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false --06-30 Q1 2022 215 243 625 674 0 0 15,000,000 15,000,000
4,076,680 4,076,680 4,071,680 4,071,680 2,000 281 5,000 702 2,000
14 2 4,025 2 2 9 10 5 22 10 803 1.85 5.5 1.85 5.5 2 1.85 5.5 1.85
5.5 2 2.00 2.00 3.6 3.791 2,375 2,372 3.2 3.2 3.0 3.0 3.0 3.0
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4 2 100% owned by Trio-Tech International Pte. Ltd. Down Payment
for Purchase of Investment Properties Down payment for purchase of
investment properties included: RMB U.S. Dollars Original
Investment (10% of Junzhou equity) $ 10,000 $ 1,606 Less:
Management Fee (5,000 ) (803 ) Net Investment 5,000 803 Less: Share
of Loss on Joint Venture (137 ) (22 ) Net Investment as Down
Payment (Note *a) 4,863 781 Loans Receivable 5,000 814 Interest
Receivable 1,250 200 Less: Impairment of Interest (906 ) (150 )
Transferred to Down Payment (Note *b) 5,344 864 * Down Payment for
Purchase of Investment Properties 10,207 1,645 Less: Provision of
Impairment loss on other assets (10,207 ) (1,645 ) Down Payment for
Purchase of Investment Properties - - On December 2, 2010, the
Company signed a Joint Venture agreement (“agreement”) with Jia
Sheng Property Development Co. Ltd. (“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 million for the 10% investment
in the joint venture. The Developer paid the Company a management
fee of RMB 5 million in cash upon signing of the agreement, with a
remaining fee of RMB 5 million payable upon fulfilment of certain
conditions in accordance with the agreement. The Company further
reduced its investment by RMB 137, or approximately $22, through
the losses from operations incurred by the Joint Venture. On
October 2, 2013, the Company disposed of its entire 10% interest in
the Joint Venture but to date has not received payment in full
therefor. The Company recognized that disposal based on the
recorded net book value of RMB 5 million, or equivalent to $803K,
from net considerations paid, in accordance with GAAP under ASC
Topic 845 Non-monetary Consideration. It is presented under “Other
Assets” as noncurrent 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 that the gain
can be ascertained. Amounts of RMB 5,000, or approximately $773, as
disclosed in Note 6, plus the interest receivable on long term loan
receivable of RMB 1,250, or approximately $200, and impairment on
interest of RMB 906, or approximately $150.
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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 September 30, 2022
OR
☐ 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)
California
|
|
95-2086631
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification Number)
|
|
|
|
Block 1008 Toa Payoh North
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|
|
Unit 03-09 Singapore
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|
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
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Title of each
class
|
Trading Symbol
|
on which
registered
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Common Stock, no par value
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TRT
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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 November 1, 2022, there were 4,076,680 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
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Part I.
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Financial Information
|
|
|
|
|
Item 1.
|
Financial Statements
|
1
|
|
(a) Condensed Consolidated
Balance Sheets as of Sep 30, 2022 (Unaudited), and June 30,
2022
|
1 |
|
(b) Condensed Consolidated
Statements of Operations and Comprehensive Income/(Loss) for the
Three Months Ended September 30, 2022 (Unaudited), and September
30, 2021 (Unaudited)
|
2 |
|
(c) Condensed Consolidated
Statements of Shareholders’ Equity for the Three Months Ended
September 30, 2022 (Unaudited), and September 30, 2021
(Unaudited)
|
4 |
|
(d) Condensed Consolidated
Statements of Cash Flows for the Three Months Ended September 30,
2022 (Unaudited), and September 30, 2021 (Unaudited)
|
5 |
|
(e) Notes to Condensed
Consolidated Financial Statements (Unaudited)
|
6 |
Item 2.
|
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
|
27 |
Item 3.
|
Quantitative and Qualitative Disclosures
about Market Risk
|
37 |
Item 4.
|
Controls and Procedures
|
37 |
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|
|
Part II.
|
Other Information
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|
|
|
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Item 1.
|
Legal Proceedings
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38 |
Item 1A.
|
Risk Factors
|
38 |
Item 2.
|
Unregistered Sales of Equity Securities and
Use of Proceeds
|
38 |
Item 3.
|
Defaults upon Senior Securities
|
38 |
Item 4.
|
Mine Safety Disclosures
|
38 |
Item 5.
|
Other Information
|
38 |
Item 6.
|
Exhibits
|
38 |
|
|
|
Signatures
|
39 |
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; 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; the trade tension between U.S. and China; 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)
|
|
September 30,
2022
|
|
|
June 30,
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
9,428 |
|
|
$ |
7,698 |
|
Short-term deposits
|
|
|
2,829 |
|
|
|
5,420 |
|
Trade accounts receivable, less allowance for doubtful accounts of
$215 and
$243,
respectively
|
|
|
12,491 |
|
|
|
11,592 |
|
Other receivables
|
|
|
942 |
|
|
|
998 |
|
Inventories, less provision for obsolete inventories of
$625 and
$674,
respectively
|
|
|
3,548 |
|
|
|
2,258 |
|
Prepaid expenses and other current assets
|
|
|
631 |
|
|
|
1,215 |
|
Financed sales receivable
|
|
|
20 |
|
|
|
21 |
|
Total current assets
|
|
|
29,889 |
|
|
|
29,202 |
|
NON-CURRENT ASSETS:
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
173 |
|
|
|
169 |
|
Investment properties, net
|
|
|
533 |
|
|
|
585 |
|
Property, plant and equipment, net
|
|
|
8,687 |
|
|
|
8,481 |
|
Operating lease right-of-use assets
|
|
|
2,759 |
|
|
|
3,152 |
|
Other assets
|
|
|
121 |
|
|
|
137 |
|
Financed sales receivable
|
|
|
11 |
|
|
|
17 |
|
Restricted term deposits
|
|
|
1,632 |
|
|
|
1,678 |
|
Total non-current assets
|
|
|
13,916 |
|
|
|
14,219 |
|
TOTAL ASSETS
|
|
$ |
43,805 |
|
|
$ |
43,421 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Lines of credit
|
|
$ |
482 |
|
|
$ |
929 |
|
Accounts payable
|
|
|
3,469 |
|
|
|
2,401 |
|
Accrued expenses
|
|
|
6,179 |
|
|
|
6,004 |
|
Income taxes payable
|
|
|
968 |
|
|
|
787 |
|
Current portion of bank loans payable
|
|
|
491 |
|
|
|
472 |
|
Current portion of finance leases
|
|
|
104 |
|
|
|
118 |
|
Current portion of operating leases
|
|
|
1,130 |
|
|
|
1,218 |
|
Total current liabilities
|
|
|
12,823 |
|
|
|
11,929 |
|
NON-CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
|
Bank loans payable, net of current portion
|
|
|
1,251 |
|
|
|
1,272 |
|
Finance leases, net of current portion
|
|
|
91 |
|
|
|
119 |
|
Operating leases, net of current portion
|
|
|
1,629 |
|
|
|
1,934 |
|
Income taxes payable, net of current portion
|
|
|
137 |
|
|
|
137 |
|
Deferred tax liabilities
|
|
|
30 |
|
|
|
- |
|
Other non-current liabilities
|
|
|
26 |
|
|
|
28 |
|
Total non-current liabilities
|
|
|
3,164 |
|
|
|
3,490 |
|
TOTAL LIABILITIES
|
|
$ |
15,987 |
|
|
$ |
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 September 30 and June 30, 2022
|
|
$ |
12,769 |
|
|
|
12,750 |
|
Paid-in capital
|
|
|
4,740 |
|
|
|
4,708 |
|
Accumulated retained earnings
|
|
|
10,101 |
|
|
|
9,219 |
|
Accumulated other comprehensive income-translation adjustments
|
|
|
1 |
|
|
|
1,197 |
|
Total Trio-Tech International shareholders’ equity
|
|
|
27,611 |
|
|
|
27,874 |
|
Non-controlling interest
|
|
|
207 |
|
|
|
128 |
|
TOTAL EQUITY
|
|
$ |
27,818 |
|
|
$ |
28,002 |
|
TOTAL LIABILITIES AND EQUITY
|
|
$ |
43,805 |
|
|
$ |
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
|
|
|
|
Sept. 30,
2022
|
|
|
Sept. 30,
2021
|
|
Revenue
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
$ |
3,585 |
|
|
$ |
3,562 |
|
Testing services
|
|
|
6,364 |
|
|
|
4,600 |
|
Distribution
|
|
|
1,982 |
|
|
|
1,998 |
|
Real estate
|
|
|
8 |
|
|
|
11 |
|
|
|
|
11,939 |
|
|
|
10,171 |
|
Cost of Sales
|
|
|
|
|
|
|
|
|
Cost of manufactured products sold
|
|
|
2,525 |
|
|
|
2,434 |
|
Cost of testing services rendered
|
|
|
4,126 |
|
|
|
2,883 |
|
Cost of distribution
|
|
|
1,648 |
|
|
|
1,656 |
|
Cost of real estate
|
|
|
18 |
|
|
|
19 |
|
|
|
|
8,317 |
|
|
|
6,992 |
|
Gross Margin
|
|
|
3,622 |
|
|
|
3,179 |
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
2,305 |
|
|
|
1,980 |
|
Selling
|
|
|
173 |
|
|
|
147 |
|
Research and development
|
|
|
73 |
|
|
|
82 |
|
Gain on disposal of property, plant and equipment
|
|
|
4 |
|
|
|
- |
|
Total operating expenses
|
|
|
2,555 |
|
|
|
2,209 |
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
|
1,067 |
|
|
|
970 |
|
|
|
|
|
|
|
|
|
|
Other Income/(Expenses)
|
|
|
|
|
|
|
|
|
Interest expenses
|
|
|
(44 |
) |
|
|
(28 |
) |
Other income, net
|
|
|
179 |
|
|
|
161 |
|
Total other income
|
|
|
135 |
|
|
|
133 |
|
|
|
|
|
|
|
|
|
|
Income from Continuing Operations before Income
Taxes
|
|
|
1,202 |
|
|
|
1,103 |
|
|
|
|
|
|
|
|
|
|
Income Tax Expenses
|
|
|
(225 |
) |
|
|
(180 |
) |
|
|
|
|
|
|
|
|
|
Income from Continuing Operations before Non-controlling Interest,
Net of Tax
|
|
|
977 |
|
|
|
923 |
|
|
|
|
|
|
|
|
|
|
Discontinued Operations
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of tax
|
|
|
1 |
|
|
|
5 |
|
NET INCOME
|
|
|
978 |
|
|
|
928 |
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to the non-controlling interest
|
|
|
96 |
|
|
|
11 |
|
Net Income Attributable to Trio-Tech International Common
Shareholders
|
|
$ |
882 |
|
|
$ |
917 |
|
|
|
|
|
|
|
|
|
|
Amounts Attributable to Trio-Tech International Common
Shareholders:
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
|
882 |
|
|
|
914 |
|
Income from discontinued operations, net of tax
|
|
|
- |
|
|
|
3 |
|
Net Income Attributable to Trio-Tech International Common
Shareholders
|
|
$ |
882 |
|
|
$ |
917 |
|
|
|
|
|
|
|
|
|
|
Basic Earnings per Share:
|
|
|
|
|
|
|
|
|
Basic earnings per share from continuing operations attributable to
Trio-Tech International
|
|
$ |
0.22 |
|
|
$ |
0.23 |
|
Basic earnings per share from discontinued operations attributable
to Trio-Tech International
|
|
$ |
- |
|
|
$ |
- |
|
Basic Earnings per Share from Net Income Attributable to
Trio-Tech International
|
|
$ |
0.22 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share:
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations attributable
to Trio-Tech International
|
|
$ |
0.21 |
|
|
$ |
0.23 |
|
Diluted earnings per share from discontinued operations
attributable to Trio-Tech International
|
|
$ |
- |
|
|
$ |
- |
|
Diluted Earnings per Share from Net Income Attributable to
Trio-Tech International
|
|
$ |
0.21 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
4,077 |
|
|
|
3,913 |
|
Dilutive effect of stock options
|
|
|
81 |
|
|
|
94 |
|
Number of shares used to compute earnings per share
diluted
|
|
$ |
4,158 |
|
|
$ |
4,007 |
|
See notes to condensed consolidated financial statements.
TRIO-TECH INTERNATIONAL AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) /
INCOME
UNAUDITED (IN THOUSANDS)
|
|
Three Months Ended
|
|
|
|
Sept. 30,
|
|
|
Sept. 30,
|
|
|
|
2022
|
|
|
2021
|
|
Comprehensive Income Attributable to Trio-Tech International
Common
|
|
|
|
|
|
|
|
|
Shareholders
|
|
|
|
|
|
|
|
|
Net income
|
|
$ |
978 |
|
|
$ |
928 |
|
Foreign currency translation, net of tax
|
|
|
(1,213 |
) |
|
|
(289 |
) |
Comprehensive (Loss) / Income
|
|
|
(235 |
) |
|
|
639 |
|
Less: Comprehensive income attributable to the non-controlling
interests
|
|
|
79 |
|
|
|
4 |
|
Comprehensive (Loss) / Income Attributable to Trio-Tech
International Common Shareholders
|
|
$ |
(314 |
) |
|
$ |
635 |
|
See notes to condensed consolidated financial statements.
TRIO-TECH INTERNATIONAL AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
EQUITY
UNAUDITED (IN THOUSANDS)
Three months ended
September 30, 2022
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated Retained
|
|
|
Accumulated Other
Comprehensive
|
|
|
Non- controlling
|
|
|
|
|
|
|
|
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 |
|
Stock option expenses
|
|
|
- |
|
|
|
- |
|
|
|
32 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
32 |
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
882 |
|
|
|
- |
|
|
|
96 |
|
|
|
978 |
|
Dividend declared by subsidiary
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercise of stock option
|
|
|
5 |
|
|
|
19 |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
19 |
|
Translation adjustment
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
(1,196 |
)
|
|
|
(17 |
)
|
|
|
(1,213 |
)
|
Balance at Sept 30, 2022
|
|
|
4,077 |
|
|
|
12,769 |
|
|
|
4,740 |
|
|
|
10,101 |
|
|
|
1 |
|
|
|
207 |
|
|
|
27,818 |
|
Three months ended
September 30, 2021
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Accumulated Retained
|
|
|
Accumulated Other
Comprehensive
|
|
|
Non- controlling
|
|
|
|
|
|
|
|
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 |
|
Stock option expenses
|
|
|
- |
|
|
|
- |
|
|
|
12 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
12 |
|
Net income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
917 |
|
|
|
- |
|
|
|
11 |
|
|
|
928 |
|
Translation adjustment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
(282 |
) |
|
|
(7 |
) |
|
|
(289 |
) |
Balance at Sept. 30, 2021
|
|
|
3,913 |
|
|
|
12,178 |
|
|
|
4,245 |
|
|
|
7,741 |
|
|
|
2,117 |
|
|
|
423 |
|
|
|
26,704 |
|
See notes to condensed consolidated financial statements.
TRIO-TECH
INTERNATIONAL AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (IN THOUSANDS)
|
|
Three Months Ended
|
|
|
|
Sept. 30,
|
|
|
Sept. 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Cash Flow from Operating Activities
|
|
|
|
|
|
|
|
|
Net income/ (loss)
|
|
$ |
978 |
|
|
$ |
928 |
|
Adjustments to reconcile net income/(loss) to net cash flow
provided by operating activities
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
882 |
|
|
|
709 |
|
Addition of provision for obsolete inventories
|
|
|
(38 |
) |
|
|
11 |
|
Stock option expense
|
|
|
32 |
|
|
|
12 |
|
Bad debt recovery
|
|
|
(17 |
) |
|
|
(2 |
) |
Accrued interest expense, net accrued interest income
|
|
|
43 |
|
|
|
16 |
|
Payment of interest portion of finance lease
|
|
|
(3 |
) |
|
|
(6 |
) |
Gain on sale of property, plant and equipment - continuing
operations
|
|
|
(15 |
) |
|
|
- |
|
Warranty recovery, net
|
|
|
2 |
|
|
|
- |
|
Deferred tax expense
|
|
|
20 |
|
|
|
18 |
|
Changes in operating assets and liabilities, net of acquisition
effects
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
(886 |
) |
|
|
(1,105 |
) |
Other receivables
|
|
|
56 |
|
|
|
(30 |
) |
Other assets
|
|
|
11 |
|
|
|
(52 |
) |
Inventories
|
|
|
(1,341 |
) |
|
|
(362 |
) |
Prepaid expenses and other current assets
|
|
|
537 |
|
|
|
(893 |
) |
Accounts payable and accrued expenses
|
|
|
1,469 |
|
|
|
68 |
|
Income taxes payable
|
|
|
211 |
|
|
|
123 |
|
Operating lease liabilities
|
|
|
(380 |
) |
|
|
(146 |
) |
Net Cash Provided by / (Used in) Operating Activities
|
|
$ |
1,561 |
|
|
$ |
(711 |
) |
|
|
|
|
|
|
|
|
|
Cash Flow from Investing Activities
|
|
|
|
|
|
|
|
|
Withdrawal from unrestricted term deposits, net
|
|
|
2,486 |
|
|
|
664 |
|
Additions to property, plant and equipment
|
|
|
(1,156 |
) |
|
|
(438 |
) |
Net Cash Provided by Investing Activities
|
|
|
1,330 |
|
|
|
226 |
|
|
|
|
|
|
|
|
|
|
Cash Flow from Financing Activities
|
|
|
|
|
|
|
|
|
Payment on lines of credit
|
|
|
(938 |
) |
|
|
(301 |
) |
Payment of bank loans
|
|
|
(117 |
) |
|
|
(107 |
) |
Payment of finance leases
|
|
|
(36 |
) |
|
|
(53 |
) |
Proceeds from exercising stock options
|
|
|
19 |
|
|
|
- |
|
Proceeds from lines of credit
|
|
|
483 |
|
|
|
478 |
|
Proceeds from bank loans
|
|
|
175 |
|
|
|
- |
|
Net Cash (Used in) / Provided by Financing Activities
|
|
|
(414 |
) |
|
|
17 |
|
|
|
|
|
|
|
|
|
|
Effect of Changes in Exchange Rate
|
|
|
(793 |
) |
|
|
(214 |
) |
|
|
|
|
|
|
|
|
|
Net Increase / (Decrease) in Cash, Cash Equivalents, and
Restricted Cash
|
|
|
1,684 |
|
|
|
(682 |
) |
Cash, Cash Equivalents, and Restricted Cash at Beginning
of Period
|
|
|
9,376 |
|
|
|
7,577 |
|
Cash, Cash Equivalents, and Restricted Cash at End of
Period
|
|
$ |
11,060 |
|
|
$ |
6,895 |
|
|
|
|
|
|
|
|
|
|
Supplementary Information of Cash Flows
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$ |
43 |
|
|
$ |
122 |
|
Income taxes
|
|
$ |
1 |
|
|
$ |
52 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Cash, Cash Equivalents, and Restricted
Cash
|
|
|
|
|
|
|
|
|
Cash
|
|
|
9,428 |
|
|
|
5,173 |
|
Restricted Term-Deposits in Non-Current Assets
|
|
|
1,632 |
|
|
|
1,722 |
|
Total Cash, Cash Equivalents, and Restricted Cash Shown in
Statements of Cash Flows
|
|
$ |
11,060 |
|
|
$ |
6,895 |
|
See notes to condensed consolidated financial statements.
Amounts included in 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. Restricted deposits are
classified as non-current assets as they relate to long-term
obligations and will become unrestricted only upon discharge of the
obligations.
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 first quarter of
the fiscal year ended June 30, 2023
(“Fiscal 2023”), 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% owned by Trio-Tech International Pte. Ltd.)
|
55%
|
Penang and Selangor, Malaysia
|
Trio-Tech (Kuala Lumpur) Sdn. Bhd.
|
55%
|
Selangor, Malaysia
|
(100% owned by Trio-Tech Malaysia Sdn. Bhd.)
|
|
|
Prestal Enterprise Sdn. Bhd.
|
76%
|
Selangor, Malaysia
|
(76% owned by Trio-Tech International Pte. Ltd.)
|
|
|
Trio-Tech (SIP) Co., Ltd. *
|
100%
|
Suzhou, China
|
Trio-Tech (Chongqing) Co. Ltd. *
|
100%
|
Chongqing, China
|
SHI International Pte. Ltd. (Dormant)
(55% owned by Trio-Tech International Pte. Ltd)
|
55%
|
Singapore
|
PT SHI Indonesia (Dormant)
(100% owned by SHI International Pte. Ltd.)
|
52%
|
Batam, Indonesia
|
Trio-Tech (Tianjin) Co., Ltd. *
|
100%
|
Tianjin, China
|
Trio-Tech (Jiangsu) Co., Ltd.
(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
(“Fiscal 2022”). 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 three months ended September 30, 2022 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.
- 6-
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.
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 March 2020, FASB issued ASU
2020-04, updating ASC Topic 848: Reference Rate Reform (“Topic
848”): Facilitation of the
Effects of Reference Rate Reform on Financial Reporting (“ASU
2020-04”), which provides optional expedients and
exceptions for applying U.S. GAAP to contracts, hedging
relationships and other transactions affected by the
discontinuation of the London Interbank Offered Rate (“LIBOR”) or
by another reference rate expected to be discontinued. ASU
2020-04 is effective for all entities as of
March 12, 2020, and the Company
may elect to apply ASU 2020-04
prospectively through December 31,
2022. The Company has completed its assessment and concluded
that ASU 2020-04 has no
significant impact to the Company’s consolidated financial
statements.
In June 2016, FASB issued ASU
2016-13 ASC Topic 326, Financial Instruments — Credit
Losses (“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 will now use forward-looking information to better
inform their credit loss estimates. Many 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 326 is effective for the Company for annual
periods beginning after December 15,
2022. The Company has completed its assessment and concluded
that ASU 2016-03 has no
significant impact to the Company’s consolidated financial
statements.
Other new pronouncements issued but not yet effective until after September 30, 2022, are not expected to have a significant effect on
the Company’s consolidated financial position or results of
operations.
- 7-
3. TERM
DEPOSITS
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
|
2022
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term deposits
|
|
$ |
2,941 |
|
|
$ |
5,619 |
|
Currency translation effect on short-term deposits
|
|
|
(112 |
) |
|
|
(199 |
) |
Total short-term deposits
|
|
|
2,829 |
|
|
|
5,420 |
|
Restricted term deposits
|
|
|
1,680 |
|
|
|
1,746 |
|
Currency translation effect on restricted term deposits
|
|
|
(48 |
) |
|
|
(68 |
) |
Total restricted term deposits
|
|
|
1,632 |
|
|
|
1,678 |
|
Total term deposits
|
|
$ |
4,461 |
|
|
$ |
7,098 |
|
Restricted deposits represent the amount of cash pledged to secure
loans payable to 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 noncurrent 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 receivable on a periodic basis
to determine if any receivables will potentially be uncollectible.
Management includes any accounts receivable balances that are
determined to be uncollectible in the allowance for doubtful
accounts. After all reasonable attempts to collect a receivable
have failed, the receivable is written off against the
allowance. Based on the information available, management
believed the allowance for doubtful accounts as of September 30, 2022, and June 30, 2022, was adequate.
The following table represents the changes in the allowance for
doubtful accounts:
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
|
2022
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
|
|
$ |
243 |
|
|
$ |
311 |
|
Additions charged to expenses
|
|
|
- |
|
|
|
48 |
|
Recovered
|
|
|
(17 |
) |
|
|
(106 |
) |
Currency translation effect
|
|
|
(11 |
) |
|
|
(10 |
) |
Ending
|
|
$ |
215 |
|
|
$ |
243 |
|
- 8-
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 September 30, 2022.
|
Loan Expiry
|
|
Loan Amount
|
|
Loan Amount
|
|
Date
|
|
(RMB)
|
|
(U.S. Dollars)
|
Short-term loan receivables
|
|
|
|
|
|
JiangHuai (Project – Yu Jin Jiang An)
|
May 31, 2013
|
|
2,000
|
|
281
|
Less: allowance for doubtful receivables
|
|
|
(2,000)
|
|
(281)
|
Net loan receivables from property development projects
|
|
|
-
|
|
-
|
|
|
|
|
|
|
Long-term loan receivables
|
|
|
|
|
|
Jun Zhou Zhi Ye
|
Oct 31, 2016
|
|
5,000
|
|
702
|
Less: transfer – down-payment for purchase of investment
property
|
|
|
(5,000)
|
|
(702)
|
Net loan receivables from property development projects
|
|
|
-
|
|
-
|
The short-term loan receivables amounting to renminbi (“RMB”)
2,000, or
approximately $281 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 in the
fiscal year ended June 30, 2011
(“Fiscal 2011”). Based on
TTI’s financial policy, a provision for doubtful receivables of
$281 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 September 30,
2022 or for Fiscal 2022. TTCQ
is in the legal process of recovering the outstanding amount of
approximately $281.
The loan amounting to RMB 5,000, or approximately $702, arose due
to TTCQ entering into a Memorandum Agreement with JiaSheng Property
Development Co. Ltd. (“JiaSheng”) to invest in their property
development projects (Project B-48
Phase 2) located in Chongqing City,
China in Fiscal 2011. The 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:
|
|
Sept. 30, 2022
|
|
|
June 30, 2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
$ |
1,269 |
|
|
$ |
1,764 |
|
Work in progress
|
|
|
2,211 |
|
|
|
683 |
|
Finished goods
|
|
|
793 |
|
|
|
238 |
|
Less: provision for obsolete inventories
|
|
|
(625 |
) |
|
|
(674 |
) |
Currency translation effect
|
|
|
(100 |
) |
|
|
247 |
|
|
|
$ |
3,548 |
|
|
$ |
2,258 |
|
The following table represents the changes in provision for
obsolete inventories:
|
|
Sept. 30, 2022
|
|
|
June 30, 2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
|
|
$ |
674 |
|
|
$ |
679 |
|
Additions charged to expenses
|
|
|
- |
|
|
|
17 |
|
Usage – disposition
|
|
|
(38 |
) |
|
|
(34 |
) |
Currency translation effect
|
|
|
(11 |
) |
|
|
12 |
|
Ending
|
|
$ |
625 |
|
|
$ |
674 |
|
7. INVESTMENT
PROPERTIES
The following table presents the Company’s investment in properties
in China as of September 30, 2022.
The exchange rate is based on the market rate as of September 30, 2022.
|
Investment Date / Reclassification
|
|
Investment
|
|
|
Investment Amount
|
|
|
Date
|
|
Amount (RMB)
|
|
|
(U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of rental property – Property I – MaoYe Property
|
Jan 04, 2008
|
|
|
5,554 |
|
|
|
894 |
|
Currency translation
|
|
|
- |
|
|
|
(87 |
) |
Reclassification as “Assets held for sale”
|
July 01, 2018
|
|
|
(5,554 |
) |
|
|
(807 |
) |
Reclassification from “Assets held for sale”
|
Mar 31, 2019
|
|
|
2,024 |
|
|
|
301 |
|
|
|
|
|
2,024 |
|
|
|
301 |
|
Purchase of rental property – Property II - JiangHuai
|
Jan 06, 2010
|
|
|
3,600 |
|
|
|
580 |
|
Purchase of rental property – Property III - FuLi
|
Apr 08, 2010
|
|
|
4,025 |
|
|
|
648 |
|
Currency translation |
|
|
|
- |
|
|
|
(175 |
) |
Gross investment in rental
property
|
|
|
9,649 |
|
|
|
1,354 |
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation on rental property
|
Sep 30, 2022
|
|
|
(7,643 |
) |
|
|
(1,088 |
) |
Reclassified as “Assets held for sale”- MaoYe Property
|
July 01, 2018
|
|
|
2,822 |
|
|
|
410 |
|
Reclassification from “Assets held for sale”- MaoYe Property
|
Mar 31, 2019
|
|
|
(1,029 |
) |
|
|
(143 |
) |
|
|
|
|
(5,850 |
) |
|
|
(821 |
) |
Net investment in property –
China
|
|
|
3,799 |
|
|
|
533 |
|
The following table presents the Company’s investment in properties
in China as of June 30, 2022. The
exchange rate is based on the market rate as of June 30, 2022.
|
|
Investment
Date /
Reclassification
|
|
Investment
|
|
|
Investment Amount
|
|
|
|
Date
|
|
Amount (RMB)
|
|
|
(U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of rental property – Property I – MaoYe Property
|
|
Jan 04, 2008
|
|
|
5,554 |
|
|
|
894 |
|
Currency translation
|
|
|
|
|
- |
|
|
|
(87 |
) |
Reclassification as “Assets held for sale”
|
|
July 01, 2018
|
|
|
(5,554 |
) |
|
|
(807 |
) |
Reclassification from “Assets held for sale”
|
|
Mar 31, 2019
|
|
|
2,024 |
|
|
|
301 |
|
|
|
|
|
|
2,024 |
|
|
|
301 |
|
Purchase of rental property – Property II - JiangHuai
|
|
Jan 06, 2010
|
|
|
3,600 |
|
|
|
580 |
|
Purchase of rental property – Property III - FuLi
|
|
Apr 08, 2010
|
|
|
4,025 |
|
|
|
648 |
|
Currency translation |
|
|
|
|
- |
|
|
|
(89 |
) |
Gross investment in rental property
|
|
|
|
|
9,649 |
|
|
|
1,440 |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation on rental property
|
|
Jun 30, 2022
|
|
|
(7,523 |
) |
|
|
(1,122 |
) |
Reclassified as “Assets held for sale”- MaoYe Property
|
|
July 01, 2018
|
|
|
2,822 |
|
|
|
410 |
|
Reclassification from “Assets held for sale”- MaoYe Property
|
|
Mar 31, 2019
|
|
|
(1,029 |
) |
|
|
(143 |
) |
|
|
|
|
|
(5,730 |
) |
|
|
(855 |
) |
Net investment in property – China
|
|
|
|
|
3,919 |
|
|
|
585 |
|
- 10-
Rental Property I - MaoYe Property
In 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 lease agreement was entered into on February 10, 2022 for a period of 4 years at a monthly rate of RMB14, or approximately $2, after
termination of the previous agreement. Pursuant to the agreement,
monthly rental will increase by 5%
each year.
Property purchased from MaoYe generated a rental income of $6
during the three months ended
September 30, 2022, as compared to
$2 for the same period in Fiscal 2022.
Depreciation expense for MaoYe was $4 for the three months ended September 30, 2022, as compared to $4 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 June 30, 2022, 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 it is likely to cause delays in court to
consummate the execution of the sale.
Property purchased from JiangHuai did not generate any rental income for the
three months ended September 30, 2022 and 2021.
Depreciation expense for JiangHuai was $7 for the three months ended September 30, 2022, as compared to $7 for the
same period in last Fiscal 2022.
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.
One of the two
commercial properties was leased from TTCQ by a third party under a two-year lease to rent out the
154.49 square meter space at a monthly rate of RMB9, or approximately $1,
commencing from May 21, 2021, to
May 23, 2023. This agreement was
prematurely terminated in May 2022.
As of mid August 2022, TTCQ had
found a new tenant for this unit for a period of 1 year.
TTCQ is actively searching for tenants to occupy the one commercial properties, which is vacant as
of the date of this Report.
Properties purchased from FuLi generated a rental income of $2 for
the three months ended September 30, 2022, as compared to $9 for the
same period in Fiscal 2022.
Depreciation expense for FuLi was $7 for the three months ended September 30, 2022, as compared to $8 for the
same period in Fiscal 2022.
Summary
Total rental income for all investment properties in China was $8
for the three months ended
September 30, 2022, as compared to
$11 for the same period in Fiscal 2022.
Depreciation expenses for all investment properties in China were
$18 for the three months ended
September 30, 2022, as compared to
$19 for the same period in Fiscal 2022.
- 11-
8. OTHER
ASSETS
Other assets consisted of the following:
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
|
2022
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Down payment for purchase of investment properties *
|
|
$ |
- |
|
|
$ |
- |
|
Down payment for purchase of property, plant and equipment
|
|
|
- |
|
|
|
- |
|
Deposits for rental and utilities and others
|
|
|
136 |
|
|
|
142 |
|
Currency translation effect
|
|
|
(15 |
) |
|
|
(5 |
) |
Total
|
|
$ |
121 |
|
|
$ |
137 |
|
*Down payment for purchase of investment properties included:
|
|
2022 |
|
|
|
RMB
|
|
|
U.S. Dollars
|
|
Original Investment (10% of Junzhou equity)
|
|
$ |
10,000 |
|
|
$ |
1,606 |
|
Less: Management Fee
|
|
|
(5,000 |
) |
|
|
(803 |
) |
Net Investment
|
|
|
5,000 |
|
|
|
803 |
|
Less: Share of Loss on Joint Venture
|
|
|
(137 |
) |
|
|
(22 |
) |
Net Investment as Down Payment (Note *a)
|
|
|
4,863 |
|
|
|
781 |
|
Loans Receivable
|
|
|
5,000 |
|
|
|
814 |
|
Interest Receivable
|
|
|
1,250 |
|
|
|
200 |
|
Less: Impairment of Interest
|
|
|
(906 |
) |
|
|
(150 |
) |
Transferred to Down Payment (Note *b)
|
|
|
5,344 |
|
|
|
864 |
|
* Down Payment for Purchase of Investment Properties
|
|
|
10,207 |
|
|
|
1,645 |
|
Less: Effect of foreign currency exchange |
|
|
- |
|
|
|
(65 |
) |
Less: Provision of Impairment loss on other assets
|
|
|
(10,207 |
) |
|
|
(1,580 |
) |
* Down Payment for Purchase of Investment Properties
|
|
$ |
- |
|
|
$ |
- |
|
|
a)
|
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
million for the 10% investment in the Joint Venture. The Developer
paid the Company a management fee of RMB 5 million in cash upon
signing of the Agreement, with a remaining fee of RMB 5 million payable upon fulfilment
of certain conditions in accordance with the Agreement. The Company
further reduced its investment by RMB 137, 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 therefor. The Company recognized a disposal based
on the recorded net book value of RMB 5 million, or equivalent to
$803K, from net
considerations paid, in accordance with GAAP under ASC Topic
845 Non-monetary Consideration. It
is presented under “Other Assets” as noncurrent 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.
|
|
b)
|
Amounts of RMB 5,000, or approximately $814, as disclosed in Note
7, plus the interest receivable on
long-term loan receivable of RMB 1,250, or approximately $200, and
impairment on interest of RMB 906, or approximately $150.
The shop lots are to be delivered to TTCQ upon completion of the
construction of the shop lots in Singapore Themed Resort Project.
The initial targeted date of completion was in the fiscal year
ended June 30, 2017. However, the
progress has been delayed as the developer is currently undergoing
asset reorganization process, to re-negotiate with their 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
Chongging, China. The Company elected to take this non-cash
impairment charge due to increased uncertainties regarding the
project’s viability, given the developers weakening financial
condition as well as uncertainties arising from the negative
real-estate environment in China, implementation of control
measures on real-estate lending in China and its relevant
government policies, together with effects of the ongoing pandemic.
The local court is verifying the documents due to the sizable
number of creditors as of September 30,
2022.
|
- 12-
9. LINES OF CREDIT
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 September 30, 2022, the
Company had certain lines of credit that are collateralized by
restricted deposits.
Entity with
|
|
Type of
|
|
Interest
|
|
Credit
|
|
Unused
|
Facility
|
|
Facility
|
|
Rate
|
|
Limitation
|
|
Credit
|
Trio-Tech International Pte. Ltd., Singapore
|
|
Lines of Credit
|
|
Ranging from 1.85% to
5.5%
|
|
$
|
4,397
|
|
$
|
4,397
|
Universal (Far East) Pte. Ltd.
|
|
Lines of Credit
|
|
Ranging from 1.85% to
5.5%
|
|
$
|
1,047
|
|
$
|
565
|
Trio-Tech Malaysia Sdn. Bhd.
|
|
Revolving credit
|
|
Cost of Funds Rate
+2%
|
|
$
|
327
|
|
$
|
327
|
As of June 30, 2022, the Company
had certain lines of credit that are collateralized by restricted
deposits.
Entity with
|
|
Type of
|
|
Interest
|
|
Credit
|
|
Unused
|
Facility
|
|
Facility
|
|
Rate
|
|
Limitation
|
|
Credit
|
Trio-Tech International Pte. Ltd., Singapore
|
|
Lines of Credit
|
|
Ranging from 1.85% to
5.5%
|
|
$
|
4,090
|
|
$
|
3,651
|
Universal (Far East) Pte. Ltd.
|
|
Lines of Credit
|
|
Ranging from 1.85% to
5.5%
|
|
$
|
1,076
|
|
$
|
586
|
Trio-Tech Malaysia Sdn. Bhd.
|
|
Revolving credit
|
|
Cost of Funds Rate
+2%
|
|
$
|
338
|
|
$
|
338
|
10. ACCRUED
EXPENSE
Accrued expense consisted of the following:
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
|
2022
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll and related costs
|
|
$ |
2,469 |
|
|
$ |
2,158 |
|
Commissions
|
|
|
133 |
|
|
|
116 |
|
Customer deposits
|
|
|
9 |
|
|
|
10 |
|
Legal and audit
|
|
|
346 |
|
|
|
320 |
|
Sales tax
|
|
|
76 |
|
|
|
531 |
|
Utilities
|
|
|
215 |
|
|
|
273 |
|
Warranty
|
|
|
18 |
|
|
|
16 |
|
Accrued purchase of materials and property, plant and equipment
|
|
|
456 |
|
|
|
905 |
|
Provision for reinstatement
|
|
|
298 |
|
|
|
308 |
|
Deferred income
|
|
|
49 |
|
|
|
55 |
|
Contract liabilities
|
|
|
1,218 |
|
|
|
933 |
|
Other accrued expense
|
|
|
829 |
|
|
|
571 |
|
Currency translation effect
|
|
|
63 |
|
|
|
(192 |
) |
Total
|
|
$ |
6,179 |
|
|
$ |
6,004 |
|
- 13-
11.
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.
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
|
2022
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
|
|
$ |
16 |
|
|
$ |
14 |
|
Additions charged to cost and expense
|
|
|
1 |
|
|
|
7 |
|
Reversal
|
|
|
(1 |
) |
|
|
(4 |
) |
Currency translation effect
|
|
|
2 |
|
|
|
(1 |
) |
Ending
|
|
$ |
18 |
|
|
$ |
16 |
|
12. BANK
LOANS PAYABLE
Bank loans payable consisted of the following:
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
|
2022
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note payable denominated in the Malaysian Ringgit for expansion
plans in Malaysia, maturing in April 2028, bearing interest at the
bank’s prime rate less 2.00% (3.6% and 3.791% at September 30, 2022 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 $2,375 and $2,372, as at September 30, 2022
and June 30, 2022, respectively.
|
|
$ |
1,254 |
|
|
$ |
1,392 |
|
Financing arrangement at fixed interest rate 3.2% per annum, with
monthly payments of principal plus interest through July 2025.
|
|
|
114 |
|
|
|
128 |
|
Financing arrangement at fixed interest rate 3.0% per annum, with
monthly payments of principal plus interest through December
2026.
|
|
|
206 |
|
|
|
224 |
|
Financing arrangement at fixed interest rate 3.0% per annum, with
monthly payments of principal plus interest through August
2027.
|
|
|
168 |
|
|
|
- |
|
Total bank loans payable
|
|
$ |
1,742 |
|
|
$ |
1,744 |
|
|
|
|
|
|
|
|
|
|
Current portion of bank loans payable
|
|
|
508 |
|
|
|
503 |
|
Currency translation effect on current portion of bank loans
|
|
|
(17 |
) |
|
|
(31 |
) |
Current portion of bank loans payable
|
|
|
491 |
|
|
|
472 |
|
Long-term portion of bank loans payable
|
|
|
1,295 |
|
|
|
1,357 |
|
Currency translation effect on long-term portion of bank loans
|
|
|
(44 |
) |
|
|
(85 |
) |
Long-term portion of bank loans payable
|
|
$ |
1,251 |
|
|
|
1,272 |
|
- 14-
Future minimum payments (excluding interest) as at September 30, 2022, were as follows:
Remainder of Fiscal 2023
|
|
$ |
367 |
|
2024
|
|
|
497 |
|
2025
|
|
|
270 |
|
2026
|
|
|
242 |
|
2027
|
|
|
221 |
|
Thereafter
|
|
|
145 |
|
Total obligations and commitments
|
|
$ |
1,742 |
|
Future minimum payments (excluding interest) as at June 30, 2022, were as follows:
2023
|
|
$ |
472 |
|
2024
|
|
|
481 |
|
2025
|
|
|
246 |
|
2026
|
|
|
214 |
|
2027
|
|
|
190 |
|
Thereafter
|
|
|
141 |
|
Total obligations and commitments
|
|
$ |
1,744 |
|
13. COMMITMENTS AND
CONTINGENCIES
The Company had capital commitments in China for the purchase of
equipment and other related infrastructure costs amounting to
RMB17,203, or
approximately $2,415 as of September 30,
2022. These commitments are primarily due within the next
24 months.
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 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 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
$554 and $588 for 3 months ended
September 30, 2022, and September 30, 2021 respectively. Corporate
assets consisted primarily of cash and prepaid expense. Corporate
expense consisted primarily of stock option expense, salaries,
insurance, professional expenses and directors' fees. Corporate
expenses are allocated to the four segments on a predetermined
fixed amount calculated based on the annual budgeted sales, except
the Malaysia operation, 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 three months ended September 30, 2022, and September 30, 2021:
Business Segment Information:
|
Three Months
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended
|
|
Net
|
|
|
Operating
|
|
|
Total
|
|
|
Depr. And
|
|
|
Capital
|
|
|
Sept. 30,
|
|
Revenue
|
|
|
Income / (Loss)
|
|
|
Assets
|
|
|
Amort.
|
|
|
Expenditures
|
|
Manufacturing
|
2022
|
|
$ |
3,585 |
|
|
$ |
176 |
|
|
$ |
12,791 |
|
|
$ |
97 |
|
|
$ |
- |
|
|
2021
|
|
$ |
3,562 |
|
|
$ |
300 |
|
|
$ |
18,558 |
|
|
$ |
103 |
|
|
$ |
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Testing Services
|
2022
|
|
|
6,364 |
|
|
|
1,087 |
|
|
|
27,770 |
|
|
|
767 |
|
|
|
1,156 |
|
|
2021
|
|
|
4,600 |
|
|
|
536 |
|
|
|
18,363 |
|
|
|
585 |
|
|
|
377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
2022
|
|
|
1,982 |
|
|
|
265 |
|
|
|
1,603 |
|
|
|
- |
|
|
|
- |
|
|
2021
|
|
|
1,998 |
|
|
|
254 |
|
|
|
1,288 |
|
|
|
2 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate
|
2022
|
|
|
8 |
|
|
|
(14 |
) |
|
|
1,490 |
|
|
|
18 |
|
|
|
- |
|
|
2021
|
|
|
11 |
|
|
|
(23 |
) |
|
|
1,588 |
|
|
|
19 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate & Unallocated
|
2022
|
|
|
- |
|
|
|
(447 |
) |
|
|
151 |
|
|
|
- |
|
|
|
- |
|
|
2021
|
|
|
- |
|
|
|
(97 |
) |
|
|
314 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company
|
2022
|
|
$ |
11,939 |
|
|
$ |
1,067 |
|
|
$ |
43,805 |
|
|
$ |
882 |
|
|
$ |
1,156 |
|
|
2021
|
|
$ |
10,171 |
|
|
$ |
970 |
|
|
$ |
40,111 |
|
|
$ |
709 |
|
|
$ |
438 |
|
15. OTHER INCOME
Other income consisted of the following:
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
18 |
|
|
$ |
22 |
|
Other rental income
|
|
|
27 |
|
|
|
29 |
|
Exchange gain
|
|
|
70 |
|
|
|
34 |
|
Bad debt recovery
|
|
|
- |
|
|
|
2 |
|
Government grant
|
|
|
21 |
|
|
|
70 |
|
Other miscellaneous income
|
|
|
43 |
|
|
|
4 |
|
Total
|
|
$ |
179 |
|
|
$ |
161 |
|
16. INCOME
TAX
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 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 $43 and $23 for the
period ended September 30, 2022,
and 2021, respectively.
The Company's income tax expense was $225 for the three months ended September 30, 2022, as compared to $180 for
the same period in Fiscal 2022. Our
effective tax rate (“ETR”) from continuing operations was 19% and
16% for the quarters ended September 30,
2022 and September 30, 2021,
respectively. The increase in income tax expense and effective tax
rate was due to the following:
1.
|
The Singapore operations incurred higher income tax due to higher
income generated in period ended September 30,2022 compared to same period last fiscal
year.
|
2.
|
The Company recognizing higher GILTI expenses due to higher income
derived from controlled foreign corporation
|
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
September 30, 2022.
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. REVENUE
The Company generates revenue primarily from 3 different segments: Manufacturing, Testing
and 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.
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.
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:
●
|
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 of sales under the Manufacturing segment include a
standard 12-month warranty which
are mainly assurance warranty and are not separate performance obligations.
Warranty provided for some customized products may be classified as 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, particularly
equipment, industrial products and components by manufacturers
mainly from the U.S., Europe and Taiwan. 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.
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.
The following table is the reconciliation of contract balances.
|
|
Sept. 30
|
|
|
June 30
|
|
|
|
2022
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade Accounts Receivable
|
|
|
12,491 |
|
|
|
11,592 |
|
Accounts Payable
|
|
|
3,469 |
|
|
|
2,401 |
|
Contract Liabilities
|
|
|
1,218 |
|
|
|
933 |
|
Remaining Performance Obligation
As at September 30, 2022, the
Company had $235 of remaining performance obligations, which
represents our obligation to deliver products and services within
two years.
As at June 30, 2022, the Company
had $326 of remaining performance obligations, which represents our
obligation to deliver products and services.
Refer to Note 14 “Business Segments” of
the Notes to Condensed Consolidated Financial Statements for
information related to revenue.
- 18-
18. EARNINGS
PER SHARE
Options to purchase 636,375 shares of Common Stock at exercise
prices ranging from $3.75 to $7.76 per share were outstanding as of
September 30, 2022. 84,625 stock
options were excluded in the computation of diluted earnings per
share (“EPS”) for the three months
ended September 30, 2022, because
they were anti-dilutive.
Options to purchase 674,500 shares of Common Stock at exercise
prices ranging from $2.53 to $5.98 per share were outstanding as of
September 30, 2021. 94,011 stock
options were included in the computation of diluted EPS for the
three months ended September 30, 2021, because they were
dilutive.
The following table is a reconciliation of the weighted average
shares used in the computation of basic and diluted EPS for the
period presented herein:
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Income attributable to Trio-Tech International common shareholders
from continuing operations, net of tax
|
|
$ |
882 |
|
|
$ |
914 |
|
Income attributable to Trio-Tech International common shareholders
from discontinued operations, net of tax
|
|
|
- |
|
|
|
3 |
|
Net Income attributable to Trio-Tech International common
shareholders
|
|
$ |
882 |
|
|
$ |
917 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding – basic
|
|
|
4,077 |
|
|
|
3,913 |
|
Dilutive effect of stock options
|
|
|
81 |
|
|
|
94 |
|
Number of shares used to compute earnings per share – diluted
|
|
|
4,158 |
|
|
|
4,007 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share from continuing operations attributable to
Trio-Tech International
|
|
|
0.22 |
|
|
|
0.23 |
|
|
|
|
|
|
|
|
|
|
Basic earnings per share from discontinued operations attributable
to Trio-Tech International
|
|
|
- |
|
|
|
- |
|
Basic earnings per share from net income attributable to Trio-Tech
International
|
|
$ |
0.22 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations attributable
to Trio-Tech International
|
|
|
0.21 |
|
|
|
0.23 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from discontinued operations
attributable to Trio-Tech International
|
|
|
- |
|
|
|
- |
|
Diluted earnings per share from net income attributable to
Trio-Tech International
|
|
$ |
0.21 |
|
|
$ |
0.23 |
|
19. 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;
|
●
|
A risk-free interest rate varying from 0.11% to 3.15% (2022: 0.11% to 2.35%);
|
●
|
no expected dividend payments and
|
●
|
expected volatility of 47.3% to 73.85% (2022: 45.38% to 55.59%).
|
- 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 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 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 first quarter of Fiscal
2023, 25,000 stock options were
granted under the 2017 Employee
Plan. There were 5,000 stock options exercised during the
three-month period ended September 30, 2022. The Company recognized
$32 in stock-based compensation expense during the three months ended September 30, 2022.
During the first quarter of Fiscal
2022, the Company did not grant any options pursuant to
the 2017 Employee Plan. There were
no stock options
exercised during the three-month
period ended September 30, 2021.
The Company recognized $12 in stock-based compensation expense
during the three months ended
September 30, 2021.
As of September 30, 2022, there
were vested stock options granted under the 2017 Employee Plan covering a total of
131,750 shares of Common Stock. The weighted-average exercise price
was $4.80 and the weighted average remaining contractual term was
1.95 years.
As of September 30, 2021, there
were vested stock options granted under the 2017 Employee Plan covering a total of
164,750 shares of Common Stock. The weighted average exercise price
was $4.35 and the weighted average remaining contractual term was
2.49 years.
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 |
|
|
$ |
106,419 |
|
Exercisable at September 30, 2022
|
|
|
131,750 |
|
|
$ |
4.80 |
|
|
$ |
1.95 |
|
|
$ |
80,314 |
|
A summary of the status of the Company’s non-vested employee stock
options during the three months
ended September 30, 2022, is
presented below:
|
|
|
|
|
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 |
|
A summary of option activities under the 2017 Employee Plan during the three months period ended September 30, 2021, is presented as
follows:
|
|
|
|
|
|
Weighted
|
|
|
Weighted Average Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
|
Average
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
Term (Years)
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at July 1, 2021
|
|
|
267,000 |
|
|
$ |
4.21 |
|
|
|
3.22 |
|
|
$ |
290 |
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Forfeited or expired
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outstanding at September 30, 2021
|
|
|
267,000 |
|
|
$ |
4.21 |
|
|
$ |
2.97 |
|
|
$ |
170 |
|
Exercisable at September 30, 2021
|
|
|
164,750 |
|
|
$ |
4.35 |
|
|
$ |
2.49 |
|
|
$ |
100 |
|
A summary of the status of the Company’s non-vested employee stock
options during the three months
period ended September 30, 2021, is
presented below:
|
|
|
|
|
Weighted Average
|
|
|
|
|
Options |
|
|
Grant-Date Fair Value
|
|
|
|
|
|
|
|
|
|
|
Non-vested at July 1, 2021
|
|
|
102,250 |
|
|
$ |
2.29 |
|
Granted
|
|
|
- |
|
|
|
- |
|
Vested
|
|
|
- |
|
|
|
- |
|
Forfeited
|
|
|
- |
|
|
|
- |
|
Non-vested at September 30, 2021
|
|
|
102,250 |
|
|
$ |
2.29 |
|
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 three months ended September 30, 2022, and September 30, 2021. The Company did
not recognize any
stock-based compensation expense during the three months ended September 30, 2022, and September 30, 2021.
As of July 1, 2022 and September 30, 2022, there were no vested or
unvested stock options outstanding under the 2007 Employee Plan.
As of September 30, 2021, there
were vested stock options granted under the 2007 Employee Plan covering a total of 37,500
shares of Common Stock. The weighted average exercise price was
$4.14 and the weighted average remaining contractual term was 0.49
years.
A summary of option activities under the 2007 Employee Plan during the three months ended September 30 2021, is presented as
follows:
|
|
|
|
|
|
Weighted
|
|
|
Weighted Average Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
|
Average
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
Term (Years)
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at July 1, 2021
|
|
|
37,500 |
|
|
$ |
4.14 |
|
|
|
0.75 |
|
|
$ |
34 |
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Forfeited or expired
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outstanding at September 30, 2021
|
|
|
37,500 |
|
|
$ |
4.14 |
|
|
$ |
0.49 |
|
|
$ |
3 |
|
Exercisable at September 30, 2021
|
|
|
37,500 |
|
|
$ |
4.14 |
|
|
$ |
0.49 |
|
|
$ |
3 |
|
There were no non-vested employee stock options during the
three months ended September 30, 2021.
- 21-
2017 Directors Equity Incentive
Plan
The 2017 Directors Plan initially
covered an aggregate of 300,000 shares of 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 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 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 first quarter of Fiscal
2023 and Fiscal 2022, the Company did not grant any options
pursuant to the 2017 Directors
Plan. There were no stock options exercised and the Company did
not recognize any
stock-based compensation expense during the three months ended September 30, 2022 and 2021.
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
September 30, 2022, or September 30, 2021.
As of 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 exercise price
was $5.10 and the weighted average remaining contractual term was
2.57 years.
As of September 30, 2021, there
were vested stock options granted under the 2017 Directors Plan covering a total of
320,000 shares of Common Stock. The weighted average exercise price
was $4.27 and the weighted average remaining contractual term was
2.97 years.
A summary of option activities under the 2017 Directors Plan during the three months 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
|
|
|
420,000 |
|
|
$ |
5.10 |
|
|
|
2.85 |
|
|
$ |
228 |
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Forfeited or expired
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outstanding at September 30, 2022
|
|
|
420,000 |
|
|
$ |
5.10 |
|
|
$ |
2.57 |
|
|
$ |
278 |
|
Exercisable at September 30, 2022
|
|
|
420,000 |
|
|
$ |
5.10 |
|
|
$ |
2.57 |
|
|
$ |
278 |
|
A summary of option activities under the 2017 Directors Plan during the three months ended September 30, 2021, is presented as
follows:
|
|
|
|
|
|
Weighted
|
|
|
Weighted Average Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
|
Average
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
Term (Years)
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at July 1, 2021
|
|
|
320,000 |
|
|
$ |
4.27 |
|
|
|
3.22 |
|
|
$ |
340 |
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Forfeited or expired
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outstanding at September 30, 2022
|
|
|
320,000 |
|
|
$ |
4.27 |
|
|
$ |
2.97 |
|
|
$ |
210 |
|
Exercisable at September 30, 2022
|
|
|
320,000 |
|
|
$ |
4.27 |
|
|
$ |
2.97 |
|
|
$ |
210 |
|
- 22-
2007 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 three months ended September 30, 2022 and 2021. The Company did not recognize any
stock-based compensation expense during the three months ended September 30, 2022 and 2021.
As of July 1, 2022 and September 30, 2022, there were no vested
stock options outstanding under the 2007 Directors Plan.
As of September 30, 2022, there
were no vested stock options granted under the 2007 Directors Plan.
As of September 30, 2021, there
were vested stock options granted under the 2007 Directors Plan covering a total of
50,000 shares of Common Stock. The weighted average exercise price
was $4.14 and the weighted average remaining contractual term was
0.49 years.
A summary of option activities under the 2007 Directors Plan during the three months ended September 30, 2021 is presented as
follows:
|
|
|
|
|
|
Weighted
|
|
|
Weighted Average Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
|
Average
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Options
|
|
|
Exercise Price
|
|
|
Term (Years)
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at July 1, 2021
|
|
|
50,000 |
|
|
$ |
4.14 |
|
|
|
0.75 |
|
|
$ |
45 |
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Forfeited or expired
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Outstanding at September 30, 2021
|
|
|
50,000 |
|
|
$ |
4.14 |
|
|
$ |
0.49 |
|
|
$ |
4 |
|
Exercisable at September 30, 2021
|
|
|
50,000 |
|
|
$ |
4.14 |
|
|
$ |
0.49 |
|
|
$ |
4 |
|
20. 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 years in amounts necessary
to reduce the carrying amount of the asset to its estimated
residual value. Depreciation expense relating to the property held
as investments in operating leases was $17 and $18 for 3 months ended September 30, 2022, and September 30, 2021, respectively.
Future minimum rental income in China and Thailand to be received
from Fiscal 2023 to the fiscal year
ended June 30, 2027 (“Fiscal
2027”) on noncancelable operating
leases is contractually due as follows as of September 30, 2022:
Remainder of fiscal 2023
|
|
$ |
86 |
|
Fiscal 2024
|
|
|
133 |
|
Fiscal 2025
|
|
|
135 |
|
Fiscal 2026
|
|
|
46 |
|
Fiscal 2027
|
|
|
10 |
|
|
|
$ |
410 |
|
Future minimum rental income in China and Thailand to be received
from Fiscal 2023 to Fiscal
2024 on non-cancelable operating
leases is contractually due as follows as of June 30, 2022:
2023
|
|
$ |
6 |
|
2024
|
|
$ |
27 |
|
2025
|
|
$ |
28 |
|
2026
|
|
$ |
29 |
|
2027
|
|
$ |
10 |
|
|
|
$ |
100 |
|
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 such as taxes.
Financing receivables, consisting of net investment in sales-type
leases and receivables from financed sales of four units of chiller systems are
as follows:
Components of Lease Balances
|
|
Sept. 30,
|
|
|
|
2022
|
|
Assets
|
|
|
|
|
Gross financial sales receivable
|
|
$ |
33 |
|
Unearned finance income
|
|
|
(2 |
) |
Financed sales receivable
|
|
$ |
31 |
|
|
|
|
|
|
Net financed sales receivables due within one year
|
|
$ |
20 |
|
Net financed sales receivables due after one year
|
|
$ |
11 |
|
As of September 30, 2022, the
financed sale receivables had a weighted average effective interest
rate of 11.2% and weighted average remaining lease term of 1.5
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):
|
|
Sept. 30,
|
|
|
June 30,
|
|
|
|
2022
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Finance Leases (Plant and Equipment)
|
|
|
|
|
|
|
|
|
Plant and equipment, at cost
|
|
$ |
1,671 |
|
|
$ |
1,727 |
|
Accumulated depreciation
|
|
|
(1,066 |
) |
|
|
(1,179 |
) |
Plant and Equipment, Net
|
|
$ |
605 |
|
|
$ |
548 |
|
|
|
|
|
|
|
|
|
|
Current portion of finance leases
|
|
$ |
104 |
|
|
$ |
118 |
|
Net of current portion of finance leases
|
|
|
91 |
|
|
|
119 |
|
Total Finance Lease Liabilities
|
|
$ |
195 |
|
|
$ |
237 |
|
|
|
|
|
|
|
|
|
|
Operating Leases (Corporate Offices, Research and Development
Facilities)
|
|
|
|
|
|
|
|
|
Operating lease right-of-use assets
|
|
$ |
2,759 |
|
|
$ |
3,152 |
|
Operating lease right-of-use assets, Net
|
|
$ |
2,759 |
|
|
$ |
3,152 |
|
Current portion of operating leases
|
|
|
1,130 |
|
|
|
1,218 |
|
Net of current portion of operating leases
|
|
|
1,629 |
|
|
|
1,934 |
|
Total Operating Lease Liabilities
|
|
$ |
2,759 |
|
|
$ |
3,152 |
|
|
|
Three Months Ended
|
|
|
|
Sept. 30,
|
|
|
Sept. 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Lease Cost
|
|
|
|
|
|
|
|
|
Finance lease cost:
|
|
|
|
|
|
|
|
|
Interest on finance lease
|
|
$ |
16 |
|
|
$ |
6 |
|
Amortization of right-of-use assets
|
|
|
48 |
|
|
|
28 |
|
Total finance lease cost
|
|
|
64 |
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
$ |
380 |
|
|
$ |
242 |
|
Other information related to leases was as follows (in thousands
except lease term and discount rate):
|
|
Three Months Ended
|
|
|
|
Sept. 30,
|
|
|
Sept. 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
Cash Paid for Amounts Included in the Measurement of Lease
Liabilities
|
|
|
|
|
|
|
|
|
Operating cash flows from finance leases
|
|
$ |
(16 |
) |
|
$ |
(6 |
) |
Operating cash flows from operating leases
|
|
|
(380 |
) |
|
|
(146 |
) |
Finance cash flows from finance leases
|
|
|
(36 |
) |
|
|
(53 |
) |
Right-of-Use Assets Obtained in Exchange for New Operating Lease
Liabilities
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Weighted-Average Remaining Lease Term:
|
|
|
|
|
|
|
|
|
Finance leases
|
|
|
1.79 |
|
|
|
2.72 |
|
Operating leases
|
|
|
2.83 |
|
|
|
3.64 |
|
Weighted-Average Discount Rate:
|
|
|
|
|
|
|
|
|
Finance leases
|
|
|
3.23 |
% |
|
|
3.56 |
% |
Operating leases
|
|
|
5.52 |
% |
|
|
4.57 |
% |
As of September 30, 2022, the
maturities of the Company’s operating and finance lease liabilities
are as follow:
|
|
Operating Lease Liabilities
|
|
|
Finance Lease Liabilities
|
|
Fiscal Year
|
|
|
|
|
|
|
|
|
Remainder of Fiscal 2023
|
|
|
1,969 |
|
|
|
110 |
|
2024
|
|
|
1,005 |
|
|
|
89 |
|
2025
|
|
|
552 |
|
|
|
7 |
|
2026
|
|
|
399 |
|
|
|
- |
|
Thereafter
|
|
|
65 |
|
|
|
- |
|
Total future minimum lease payments
|
|
|
2,990 |
|
|
|
206 |
|
Less: amount representing interest
|
|
|
(231 |
) |
|
|
(11 |
) |
Present value of net minimum lease payments
|
|
|
2,759 |
|
|
|
195 |
|
|
|
|
|
|
|
|
|
|
Presentation on statement of financial position
|
|
|
|
|
|
|
|
|
Current
|
|
|
1,130 |
|
|
|
104 |
|
Non-Current
|
|
|
1,629 |
|
|
|
91 |
|
- 25-
As of June 30, 2022, future minimum
lease payments under finance leases and noncancelable operating
leases were as follows:
|
|
Operating Lease Liabilities
|
|
|
Finance Lease Liabilities
|
|
Fiscal Year
|
|
|
|
|
|
|
|
|
2023
|
|
|
1,357 |
|
|
|
129 |
|
2024
|
|
|
1,032 |
|
|
|
104 |
|
2025
|
|
|
554 |
|
|
|
20 |
|
2026
|
|
|
423 |
|
|
|
- |
|
Thereafter
|
|
|
69 |
|
|
|
- |
|
Total future minimum lease payments
|
|
|
3,435 |
|
|
|
253 |
|
Less: amount representing interest
|
|
|
(283 |
) |
|
|
(16 |
) |
Present value of net minimum lease payments
|
|
|
3,152 |
|
|
|
237 |
|
|
|
|
|
|
|
|
|
|
Presentation on statement of financial position
|
|
|
|
|
|
|
|
|
Current
|
|
|
1,218 |
|
|
|
118 |
|
Non-Current
|
|
|
1,934 |
|
|
|
119 |
|
21. 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 three months ended September 30, 2022 and 2021.
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. CONCENTRATION OF
CUSTOMERS
The Company had two major customers that accounted for the
following revenue and trade account receivables:
|
|
For the Period Ended Sept. 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Revenue
|
|
|
|
|
|
|
|
|
- Customer A
|
|
|
38.9 |
% |
|
|
40.3 |
% |
- Customer B
|
|
|
16.4 |
% |
|
|
13.0 |
% |
Trade Account Receivables
|
|
|
|
|
|
|
|
|
- Customer A
|
|
|
36.7 |
% |
|
|
38.4 |
% |
- Customer B
|
|
|
16.9 |
% |
|
|
13.6 |
% |
- 26-
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.
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 aerospace,
communications and other electronics products.
During the three months ended September 30, 2022, TTI generated
approximately 99.9% of its revenue from its three core business
segments in the test and measurement industry, i.e., manufacturing
of test equipment, testing services and distribution of test
equipment. The Real Estate segment contributed only 0.01% to the
total revenue during the three months ended September 30, 2022.
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.
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 semiconductor and
electronic components who look to us when they do not want to
establish their own facilities. 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 mainly from the U.S.,
Europe, and Taiwan. The products include environmental chambers,
handlers, interface systems, vibration systems, shaker systems,
solderability testers and other semiconductor equipment. Besides
equipment, we also distribute a wide range of components such as
connectors, sockets, LCD display panels and touch screen panels.
Furthermore, our range of products are mainly targeted for
industrial products rather than consumer products whereby the life
cycle of the industrial products can last from three years to seven
years.
Real Estate
Our real estate segment generates investment income from the
investments made and rental revenue received from real estate that
we purchased in Chongqing, China.
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.
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. Refer to Note 1 “Basis of
Presentation And Summary of 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 for a complete description of our critical
accounting policies and estimates.
First Quarter Fiscal
Year 2023 Highlights
●
|
Total revenue increased by $1,768, or 17.4%, to $11,939 in the
first quarter of Fiscal 2023, compared to $10,171 for the same
period in the fiscal year ended June 30, 2022 (“Fiscal 2022”).
|
●
|
Manufacturing segment revenue increased by $23, or 0.6% to $3,585
for the first quarter of Fiscal 2023, compared to $3,562 for the
same period in Fiscal 2022.
|
●
|
Testing segment revenue increased by $1,764, or 38.3%, to $6,364
for the first quarter of Fiscal 2023, compared to $4,600 for the
same period in Fiscal 2022.
|
●
|
Distribution segment revenue decreased by $16, or 0.0%, to $1,982
for the first quarter of Fiscal 2023, compared to $1,998 for the
same period in Fiscal 2022.
|
●
|
Real estate segment rental revenue decreased by $3, or 27.3% to $8
for the first quarter of Fiscal 2023, compared to $11 for the same
period in Fiscal 2022.
|
●
|
The overall gross profit margin decreased by 0.9% to 30.3% for the
first quarter of Fiscal 2023, from 31.2% for the same period in
Fiscal 2022.
|
●
|
General and administrative expense increased by $325, or 16.4%, to
$2,305 for the first quarter of Fiscal 2023, from $1,980 for the
same period in Fiscal 2022.
|
●
|
Selling expense increased by $26, or 17.7%, to $173 for the first
quarter of Fiscal 2023, from $147 for the same period in Fiscal
2022.
|
●
|
Other income increased by $18, or 11.2%, to $179 for the first
quarter of Fiscal 2023, from $161 for the same period in Fiscal
2022.
|
●
|
Income from operations was $1,067 for the first quarter of Fiscal
2023, an increase of $97 as compared to $970 for the same period in
Fiscal 2022.
|
●
|
Income tax expense was $225 in the first quarter of Fiscal 2023, an
increase of $45 as compared to $180 in the same period in Fiscal
2022.
|
●
|
During the first quarter of Fiscal 2023, income from continuing
operations before non-controlling interest, net of tax was $977, as
compared to income from continuing operations before
non-controlling interest of $923 for the same period in Fiscal
2022.
|
●
|
Net income attributable to non-controlling interest for the first
quarter of Fiscal 2023 was $96, an improvement of $85 as compared
to $11 in the same period in Fiscal 2022.
|
●
|
Basic earnings per share for the first quarter of Fiscal 2023 was
$0.22, as compared to earnings per share of $0.23 for the same
period in Fiscal 2022.
|
●
|
Diluted earnings per share for the first quarter of Fiscal 2023 was
$0.21, as compared to earnings per share of $0.23 for the same
period in Fiscal 2022.
|
●
|
Total assets increased by $384 to $43,805 as of September 30, 2022,
compared to $43,421 as of June 30, 2022.
|
●
|
Total liabilities increased by $568 to $15,987 as of September 30,
2022, compared to $15,419 as of June 30, 2022.
|
Results of Operations and Business Outlook
The following table sets forth our revenue components for three
months ended September 30, 2022 and 2021.
Revenue Components
|
|
Three Months Ended
|
|
|
|
Sept. 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
|
30.0 |
% |
|
|
35.0 |
% |
Testing Services
|
|
|
53.3 |
% |
|
|
45.2 |
% |
Distribution
|
|
|
16.6 |
% |
|
|
19.6 |
% |
Real Estate
|
|
|
0.1 |
% |
|
|
0.1 |
% |
Total
|
|
|
100.0 |
% |
|
|
100.0 |
% |
Revenue for the three months ended September 30, 2022, was $11,939,
an increase of $1,768 from $10,171, when compared to the revenue
for the same period of the prior fiscal year. As a percentage,
revenue increased by 17.4% for the three months ended September 30,
2022, when compared to revenue for the same period of the prior
year.
For the three months ended September 30, 2022, there was an
increase in revenue in Testing segment when compared to the same
period of the prior fiscal year. Manufacturing and Distribution
segments revenue remained almost at the same level as the same
period of prior year.
Total revenue into and within China, the Southeast Asia regions and
other countries (except revenue into and within the United States)
increased by $1,774, or 18.3%, to $11,446 for the three months
ended September 30, 2022, as compared with $9,672 for the same
period of Fiscal 2022.
Total revenue into and within the U.S. was $493 for the three
months ended September 30, 2022, a decrease of $6 from $499 for the
same period of the prior year.
Revenue within our four current segments for the three months ended
September 30, 2022, is discussed below.
Manufacturing Segment
Revenue in the manufacturing segment as a percentage of total
revenue was 30.0% for the three months ended September 30, 2022, a
decrease of 5% of total revenue when compared to 35.0% in the same
period of Fiscal 2022. The absolute amount of revenue
increased by $23 to $3,585 for the three months ended September 30,
2022, compared to $3,562, for the same period of Fiscal
2022.
Testing Services Segment
The testing segment's revenue was 53.3% for the three months ended
September 30, 2022, representing an increase of 8.1%, compared to
45.2% for the same period of Fiscal 2022. The absolute amount of
revenue increased by $1,764 to $6,364 from $4,600 for the three
months ended September 30, 2022, as compared to the same period of
Fiscal 2022.
During the third quarter of Fiscal 2022, the Company incorporated
Trio-Tech (Jiangsu) Co. Ltd. (“TTJS”), located in Suzhou, China
together with Suzhou Anchuang Technology Management L.L.P. (“SATM”)
to provide subcontract services in the semiconductor and/or other
related services in the electronics industry, mainly in Suzhou,
China. The joint venture contributed 22% of revenue in the testing
segment for the three months ended September 30, 2022.
The revenue in the testing segment from one customer accounted for
30.8% and 40.4% of our revenue in the testing segment for the three
months ended September 30, 2022 and 2021, 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.
Distribution Segment
Revenue in the distribution segment was 16.6% as a percentage of
total revenue for the three months ended September 30, 2022, a
decrease of 3%, compared to the same period of Fiscal
2022. The absolute amount of revenue decreased by $16 to
$1,982 from $1,998 for the three months ended September 30, 2022,
compared to the same period of Fiscal 2022.
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 for the
three months ended September 30, 2022. The absolute amount of
revenue decreased by $3 to $8 from $11 and remained comparable for
the three months ended September 30, 2022, compared to the same
period of Fiscal 2022.
Uncertainties and Remedies
There are several influencing factors which create uncertainties
when forecasting performance, such as the constantly changing
nature of technology, specific 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 customers are unable to provide a
forecast of the products required in the upcoming weeks; hence it
is difficult to plan for the resources needed to meet these
customers’ requirements due to short lead time and last-minute
order confirmation. This will normally result in a lower margin for
these products as it is 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 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 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.
In December 2019, COVID-19 was reported to have surfaced in China,
resulting in shutdowns of manufacturing and commerce in the months
that followed. Since then, the COVID-19 pandemic has spread to
multiple countries worldwide and has resulted in authorities
implementing numerous measures to try to contain the disease and
slow its spread, such as travel bans and restrictions, quarantines,
shelter-in-place orders and shutdowns. These measures have created
significant uncertainty and economic disruption, both short-term
and potentially long-term.
The degree to which COVID-19 impacts our results will depend on
future developments, which are highly uncertain and cannot be
predicted, including but not limited to the duration and spread of
the pandemic, its severity, the action to contain the virus or
treat its impact, and how quickly and to what extent normal
economic and operating conditions can resume. Even after the
COVID-19 pandemic has subsided, we may experience material adverse
impacts on our business as a result of the global economic impact
and any recession that has occurred or may occur in the future.
There are no comparable recent events that provide guidance as to
the effect the spread of COVID-19 as a global pandemic may have,
and, as a result, the ultimate impact of the pandemic on our
operations and financial results is highly uncertain and subject to
change.
We also continue to consider the potential impact of increasing
inflation on our business operations. Although no material
impairment or other material adverse effects have been identified
to date related to such factors, there is substantial uncertainty
in the nature and degree of their continued effects over time. That
uncertainty could affect management’s accounting estimates and
assumptions, which could result in greater variability in a variety
of areas that depend on these estimates and assumptions as
additional events and information become known. Further, although
we have not experienced any material adverse effects on our
business due to increasing inflation, it has raised operating costs
and, in the future, could impact demand or pricing of our products,
foreign exchange rates or manpower costs. We are actively
monitoring the effects these disruptions and increasing inflation
could have on our business operations.
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. 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 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.
Comparison of the Three Months Ended September 30, 2022, and
September 30, 2021
The following table sets forth certain consolidated statements of
income data as a percentage of revenue for the three months ended
September 30, 2022 and 2021 respectively:
|
|
Three Months Ended
|
|
|
|
Sept. 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
(Unaudited) |
|
Revenue
|
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of sales
|
|
|
69.7 |
% |
|
|
68.8 |
% |
Gross Margin
|
|
|
30.3 |
% |
|
|
31.2 |
% |
Operating expense
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
19.3 |
% |
|
|
19.4 |
% |
Selling
|
|
|
1.4 |
% |
|
|
1.4 |
% |
Research and development
|
|
|
0.6 |
% |
|
|
1.0 |
% |
Total operating expense
|
|
|
21.3 |
% |
|
|
21.8 |
% |
Income from Operations
|
|
|
9.0 |
% |
|
|
9.4 |
% |
Overall Gross
Margin
Overall gross margin as a percentage of revenue decreased by 1.0%
to 30.3% for the three months ended September 30, 2022, from 31.2%
for the same period of Fiscal 2022.
Gross profit margin as a percentage of revenue in the manufacturing
segment decreased by 2.1% to 29.6% for the three months ended
September 30, 2022, as compared to 31.7% for the same period in
Fiscal 2022. In absolute dollar amounts, gross profits in the
manufacturing segment decreased by $68 to $1,060 for the three
months ended September 30, 2022, from $1,128 for the same period in
Fiscal 2022. The decrease in gross profit margin was primarily due
to a higher proportion of lower profit margin product sales for the
three months ended September 30, 2022 compared to the same period
of Fiscal 2022.
Gross profit margin as a percentage of revenue in the testing
segment decreased by 2.2% to 35.2% for the three months ended
September 30, 2022, compared to 37.3% in the same period of Fiscal
2022. The decrease in gross profit margin percentage was mainly due
to difference in product mix coupled with increased manpower costs.
In absolute dollar amounts, gross profit in the testing segment
increased by $521 to $2,238 for the three months ended September
30, 2022, from $1,717 for the same period of Fiscal 2022.
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 0.2%
to 16.9% for the three months ended September 30, 2022, from 17.1%
in the same period of Fiscal 2022. In absolute dollar
amounts, gross profit in the distribution segment for the three
months ended September 30, 2022, was $334, indicating a decrease of
$8, compared to $342 in the same period of Fiscal 2022.
In absolute dollar amounts, for the three months ended September
30, 2022, gross loss in the real estate segment was $10, as
compared to $8 for the same period of Fiscal 2022.
Operating Expense
Operating Expense for the three months ended September 30, 2022 and
2021 was as follows:
|
|
Three Months Ended
|
|
|
|
Sept. 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
(Unaudited) |
|
General and administrative
|
|
$ |
2,305 |
|
|
$ |
1,980 |
|
Selling
|
|
|
173 |
|
|
|
147 |
|
Research and development
|
|
|
73 |
|
|
|
82 |
|
Gain on disposal of property, plant and equipment
|
|
|
4 |
|
|
|
- |
|
Total
|
|
$ |
2,555 |
|
|
$ |
2,209 |
|
General and administrative expense increased by $325, or 16.4%,
from $1,980 to $2,305 for the three months ended September 30,
2022, compared to the same period of Fiscal 2022. The increase in
general and administrative expense was mainly attributable 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 increased manpower costs.
Selling expense increased by $26, or 17.7%, from $147 to $173 for
the three months ended September 30, 2022, compared to the same
period of Fiscal 2022. The increase in selling expense was
primarily attributable to an increase in commission costs in the
distribution segment of the Singapore operations as a result of an
increase in commissionable revenue, and an increase in travel costs
due to relaxation of travel restrictions in the first quarter of
Fiscal 2023, compared to the same quarter of Fiscal 2022.
Income from Operations
Income from operations was $1,067 for the three months ended
September 30, 2022, an increase of $97, compared to profit of $970
from operations for the same period of Fiscal 2022. The result was
mainly due to the increased revenue and gross profit margin in
absolute dollars amount, offset by the higher operating
expense.
Interest Expense
Interest expense for the three months ended September 30, 2022 and
2021 were as follows:
|
|
Three Months Ended
|
|
|
|
Sept. 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
(Unaudited) |
|
Interest expense
|
|
$ |
44 |
|
|
$ |
28 |
|
Interest expense was $44 for the three months ended September 30,
2022, an increase of $16, or 57.1%, compared to $28 for the same
period of Fiscal 2022. As of September 30, 2022, the Company had an
unused line of credit of $5,289 as compared to $5,397 at September
30, 2021.
Other Income
Other income for the three months ended September 30, 2022 and 2021
were as follows:
|
|
Three Months Ended
|
|
|
|
September 30,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$ |
18 |
|
|
$ |
22 |
|
Other rental income
|
|
|
27 |
|
|
|
29 |
|
Exchange gain
|
|
|
70 |
|
|
|