 31, 2022~~
~~The following table sets forth certain consolidated statements of income data as a percentage of revenue for the nine months ended March 31, 2023 and 2022, respectively:~~
Nine Months Ended

Mar. 31,
2023

Mar. 31,
2022

(Unaudited) (Unaudited)
Revenue
100.0
%
100.0
%
Cost of sales
72.4 73.5
Gross Margin
27.6
%
26.5
%
Operating expenses:

General and administrative
18.9
%
19.6
%
Selling
1.5 1.4
Research and development
0.9 0.9
Total operating expenses
21.3
%
21.9
%
Income from Operations
6.3
%
4.6
%
~~Overall Gross Margin~~
Overall gross margin as a percentage of revenue increased marginally by 1.1% to 27.6% for the nine months ended March 31, 2023, compared to 26.5% in the same period of Fiscal 2022. Gross profits increased by $872 to $9,415 for the nine months ended March 31, 2023, from $8,543 for the same period of Fiscal 2022.
Gross profit margin as a percentage of revenue in the Manufacturing segment increased by 0.8% to 23.9% for the nine months ended March 31, 2023, from 23.1% in the same period of Fiscal 2022. Gross profit increased by $418 to $2,767 for the nine months ended March 31, 2023 compared to $2,349 for the same period of Fiscal 2022. The gross margin increase was primarily due to an increase in Manufacturing segment revenue in the nine months ended March 31, 2023, compared to the same period of Fiscal 2022.
Gross profit margin as a percentage of revenue in the Testing segment decreased by 1.3% to 33.3% for the nine months ended March 31, 2023, from 34.6% in the same period of Fiscal 2022. Gross profit in the Testing segment increased by $1,054 to $5,896 for the nine months ended March 31, 2023, from $4,842 for the same period of Fiscal 2022 due to an increase in testing services revenue, mainly contributed by the new subsidiary in China which was not yet operational in the same period of Fiscal 2022. The drop in margin resulted from lower demand due to inventory corrections made by customers in the second and third quarters of Fiscal 2023.
Gross profit margin as a percentage of revenue in the Distribution segment was 16.3% for the nine months ended March 31, 2023, compared to 17.3% in the same period of Fiscal 2022. Gross profit in the Distribution segment for the nine months ended March 31, 2023, was $791, a decrease of $595 compared to $1,386 in the same period of Fiscal 2022. The decrease in gross profit was due to the decrease in distribution sales in our Singapore operation compared to the same period of Fiscal 2022 resulting from inventory corrections made by customers.
~~Gross loss in the Real Estate segment increased by $3 to $39 for the nine months ended March 31, 2023, from $36 in the same period of Fiscal 2022.~~

~~Operating Expenses~~
~~Operating expenses for the nine months ended March 31, 2023 and 2022 were as follows:~~

Nine Months Ended

Mar. 31,
2023

Mar. 31,
2022

(Unaudited)

(Unaudited)

General and administrative
$ 6,472 $ 6,305
Selling
526 449
Research and development
311 293
Loss on disposal of plant and equipment
7 -
Total
$ 7,316 $ 7,047
General and administrative expenses increased by $167 or 2.6%, from $6,305 to $6,472 for the nine months ended March 31, 2023, compared to the same period of Fiscal 2022. The increase in general and administrative expenses was primarily due to the general and administrative expense relating to the Company’s new subsidiary Trio-Tech Jiangsu, which was setup in the third quarter of Fiscal 2022, coupled with inflationary impact on costs.
Selling expenses increased by $107 or 23.8%, for the nine months ended March 31, 2023, from $449 to $556 compared to the same period of Fiscal 2022. The increase in selling expenses was primarily attributable to an increase in commission expenses in the Manufacturing segment of Singapore operation as a result of an increase in commissionable revenue and increased travel costs.
~~Income from Operations~~
Income from operations was $2,099 for the nine months ended March 31, 2023, compared to $1,496 for the same period of Fiscal 2022. The increase was mainly due to the increase in gross profit margin, partially offset by an increase in operating expenses, as discussed earlier.
~~Interest Expense~~
~~Interest expense for the nine months ended March 31, 2023 and 2022 were as follows:~~

Nine Months Ended

Mar. 31,
2023

Mar. 31,
2022

(Unaudited)

(Unaudited)

Interest expense
$ 83 $ 87
Interest expense decreased marginally by $4 to $83 from $87 for the nine months ended March 31, 2023, compared to the same period of Fiscal 2022. The decrease was mainly due to lower utilization of lines of credit in the SingaporeMalaysia operations.
~~Other Income~~
~~Other income for the nine months ended March 31, 2023 and 2022 was as follows:~~

Nine Months Ended

Mar. 31,
2023

Mar. 31,
2022

(Unaudited)

(Unaudited)

Interest income
$ 104 $ 51
Other rental income
85 88
Exchange loss
(326
)
(13
)
Bad debt recovery
- 104
Government grant
108 160
Commission income
- 200
Other miscellaneous income
88 79
Total
$ 59 $ 669
Other income for the nine months ended March 31, 2023 was $59, a decrease of $610 compared to other income of $669 for the same period of Fiscal 2022. The decrease was mainly contributed by a negative foreign currency impact in the second quarter of Fiscal 2023 and the absence of one-time commission income that was earned in the same period in Fiscal 2022.

Our net income is impacted by the overall strengthening or weakening of the US dollars since the functional currency of our foreign subsidiaries is not the U.S. Dollars. During the second quarter in Fiscal 2023, exchange rate movement negatively impacted our net income due to the strengthening of Singapore dollars against the U.S. Dollar which was partially offset by the exchange gain that arose in the first quarter of fiscal 2023.
~~Income Tax Expenses~~
Income tax expenses for the nine months ended March 31, 2023 was $474, a decrease of $29 compared to of $503 for the same period of Fiscal 2022. The marginal decrease was contributed by tax provision adjustments made pursuant to the tax filings for Fiscal 2022.
~~Non-controlling Interest~~
As of March 31, 2023, we held a 55% interest in Trio-Tech (Malaysia) Sdn. Bhd., Trio-Tech (Kuala Lumpur) Sdn. Bhd., SHI International Pte. Ltd., and 52% interest in PT. SHI Indonesia. We also held a 76% interest in Prestal Enterprise Sdn. Bhd and 51% interest in Trio-Tech JiangSu Co. Ltd. The net income attributable to the non-controlling interest in these subsidiaries for the nine months ended March 31, 2023, was $215, a change of $240, compared to a net loss of $25 for the same period of Fiscal 2022. The increase was attributable to the increase in net income generated by the China operation.

Net Income Attributable to Trio-Tech International Common Shareholders

Net income ~~was $1,382~~attributable to Company’s common shareholders for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, was $230, a ~~decrease~~change of ~~$223~~$652, compared to a net income of ~~$1,605~~$882 for the same period ofin Fiscal ~~2022. The decrease was mainly due to the lower demand from customers in the second and third quarter of Fiscal 2023 in response to the overall inventory corrections in the semiconductor industry.~~  2023.
- 33 -

Earnings per Share

Basic earnings per share from continuing operations ~~was $0.34~~were $0.06 for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, compared to ~~$0.40~~$0.22 for the same period in Fiscal ~~2022.~~2023. Basic earnings per share from discontinued operations were $nil for both the ~~nine~~three months ended ~~March 31,~~September 30, 2023 and 2022.

Diluted earnings per share from continuing operations ~~was $0.33~~were $0.05 for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, as compared to ~~$0.38~~$0.21 for the same period ofin Fiscal ~~2022.~~2023. Diluted earnings per share from discontinued operations were $nil for both the ~~nine~~three months ended ~~March 31,~~September 30, 2023 and 2022.

Segment Information

The revenue, gross ~~profit~~ margin, and income / (loss) from operations infor each segment ~~for~~during the ~~nine months ended March 31,~~first quarter of Fiscal 2024 and Fiscal 2023 ~~and 2022, 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 ~~nine~~three months ended ~~March 31,~~September 30, 2023 and 2022 were as follows:

Three Months Ended

Nine Months Ended

Sept. 30,

Mar. 31,
2023

Mar. 31,
2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue
$ 11,592 $ 10,187 $ 2,885 $ 3,585
Gross margin
23.9
%
23.1
%
29.0
%
29.6
%
Income from operations
$ 373 $ 107
(Loss) / Income from operations
$ (42 ) $ 176

(Loss) / Income from operations from the Manufacturing segment was ~~$373 for the nine months ended March 31, 2023, an increase of $266 as~~$42 compared to ~~$107~~income from operations of $176 in the same period ofin Fiscal ~~2022~~2023, primarily due to an ~~increase~~decrease in gross profit margin. ~~The increase in gross margin was partially offset with an increase in operating expenses. The Manufacturing segment's operating expenses were $2,392 and $2,242~~Operating expense remained comparable for the ~~nine~~Manufacturing segment, which was $878 and $884 for the three months ended ~~March 31,~~September 30, 2023 and 2022, respectively. The increase in operating expenses of $150 was mainly due to an increase in general and administrative expenses by $150, compared to the same period of Fiscal 2022. The increase in general and administrative expenses was mainly attributable to an increase in payroll-related expenses in the Singapore operations. The increase in selling expenses was primarily attributable to an increase in commission expenses in the Manufacturing segment of Singapore operation because of an increase in commissionable revenue and increase in business travel.

Testing Segment

The revenue, gross margin, and income from operations for the Testing segment for the ~~nine~~three months ended ~~March 31,~~September 30, 2023 and 2022 were as follows:

Three Months Ended

Nine Months Ended

Sept. 30,

Mar. 31,
2023

Mar. 31,
2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue
$ 17,709 $ 13,983 $ 5,164 $ 6,364
Gross margin
33.3
%
34.6
%
26.7
%
35.2
%
Income from operations
$ 1,445 $ 999
(Loss) / Income from operations
$ (128
)
$ 861

~~Income~~Loss from operations in the Testing segment for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, was ~~$1,445, an increase~~$128, a decrease of ~~$446 compared to $999~~$989 from income from operations of $861 in the same period ofin Fiscal ~~2022~~2023. The decrease was mainly ~~because of increase~~attributable to a decrease in ~~revenue~~gross profit due to lower revenue. Operating expense was $1,508 and ~~gross profits. Operating expenses was $4,730 and $3,843~~$1,377 for the ~~nine~~three months ended ~~March 31,~~September 30, 2023 and 2022, respectively. The ~~higher~~increase of $131 in operating ~~expenses was mainly attributed~~expense is due to an increase in corporate ~~overheads of $567.~~expense partially offset by the decrease in general and administrative expenses.

The increase in corporate overhead expenses was due to a change in the corporate overhead allocation compared to the same period of Fiscal 2022. Corporate charges are allocated on a predetermined fixed charge basis.
- 34 -

Distribution Segment

The revenue, gross margin, and income from operations for the Distribution segment for the ~~nine~~three months ended ~~March 31,~~September 30, 2023 and 2022 were as follows:

Three Months Ended

Nine Months Ended

Sept. 30,

Mar. 31,
2023

Mar. 31,
2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue
$ 4,855 $ 8,038 $ 1,910 $ 1,982
Gross margin
16.3
%
17.2
%
16.4
%
16.9
%
Income from operations
$ 633 $ 1,107 $ 245 $ 265

Income from operations in the Distribution segment for ~~the nine~~three months ended ~~March 31,~~September 30, 2023 was ~~$633, a decrease of $474~~$245, compared to ~~$1,107 in~~$265 for the same period ofin Fiscal ~~2022.~~2023. The decrease ~~in operating income~~of $21 was ~~primarily~~mainly due to a decrease in gross margin of $596, which was partially offset with a decrease in operating expenses of $121. Operating expenses were $158 and $279 for the nine months ended March 31, 2023 and 2022, respectively. The decrease in operating expenses was mainly contributed by a decrease in general and administrative expenses of $86.profit margin.

Real Estate Segment

The revenue, gross margin and loss from operations for the Real Estate segment for the ~~nine~~three months ended ~~March 31,~~September 30, 2023 and 2022 were as follows:

Three Months Ended

Nine Months Ended

Sept. 30,

Mar. 31,
2023

Mar. 31,
2022

2023

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenue
$ 15 $ 23 $ 7 $ 8
Gross margin
260
%
163.6
%
(142.9
)%
(125.0
)%
Loss from operations
$ (76
)
$ (86
)
$ (26
)
$ (14
)

Loss from operations in the Real Estate segment for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, was ~~$76, a decrease of $10~~$26 compared to ~~$86~~$14 for the same period of Fiscal ~~2022. The decrease in operating loss was mainly due to a decrease in operating expenses.~~2023. Operating expenses was ~~$37~~$16 and ~~$51~~$4 for the ~~nine~~three months ended ~~March 31,~~September 30, 2023 and 2022, respectively.
39

Corporate

The loss from operations for ~~corporate~~Corporate for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, and 2022 ~~were~~was as follows:

Nine Months Ended

Mar. 31,
2023

Mar. 31,
2022

(Unaudited)

(Unaudited)

Loss from operations $ (276 ) $ (632
)

Three Months Ended

Sept. 30,

2023

2022

(Unaudited)

(Unaudited)

Loss from operations
$ (50
)
$ (221
)

~~The improvement~~Corporate operating loss was $50 for the three months ended September 30, 2023, compared to loss of ~~$356 was mainly due to a change~~$221 in ~~the corporate overhead allocation as compared to~~ the same period ~~last fiscal year. Corporate charges are allocated on a predetermined fixed charge basis.~~in Fiscal 2023.
- 35 -

Financial Condition

During the ~~nine~~three months ended ~~March 31,~~September 30, 2023, total assets increased by ~~$1,953~~$2,513 to ~~$45,374~~$44,699 compared to ~~$43,421~~$42,186 as of June 30, ~~2022.~~2023. The increase was primarily due to an increase in inventories, cash and cash equivalents, ~~term deposits,~~other receivables, other assets and ~~property, plant and equipment,~~trade account receivable partially offset by a decrease in ~~trade receivables, other receivables~~short term deposits, prepaid expenses, assets held for sale and ~~prepaid expenses.~~operating right-of-use assets.

Cash and cash equivalents were ~~$8,430 as~~$8,333 at ~~March 31,~~September 30, 2023, reflecting an increase of ~~$732~~$750 from ~~$7,698~~$7,583 as at June 30, ~~2022,~~2023, primarily due to ~~increased collections from customers.~~maturity of the short-term deposit in the Singapore operation for the three months ended September 30, 2023.

Short-term deposits ~~and restricted term deposits~~ were ~~$8,220 as~~$5,946 at ~~March 31,~~September 30, 2023, reflecting ~~an increase~~a decrease of ~~$1,122~~$681 from ~~$7,098~~$6,627 as at June 30, ~~2022.~~2023. The ~~increase~~decrease was ~~primarily due~~mainly attributed to ~~increased placement~~the maturity of ~~term deposits.~~short-term deposits in the Singapore operation during the three months ended September 30, 2023 which is reflected in the cash and cash equivalents. These deposits matured but were not rolled forward, as these funds were required for working capital purposes.

~~As at March 31,~~At September 30, 2023, the trade accounts receivable balance ~~decreased~~increased by ~~$588~~$1,169 to ~~$11,004,~~$10,973, from ~~$11,592~~$9,804 as at June 30, ~~2022,~~2023, primarily due to ~~a decrease~~an increase in ~~overall~~ revenue ~~of all entities on a consolidated basis~~from customers that have longer credit term in ~~the third quarter of Fiscal 2023.~~Singapore and China operation. The number of days’ sales outstanding in accounts receivables for the Group was 8794 days and 8182 days at the end of the ~~third~~first quarter of Fiscal ~~2023~~2024 and the end of Fiscal ~~2022,~~2023, respectively.

Other receivables as at ~~March 31,~~September 30, 2023, were $1,671, an increase of $732, compared to $939. The increase was mainly ~~comprised of~~due to higher advance payments made to ~~suppliers.~~suppliers and refundable services taxes in the Singapore Operation.

Inventories as at ~~March 31,~~September 30, 2023, were ~~$2,324,~~$4,023, an increase of ~~$66,~~$1,872, compared to ~~$2,258~~$2,151 as at June 30, ~~2022.~~2023. The increase in inventories ~~are primarily held for fulfilling sales~~mainly attributed to the increased backlog ~~and~~in the Manufacturing segment attributable to our Singapore operations which are expected to be delivered ~~within~~over the next two quarters.

Prepaid expenses ~~were $731 as~~was $660 at ~~March 31,~~September 30, 2023 compared to ~~$1,215 as~~$694 at June 30, ~~2022.~~2023. This was mainly due to the ~~asset capitalization of down payments made~~prepayment for ~~the purchase of equipment in the China operation.~~ insurance, rental and software license fee.

Investment ~~properties (net)~~properties’ net in China was ~~$517 as~~$458 at ~~March 31,~~September 30, 2023 and ~~$585~~$474 as at June 30, ~~2022.~~2023. The decrease was primarily due to the foreign currency exchange movement between June 30, ~~2022~~2023 and ~~March 31,~~September 30, 2023.

Property, plant and equipment ~~increased~~decreased by ~~$1,506~~$1,054 from ~~$8,481 as~~$8,344 at June 30, ~~2022,~~2023, to ~~$9,987~~$7,290 as at ~~March 31,~~September 30, 2023, mainly due to ~~the acquisition of new property, plant and equipment in the China operations. The increase was partially offset by~~ the depreciation charged for the period and the foreign currency exchange movement between June 30, ~~2022~~2023 and ~~March 31,~~September 30, 2023.

Other assets increased by ~~$95~~$47 to ~~$232~~$163 as at ~~March 31,~~September 30, 2023 compared to ~~$137 as~~$116 at June 30, ~~2022.~~2023.  This was primarily due to ~~rental~~an increase in utilities deposits ~~and foreign currency exchange movement between June 30, 2022 and March 31, 2023.~~in our Singapore operation.

Lines of credit ~~was $107 as~~increased to $297 at ~~March 31,~~September 30, 2023 as compared to ~~$929~~$Nil as at June 30, ~~2022. This~~2023. The increase in lines of credit was due to ~~lower utilization~~a drawdown of the lines of credit in ~~the~~our Singapore ~~Operations as of March 31, 2023.~~operation for working capital purposes.

Accounts payable ~~decreased~~increased by ~~$566~~$896 to ~~$1,835 as~~$2,556 at ~~March 31,~~September 30, 2023, as compared to ~~$2,401 as~~$1,660 at June 30, ~~2022~~2023 which was in line with the ~~decrease~~increase in ~~sales.~~inventories.

Accrued expense increased by ~~$566~~$1,939 to ~~$6,570 as~~$7,507 at ~~March 31,~~September 30, 2023, as compared to ~~$6,004~~$5,568 as at June 30, ~~2022.~~2023. The increase in accrued expense was mainly due to an increase in ~~accruals~~the accrued purchases, and contract liabilities relating to ~~acquisition of property, plant and equipment~~customers’ deposits received in the ~~China operations, and increase in contract liabilities in~~Company’s Singapore ~~operation.~~operations.

Bank loans payable decreased by ~~$177~~$120 to ~~$1,567 as~~$1,232 at ~~March 31,~~September 30, 2023, as compared to ~~$1,744~~$1,352 as of June 30, ~~2022. This~~2023. The decrease in bank loans payable was mainly due to the ~~repayments made~~repayment of bank loans in ~~the~~connection with our Malaysia operations.

Finance leases decreased by ~~$91~~$28 to ~~$146 as~~$121 at ~~March 31,~~September 30, 2023, as compared to ~~$237 as~~$149 at June 30, ~~2022.~~2023. This was due to the repayments ~~made~~of leases in ~~the~~connection with our Singapore and Malaysia operations.

Operating lease right-of-use assets and the corresponding lease liability decreased by ~~$93~~$47 to ~~$3,059 as~~$2,562 at ~~March 31,~~September 30, 2023, as compared to ~~$3,152 as~~$2,609 at June 30, ~~2022.~~2023. This was due to the repayment made and the operating lease expenses charged for the period.

40- 36 -

Other non-current liabilities increased by $924 to $952 as at March 31, 2023, as compared to $28 as at June 30, 2022. The increase was mainly due to an increase in accruals relating to acquisition of property, plant and equipment in the China operations where the payments term is more than 12 months.
Liquidity Comparison

Net cash ~~provided by~~used in operating activities increased by ~~$5,832~~$1,618 to an ~~inflow~~outflow of ~~$6,411~~$57 for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, from an inflow of ~~$579~~$1,561 for the same period ofin Fiscal ~~2022.~~2023. The increase in net cash outflow provided by operating activities was primarily due to ~~an increase~~lower net income generated of $7,104 in cash inflow from changes in depreciation, deferred tax benefit, trade receivables, other receivables, inventories, prepaid expenses and other current assets and other non-current liabilities in third quarter of Fiscal 2023 as$207 compared to the same period of Fiscal ~~2022. It was~~2023 and lower receipts from trade receivables and other receivables by $1,061, higher cash outflow for inventories by $573, prepaid expense by $501, other non-current liabilities by $367 and higher cash outflow for income tax payable $346. These are partially offset ~~by an increase of $1,400 in~~against higher cash ~~outflow~~inflow from ~~changes in stock compensation expense, accrued interest, other assets, account payable~~accounts payables and accrued expenses ~~income tax payable and operating lease in third quarter~~ of ~~Fiscal 2023 as compared to same period of Fiscal 2022.~~$1,399.

Net cash provided by investing activities decreased by ~~$4,717~~$516 to ~~an outflow of $4,179 for the nine months ended March 31, 2023, from~~ an inflow of ~~$538~~$814 for the three months ended September 30, 2023, from inflow of $1,330 for the same period ofin Fiscal ~~2022.~~2023. The ~~increase~~decrease in cash ~~outflow~~inflow was primarily due to ana decrease in withdrawal of unrestricted deposit by $1,793. These increases were partially offset by a decrease in additions to property, plant and equipment by $1,079 and proceeds from disposal of ~~$2,933..~~assets held for sale $198.

Net cash ~~outflow~~inflow from financing activities for the ~~nine~~three months ended ~~March 31,~~September 30, 2023, was ~~$1,078,~~$144, representing ~~a decrease~~an increase of ~~$1,588, as~~$558, compared to cash ~~inflow~~outflow of ~~$510~~$414 during the ~~nine~~three months ended ~~March 31,~~September 30, 2022. The ~~decrease~~increase was mainly attributable to a ~~higher payment on~~decrease in utilization of lines of credit by ~~$377, lower proceeds from exercising of stock options $410 and lower proceeds from lines of credits $883.~~$668.

~~On March 1, 2022,~~The Company filed a shelf registration statement with the ~~Company’s Registration Statement on Form S-3 (File No. 333-261485) was declared effective by the SEC,~~Securities and Exchange Commission, pursuant to which we may raise capital of ~~S$10,000,000 USD~~U.S. $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.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.  CONTROLS AND PROCEDURES

An evaluation was carried out by the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~March 31,~~September 30, 2023, the end of the period covered by this Form 10-Q. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective at a reasonable level.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the fiscal quarter ended ~~March 31,~~September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 37 -

TRIO-TECH INTERNATIONAL
PART II. OTHER INFORMATION
0
ITEM 1.         LEGAL PROCEEDINGS

Not applicable.

ITEM 1A.      RISK FACTORS

Not applicable.

ITEM 2.         UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3.         DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.         MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.        OTHER INFORMATION

Not applicable.

ITEM 6.        EXHIBITS

31.1
Rule 13a-14(a) Certification of Principal Executive Officer of Registrant
31.2
Rule 13a-14(a) Certification of Principal Financial Officer of Registrant
32
Section 1350 Certification
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

- 38 -

SIGNATURES

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

TRIO-TECH INTERNATIONAL

By:
/s/ Srinivasan Anitha
SRINIVASAN ANITHA
Chief Financial Officer
(Principal Financial Officer)
Dated: ~~May 15,~~November 13, 2023

43- 39 -

	March 31, 2023		June 30, 2022
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	8,430	$	7,698
Short-term deposits		5,703		5,420
Trade accounts receivable, less allowance for doubtful accounts of $223 and $243, respectively		11,004		11,592
Other receivables		757		998
Inventories, less provision for obsolete inventories of $743 and $674, respectively		2,324		2,258
Prepaid expenses and other current assets		731		1,215
Financed sales receivable		22		21
Restricted term deposits		755		-
Total current assets		29,726		29,202
NON-CURRENT ASSETS:
Deferred tax assets		91		169
Investment properties, net		517		585
Property, plant and equipment, net		9,987		8,481
Operating lease right-of-use assets		3,059		3,152
Other assets		232		137
Financed sales receivable		-		17
Restricted term deposits		1,762		1,678
Total non-current assets		15,648		14,219
TOTAL ASSETS	$	45,374	$	43,421

LIABILITIES
CURRENT LIABILITIES:
Lines of credit	$	107	$	929
Accounts payable		1,835		2,401
Accrued expenses		6,570		6,004
Income taxes payable		390		787
Current portion of bank loans payable		513		472
Current portion of finance leases		103		118
Current portion of operating leases		1,361		1,218
Total current liabilities		10,879		11,929
NON-CURRENT LIABILITIES:
Bank loans payable, net of current portion		1,054		1,272
Finance leases, net of current portion		43		119
Operating leases, net of current portion		1,698		1,934
Income taxes payable, net of current portion		255		137
Deferred tax liabilities		17		-
Other non-current liabilities		952		28
Total non-current liabilities		4,019		3,490
TOTAL LIABILITIES	$	14,898	$	15,419

EQUITY
TRIO-TECH INTERNATIONAL’S SHAREHOLDERS’ EQUITY:
Common stock, no par value, 15,000,000 shares authorized; 4,076,680 and 4,071,680 shares issued outstanding as at March 31, 2023 and June 30, 2022, respectively	$	12,769	$	12,750
Paid-in capital		5,045		4,708
Accumulated retained earnings		10,601		9,219
Accumulated other comprehensive income-translation adjustments		1,806		1,197
Total Trio-Tech International shareholders’ equity		30,221		27,874
Non-controlling interest		255		128
TOTAL EQUITY	$	30,476	$	28,002
TOTAL LIABILITIES AND EQUITY	$	45,374	$	43,421

	Nine Months			Operating
	Ended			Income /			Total		Depr. And		Capital
	Mar. 31,	Revenue		(Loss)			Assets		Amort.		Expenditures
Manufacturing	2023	$	11,592	$	373		$	15,056	$	365	$	18
	2022	$	10,187	$	108		$	14,204	$	318	$	103

Testing Services	2023		17,709		1,445			26,522		3,218		4,033
	2022		13,983		999			24,030		1,884		1,040

Distribution	2023		4,855		633			1,283		-		-
	2022		8,038		1,107			1,601		-		-

Real Estate	2023		15		(76	)		1,872		58		-
	2022		23		(86	)		1,730		61		1

Corporate & Unallocated	2023		-		(276	)		641		-		26
	2022		-		(632	)		238		-		-

Total Company	2023	$	34,171	$	2,099		$	45,374	$	3,641	$	4,077
	2022	$	32,231	$	1,496		$	41,803	$	2,263	$	1,144

	Mar. 31,		Jun. 30,		Sept. 30		June 30
	2023		2022		2023		2023
	(Unaudited)				(Unaudited)

Trade Accounts Receivable	$	11,004	$	11,592		10,973		9,804
Accounts Payable		1,835		2,401		2,556		1,660
Contract Liabilities		1,501		988		2,233		1,275

				Weighted Average		Weighted Average Remaining Contractual		Aggregate				Weighted		Weighted Average Remaining		Aggregate
				Exercise		Term		Intrinsic				Average		Contractual		Intrinsic
	Options			Price		(Years)		Value		Options		Exercise Price		Term (Years)		Value

Outstanding at July 1, 2022		236,375		$	5.21		2.61	$	87
Outstanding at July 1, 2023											216,375	$	4.89		2.92	$	140
Granted		65,000			4.84		-		-		48,000		4.88
Exercised		(5,000	)		3.75		-		-		-		-		-		-
Forfeited or expired		(80,000	)		-		-		-		-		-		-		-
Outstanding at March 31, 2023		216,375		$	4.89		3.17	$	117
Exercisable at March 31, 2023		134,625		$	4.49		2.52	$	109
Outstanding at September 30, 2023											264,375	$	4.88		3.05	$	590
Exercisable at September 30, 2023											152,875	$	4.55		2.30	$	390

				Weighted Average
	Options			Grant-Date Fair Value

Non-vested at July 1, 2023		81,750		$	5.53
Granted		48,000			4.81
Vested		(18,250	)		-
Non-vested at September 30, 2023		111,500		$	5.34

				Weighted Average
	Options			Grant-Date Fair Value

Non-vested at July 1, 2021		102,250		$	2.29
Granted		40,500			-
Vested		(46,875	)		-
Forfeited		-			-
Non-vested at March 31, 2022		95,875		$	2.29

Remainder of Fiscal 2023	$	36
Fiscal 2024		141
Fiscal 2025		141
Fiscal 2026		46
Fiscal 2027		16
	$	380

Components of Lease Balances	Mar. 31,			Sept. 30,		June 30,
				2023		2023
	2023			(Unaudited)
Assets
Gross financial sales receivable	$	23		$	11	$	17
Unearned finance income		(1	)		-		(1	)
Financed sales receivable	$	22		$	11	$	16

Net financed sales receivables due within one year	$	22
Net financed sales receivables due after one year	$	-
Current portion of finance leases				$	11	$	16
Net of current portion of finance leases				$	-	$	-
					11		16

	Operating Lease Liabilities			Finance Lease Liabilities			Operating Lease Liabilities			Finance Lease Liabilities
Fiscal Year
Remainder of Fiscal 2023	$	449		$	27
2024		1,376			105
Remainder of Fiscal 2024								1,075			83
2025		876			21			944			33
2026		531			-			611			11
Thereafter		67			-			86			-
Total future minimum lease payments	$	3,299		$	153			2,716			127
Less: amount representing interest		(240	)		(7	)		(154	)		(6	)
Present value of net minimum lease payments	$	3,059		$	146			2,562			121

Presentation on statement of financial position
Current		1,361			103			1,190			97
Non-Current		1,698			43			1,372			24

	Nine Months Ended						For the Period Ended Sept. 30,
	Mar. 31, 2023			Mar. 31, 2022			2023			2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue
- Customer A		34.0	%		41.5	%		25.2	%		30.9	%
- Customer B		14.0	%		5.5	%		15.9	%		14.2	%
- Customer C		11.2	%		19.4	%		14.8	%		15.6	%
Trade Account Receivables
- Customer A		35.8	%		36.4	%		23.6	%		28.3	%
- Customer B		19.2	%		6.0	%		24.9	%		21.7	%
- Customer C		7.8	%		26.4	%		18.2	%		15.0	%

Revenue Components	Three Months Ended						Nine Months Ended						Three Months Ended
	Mar. 31,			Mar. 31,			Mar. 31,			Mar. 31,			Sept. 30,
	2023			2022			2023			2022			2023			2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Manufacturing		30.1	%		27.8	%		33.9	%		31.6	%		28.9	%		30.0	%
Testing Services		57.9	%		39.6	%		51.8	%		43.4	%
Testing														51.8	%		53.3	%
Distribution		12.0	%		32.5	%		14.2	%		24.9	%		19.2	%		16.6	%
Real Estate		0.0	%		0.1	%		0.0	%		0.1	%		0.1	%		0.1	%

Total		100.0.	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

	Three Months Ended						Three Months Ended
	March 31,						Sept. 30,
	2023			2022			2023			2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Revenue		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		75.0	%		77.8	%		74.7	%		69.7	%
Gross Margin		25.0	%		22.2	%		25.3	%		30.3	%
Operating expense
General and administrative		22.8	%		21.4	%		21.6	%		19.3	%
Selling		1.6	%		1.3	%		1.9	%		1.4	%
Research and development		0.9	%		0.7	%		0.9	%		0.6	%
Loss on disposal of property, plant and equipment								0.9	%		0.0	%
Total operating expense		25.3	%		23.4	%		25.3	%		21.3	%
Income from Operations		(0.3	)%		(1.2	)%		0.0	%		9.0	%

31.1		Rule 13a-14(a) Certification of Principal Executive Officer of Registrant
31.2		Rule 13a-14(a) Certification of Principal Financial Officer of Registrant
32		Section 1350 Certification
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)