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 DecemberMarch 31, 2017

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-TECHINTERNATIONAL

(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)

16139 Wyandotte Street

Block 1008 Toa Payoh North

Van Nuys, California

Unit 03-09 Singapore

91406

318996

(Address of principal executive offices)

(Zip Code)

Registrant's Telephone Number, Including Area Code:  818-787-7000

(65) 6265 3300

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

Title of each class

Trading Symbol

Name of each exchange

On which registered

Common Stock, no par value

TRT

 NYSE American

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 non­accelerated 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 12b­2 of the Exchange Act. (Check one):

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer 

Smaller reporting company

(Do not check if a 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 FebruaryMay 1, 2018,2022, there were 3,553,0554,029,180 shares of the issuer’s Common Stock, no par value, outstanding.



 


 

TRIO-TECH INTERNATIONAL

INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION, OTHER INFORMATION AND SIGNATURE

Page

Part I.

Financial Information

Item 1.

Financial Statements

 
Part I.Financial Information
  Item 1.Financial Statements

(a) Condensed Consolidated Balance Sheets as of DecemberMarch 31, 20172022 (Unaudited), and June 30, 20172021

2
 

(b) Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months and SixNine Months Ended DecemberMarch 31, 20172022 (Unaudited), and DecemberMarch 31, 20162021 (Unaudited)

3
2

(c) Condensed Consolidated Statements of ShareholdersShareholders’ Equity for the SixNine Months Ended DecemberMarch 31, 20172022 (Unaudited), and Decemberthe March 31, 20162021 (Unaudited)

5
 

(d) Condensed Consolidated Statements of Cash Flows for the SixNine Months Ended DecemberMarch 31, 20172022 (Unaudited), and DecemberMarch 31, 20162021 (Unaudited)

6

(e) Notes to Condensed Consolidated Financial Statements (Unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2834

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

4552

Item 4.

Controls and Procedures

4552

 

Part II.

Other Information

 

 

Item 1.

Legal Proceedings

4653

Item 1A.

Risk Factors

4653

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

4653

Item 3.

Defaults upon Senior Securities

4653

Item 4.

Mine Safety Disclosures

4653

Item 5.

Other Information

4653

Item 6.

Exhibits

4653

  

Signatures

5447

-i-

FORWARD-LOOKING STATEMENTS

The discussions of Trio-Tech International’s (the “Company”) business and activities set forth in this Form 10-Q 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.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 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.

 

-1-

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

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

  

March 31,

2022

  

June 30,

2021

 

 

 

(Unaudited)

     
ASSETS        

CURRENT ASSETS:

        

Cash and cash equivalents

 $7,478  $5,836 

Short-term deposits

  4,953   6,651 

Trade accounts receivable, less allowance for doubtful accounts of $253 and $311, respectively

  10,585   8,293 

Other receivables

  735   325 
Contract assets  594   337 

Inventories, less provision for obsolete inventories of $709 and $679, respectively

  2,272   2,080 

Prepaid expenses and other current assets

  732   418 

Financed sales receivable

  21   19 

Total current assets

  27,370   23,959 

NONCURRENT ASSETS:

        

Deferred tax assets

  189   217 

Investment properties, net

  636   681 

Property, plant and equipment, net

  9,107   9,531 

Operating lease right-of-use assets

  2,602   1,876 

Other assets

  141   262 

Restricted term deposits

  1,735   1,741 

Financed sales receivable

  23   39 

Total noncurrent assets

  14,433   14,347 

TOTAL ASSETS

 $41,803  $38,306 
         

LIABILITIES

        

CURRENT LIABILITIES:

        

Lines of credit

 $523  $72 

Accounts payable

  2,220   3,702 

Accrued expenses

  3,870   2,690 
Contract liabilities  1,172   673 

Income taxes payable

  476   314 

Current portion of bank loans payable

  493   439 

Current portion of finance leases

  136   197 

Current portion of operating leases

  758   672 

Total current liabilities

  9,648   8,759 

NONCURRENT LIABILITIES:

        

Bank loans payable, net of current portion

  1,470   1,621 

Finance leases, net of current portion

  152   253 

Operating leases, net of current portion

  1,844   1,204 

Income taxes payable, net of current portion

  281   385 

Other noncurrent liabilities

  31   31 

Total noncurrent liabilities

  3,778   3,494 

TOTAL LIABILITIES

 $13,426  $12,253 
         

EQUITY

        

TRIO-TECH INTERNATIONAL’S SHAREHOLDERS’ EQUITY:

        

Common stock, no par value, 15,000,000 shares authorized; 4,029,180 shares issued outstanding as at March 31, 2022 and 3,913,055 shares as at June 30, 2021, respectively

 $12,607  $12,178 

Paid-in capital

  4,692   4,233 

Accumulated retained earnings

  8,429   6,824 

Accumulated other comprehensive income-translation adjustments

  2,392   2,399 

Total Trio-Tech International shareholders equity

  28,120   25,634 

Noncontrolling interest

  257   419 

TOTAL EQUITY

 $28,377  $26,053 

TOTAL LIABILITIES AND EQUITY

 $41,803  $38,306 
 
 
December 31,
2017
 
 
June 30,
2017
 
ASSETS
 
(Unaudited)
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
 
Cash and cash equivalents
 $5,059 
 $4,772 
Short-term deposits
  642 
  787 
Trade accounts receivable, less allowance for doubtful accounts of $255 and $247
  9,493 
  9,009 
Other receivables
  548 
  401 
Inventories, less provision for obsolete inventory of $697 and $686
  2,972 
  1,756 
Prepaid expenses and other current assets
  280 
  226 
Asset held for sale
  91 
  86 
Total current assets
  19,085 
  17,037 
NON-CURRENT ASSETS:
    
    
Deferred tax asset
  435 
  375 
Investment properties, net
  1,217 
  1,216 
Property, plant and equipment, net
  12,385 
  11,291 
Other assets
  1,950 
  1,922 
Restricted term deposits
  1,717 
  1,657 
Total non-current assets
  17,704 
  16,461 
TOTAL ASSETS
 $36,789 
 $33,498 
 
    
    
LIABILITIES
    
    
CURRENT LIABILITIES:
    
    
Lines of credit
 $2,189 
 $2,556 
Accounts payable
  3,342 
  3,229 
Accrued expenses
  3,985 
  3,043 
Income taxes payable
  292 
  233 
Current portion of bank loans payable
  356 
  260 
Current portion of capital leases
  250 
  228 
Total current liabilities
  10,414 
  9,549 
NON-CURRENT LIABILITIES: 
    
    
Bank loans payable, net of current portion
  1,617 
  1,552 
Capital  leases, net of current portion
  648 
  531 
Deferred tax liabilities
  328 
  295 
Other non-current liabilities
  46 
  44 
Total non-current liabilities
  2,639 
  2,422 
TOTAL LIABILITIES
 $13,053 
 $11,971 
 
    
    
EQUITY
    
    
TRIO-TECH INTERNATIONAL’S SHAREHOLDERS' EQUITY:
    
    
Common stock, no par value, 15,000,000 shares authorized; 3,548,055 shares issued outstanding as at December 31, 2017, and 3,523,055 shares as at June 30, 2017
 $11,013 
 $10,921 
Additional paid-in capital
  3,208 
  3,206 
Accumulated retained earnings
  5,589 
  4,341 
Accumulated other comprehensive income
  2,508 
  1,633 
Total Trio-Tech International shareholders' equity
  22,318 
  20,101 
Non-controlling interest
  1,418 
  1,426 
TOTAL EQUITY
 $23,736 
 $21,527 
TOTAL LIABILITIES AND EQUITY
 $36,789 
 $33,498 

See notes to condensed consolidated financial statements.

statements 

-2-

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

/ (LOSS)

UNAUDITED (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)

  

Three Months Ended

  

Nine Months Ended

 
  

Mar. 31,

  

Mar. 31,

  

Mar. 31,

  

Mar. 31,

 
  

2022

  

2021

  

2022

  

2021

 

Revenue

                

Manufacturing

 $3,097  $3,130  $10,187  $9,324 

Testing services

  4,417   3,504   13,983   10,018 

Distribution

  3,620   1,467   8,038   3,790 

Real estate

  4   11   23   22 
   11,138   8,112   32,231   23,154 

Cost of Sales

                

Cost of manufactured products sold

  2,530   2,148   7,838   6,855 

Cost of testing services rendered

  3,169   2,651   9,141   7,651 

Cost of distribution

  2,945   1,234   6,651   3,142 

Cost of real estate

  20   19   58   58 
   8,664   6,052   23,688   17,706 
                 

Gross Margin

  2,474   2,060   8,543   5,448 
                 

Operating Expenses:

                

General and administrative

  2,378   1,923   6,305   5,245 

Selling

  146   123   449   356 

Research and development

  80   79   293   277 

Gain on disposal of property, plant and equipment

  0   0   0   (1

)

Total operating expenses

  2,604   2,125   7,047   5,877 
                 

(Loss)/ Income from Operations

  (130

)

  (65

)

  1,496   (429

)

                 

Other Income / (Expenses)

                

Interest expenses

  (31

)

  (25

)

  (87

)

  (96

)

Other income, net

  127   273   669   627 

Total other income

  96   248   582   531 
                 

(Loss) / Income from Continuing Operations before Income Taxes

  (34)  183   2,078   102 
                 

Income Tax Expenses

  (170

)

  (118)  (503

)

  (125

)

                 

(Loss) / Income from continuing operations before non-controlling interest, net of tax

  (204)  65   1,575   (23

)

                 

Discontinued Operations

                

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

  0   1   5   (26

)

NET (LOSS) / INCOME

  (204)  66   1,580   (49

)

                 

Less: net income / (loss) attributable to noncontrolling interest

  (37)  (112

)

  (25

)

  (454

)

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

 $(167

)

 $178  $1,605  $405 
                 

Amounts Attributable to Trio-Tech International Common Shareholders:

                

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

  (167

)

  177   1,603   418 

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

  0   1   2   (13

)

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

 $(167

)

 $178  $1,605  $405 
                 

Basic (Loss) / Earnings per Share:

                

Basic (loss) / earnings per share from continuing operations attributable to Trio-Tech International

 $(0.04

)

 $0.05  $0.40  $0.11 

Basic earnings per share from discontinued operations attributable to Trio-Tech International

 $0  $0  $0  $0 

Basic (Loss) / Earnings per Share from Net Income Attributable to Trio-Tech International

 $(0.04

)

 $0.05  $0.40  $0.11 
                 

Diluted (Loss) / Earnings per Share:

                

Diluted (loss) / earnings per share from continuing operations attributable to Trio-Tech International

 $(0.04

)

 $0.04  $0.38  $0.10 

Diluted earnings per share from discontinued operations attributable to Trio-Tech International

 $0  $0  $0  $0 

Diluted (Loss) / Earnings per Share from Net Income Attributable to Trio-Tech International

 $(0.04

)

 $0.04  $0.38  $0.10 
                 

Weighted average number of common shares outstanding

                

Basic

  3,949   3,913   3,949   3,913 

Dilutive effect of stock options

  272   133   191   117 

Number of shares used to compute earnings per share diluted

  4,221   4,046   4,140   4,030 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
Dec. 31,
 
 
Dec. 31,
 
 
Dec. 31,
 
 
Dec. 31,
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Manufacturing
 $3,973 
 $3,320 
 $8,738 
 $6,991 
Testing services
  4,936 
  4,070 
  9,541 
  8,227 
Distribution
  1,606 
  1,675 
  3,142 
  2,779 
Others
  37 
  39 
  76 
  78 
 
  10,552 
  9,104 
  21,497 
  18,075 
Cost of Sales
    
    
    
    
Cost of manufactured products sold
  3,068 
  2,622 
  6,717 
  5,417 
Cost of testing services rendered
  3,251 
  2,658 
  6,390 
  5,472 
Cost of distribution
  1,409 
  1,501 
  2,777 
  2,492 
Others
  29 
  29 
  58 
  42 
 
  7,757 
  6,810 
  15,942 
  13,423 
Gross Margin
  2,795 
  2,294 
  5,555 
  4,652 
 
    
    
    
    
Operating Expenses:
    
    
    
    
General and administrative
  1,727 
  1,776 
  3,566 
  3,519 
Selling
  252 
  180 
  431 
  365 
Research and development
  118 
  52 
  302 
  105 
Write off of property, plant and equipment
  - 
  8 
  11 
  8 
Total operating expenses
  2,097 
  2,016 
  4,310 
  3,997 
 
    
    
    
    
Income from Operations
  698 
  278 
  1,245 
  655 
 
    
    
    
    
Other Income / (Expenses)
    
    
    
    
Interest expenses
  (52)
  (48)
  (110)
  (106)
Other income, net
  42 
  203 
  200 
  313 
Total other (expenses) / income
  (10)
  155 
  90 
  207 
 
    
    
    
    
Income from Continuing Operations before Income Taxes
  688 
  433 
  1,335 
  862 
 
    
    
    
    
Income Tax Expenses
  (13)
  (67)
  (55)
  (150)
 
    
    
    
    
Income from continuing operations before non-controlling interest, net of tax
  675 
  366 
  1,280 
  712 
 
    
    
    
    
Discontinued Operations (Note 19)
    
    
    
    
Loss from discontinued operations, net of tax
  (2)
  (4)
  (5)
  (3)
NET INCOME
  673 
  362 
  1,275 
  709 
 
    
    
    
    
Less: net income attributable to non-controlling interest
  - 
  52 
  27 
  96 
Net Income Attributable to Trio-Tech International Common Shareholders
 $673 
 $310 
 $1,248 
 $613 
 
    
    
    
    
Amounts Attributable to Trio-Tech International Common Shareholders:
    
    
    
    
Income from continuing operations, net of tax
  678 
  316 
  1,254 
  619 
Loss from discontinued operations, net of tax
  (5)
  (6)
  (6)
  (6)
Net Income Attributable to Trio-Tech International Common Shareholders
 $673 
 $310 
 $1,248 
 $613 
 
    
    
    
    
Basic Earnings per Share:
    
    
    
    
Basic per share from continuing operations attributable to Trio-Tech International
 $0.19 
 $0.09 
 $0.35 
 $0.18 
Basic earnings per share from discontinued operations attributable to Trio-Tech International
 $- 
 $- 
 $- 
 $- 
Basic Earnings per Share from Net Income
    
    
    
    
Attributable to Trio-Tech International
 $0.19 
 $0.09 
 $0.35 
 $0.18 
 
    
    
    
    
Diluted Earnings per Share:
    
    
    
    
Diluted earnings per share from continuing operations attributable to Trio-Tech International
 $0.18 
 $0.09 
 $0.34 
 $0.17 
Diluted earnings per share from discontinued operations attributable to Trio-Tech International
 $- 
 $- 
 $- 
 $- 
Diluted Earnings per Share from Net Income
    
    
    
    
Attributable to Trio-Tech International
 $0.18 
 $0.09 
 $0.34 
 $0.17 
 
    
    
    
    
Weighted average number of common shares outstanding
    
    
    
    
Basic
  3,548 
  3,513 
  3,548 
  3,513 
Dilutive effect of stock options
  245 
  56 
  222 
  39 
Number of shares used to compute earnings per share diluted
  3,793 
  3,569 
  3,770 
  3,552 

See notes to condensed consolidated financial statements.

-3-

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

/ (LOSS)

UNAUDITED (IN THOUSANDS)

  

Three Months Ended

  Nine Months Ended 
  

Mar. 31,

  

Mar. 31,

  

Mar. 31,

  Mar. 31, 
  

2022

  

2021

  

2022

  2021 

Comprehensive Income Attributable to Trio-Tech International Common Shareholders:

                
                 

Net (loss) / income

 $(204) $66  $1,580  $(49)

Foreign currency translation, net of tax

  16   (468)  (22)  1,115 

Comprehensive (Loss) / Income

  (188)  (402)  1,558   1,066 

Less: comprehensive loss attributable to noncontrolling interest

  (46)  (136)  (40)  (455)

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

 $(142) $(266) $1,598  $1,521 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
Dec. 31,
 
 
Dec. 31,
 
 
Dec. 31,
 
 
Dec. 31,
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
Comprehensive Income Attributable to Trio-Tech International Common Shareholders: 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 $673 
 $362 
 $1,275 
 $709 
Foreign currency translation, net of tax
  588 
  (1,094)
  963 
  (1,377)
Comprehensive Income / (Loss)
  1,261 
  (732)
  2,238 
  (668)
Less: comprehensive income / (loss) attributable to non-controlling interest
  88 
  (16)
  115 
  (37)
Comprehensive Income / (Loss) Attributable to Trio-Tech International Common Shareholders
 $1,173 
 $(716)
 $2,123 
 $(631)
    
    
    
    
    

See notes to condensed consolidated financial statements.

-4-

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(IN

UNAUDITED (IN THOUSANDS)

Six Months

Nine months ended DecemberMarch 31, 20172022

  

Common

Stock

  

Paid-in

  

Accumulated Retained

  

Accumulated Other

Comprehensive

  

Non- controlling

     
  

Shares

  

Amount

  

Capital

  

Earnings

  

Income

  

Interest

  

Total

 
      

$

  

$

  

$

  

$

  

$

  

$

 

Balance at June 30, 2021

  3,913   12,178   4,233   6,824   2,399   419   26,053 

Stock option expenses

  -   0   459   0   0   0   459 

Net income / (loss)

  -   0   0   1,605   0   (25

)

  1,580 

Dividend declared by subsidiary

  -   0   0   0   0   (122

)

  (122

)

Exercise of stock option

  116   429   0   0   0   0   429 

Translation adjustment

  -   0   0   0   (7

)

  (15

)

  (22

)

Balance at Mar. 31, 2022

  4,029   12,607   4,692   8,429   2,392   257   28,377 
 
 
Common
Stock
 
 
Additional Paid-in
 
 
Accumulated Retained
 
 
Accumulated Other
Comprehensive
 
 
Non- Controlling
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Earnings
 
 
Income
 
 
Interest
 
 
Total
 
 
 
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
Balance at June 30, 2017
  3,523 
  10,921 
  3,206 
  4,341 
  1,633 
  1,426 
  21,527 
Stock option expenses
  - 
  - 
  2 
  - 
  - 
  - 
  2 
Net income
  - 
  - 
  - 
  1,248 
  - 
  27 
  1,275 
Dividend declared by subsidiary
  - 
  - 
  - 
  - 
  - 
  (123)
  (123)
Exercise of options
  15 
  41 
  - 
  - 
  - 
  - 
  41 
Issue of restricted shares to service provider
  10 
  51 
  - 
  - 
  - 
  - 
  51 
Translation adjustment
  - 
  - 
  - 
  - 
  875 
  88 
  963 
Balance at Dec. 31, 2017
  3,548 
  11,013 
  3,208 
  5,589 
  2,508 
  1,418 
  23,736 
Six Months

Nine months ended DecemberMarch 31, 20162021

  

Common

Stock

  

Paid-in

  

Accumulated Retained

  

Accumulated Other

Comprehensive

  

Non- controlling

     
  

Shares

  

Amount

  

Capital

  

Earnings

  

Income

  

Interest

  

Total

 
      

$

  

$

  

$

  

$

  

$

  

$

 

Balance at June 30, 2020

  3,673   11,424   3,363   8,036   1,143   1,180   25,146 

Stock option expenses

  -   0   144   0   0   0   144 

Net income / (loss)

  -   0   0   405   0   (454

)

  (49

)

Dividend declared by subsidiary

  -   0   0   0   0   (189

)

  (189

)

Exercise of stock option

  240   754   0   0   0   0   754 

Translation adjustment

  -   0   0   0   1,116   (1

)

  1,115 

Balance at Mar. 31, 2021

  3,913   12,178   3,507   8,441   2,259   536   26,921 
 
 
Common
Stock
 
 
Additional Paid-in
 
 
Accumulated Retained
 
 
Accumulated Other
Comprehensive
 
 
Non- Controlling
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Earnings
 
 
Income
 
 
Interest
 
 
Total
 
 
 
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
 
$
 
Balance at June 30, 2016
  3,513 
  10,882 
  3,188 
  3,025 
  2,162 
  1,614 
  20,871 
Stock option expenses
  - 
  - 
  1 
  - 
  - 
  - 
  1 
Net income
  - 
  - 
  - 
  613 
  - 
  96 
  709 
Stock option expenses
  - 
  - 
  - 
  - 
  - 
  (117)
  (117)
Translation adjustment
  - 
  - 
  - 
  - 
  (1,244)
  (133)
  (1,377)
Balance at Dec. 31, 2016
  3,513 
  10,882 
  3,189 
  3,638 
  918 
  1,460 
  20,087 

See notes to condensed consolidated financial statements.

-5-

 

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(IN THOUSANDS)

  

Nine Months Ended

 
  

Mar. 31,

  

Mar. 31,

 
  

2022

  

2021

 
  

(Unaudited)

  

(Unaudited)

 

Cash Flow from Operating Activities

        

Net income / (loss)

 $1,580  $(49)

Adjustments to reconcile net income to net cash flow provided by operating activities

        

Depreciation and amortization

  2,263   2,224 

Stock compensation

  459   144 

Addition / (reversal) of provision for obsolete inventories

  25   (2

)

Bad debt recovery, net of allowance charged

  (61

)

  (15

)

Accrued interest expense, net (accrued interest income)

  85   (18

)

Payment of interest portion of finance lease

  (20

)

  (32

)

Gain on sale of property, plant and equipment

  0   (1

)

Dividend income

  0   (32

)

Dividend received

  0   32 

Reversal of income tax provision

  (18

)

  0 

Deferred tax benefit

  (7

)

  (70

)

Changes in operating assets and liabilities, net of acquisition effects

        

Trade accounts receivable

  (2,214

)

  (1,013

)

Other receivables

  (688

)

  320 

Other assets

  134   (33

)

Inventories

  (233

)

  (624

)

Prepaid expenses and other current assets

  (312

)

  (76

)

Accounts payable and accrued expenses

  242   754 

Income taxes payable

  145   (44

)

Operating lease liabilities

  (801

)

  (565

)

Net Cash Provided by Operating Activities

  579   900 
         

Cash Flow from Investing Activities

        

Proceeds from disposal of property, plant and equipment

      - 

Proceeds from sale of asset held for sale

      - 

Withdrawal of unrestricted deposit

  3,761   1,166 

Investment in unrestricted term deposits, net

  (2,079)  (1,370

)

Additions to property, plant and equipment

  (1,144)  (621

)

Net Cash Provided by/ (Used in) Investing Activities

  538   (825

)

         

Cash Flow from Financing Activities

        

Payment on lines of credit

  (1,025)  (174

)

Payment of bank loans

  (322)  (296

)

Payment of principal portion of finance leases

  (168)  (192

)

Dividends paid to noncontrolling interest

  (122)  (189

)

Proceeds from bank loan

  255   189 

Proceeds from exercise stock options

  429   754 

Proceeds from lines of credit

  1,463   187 

Proceeds from principal of finance leases

  -   - 

Net Cash Provided by Financing Activities

  510   279 
         

Effect of Changes in Exchange Rate

  9   753 
         

Net Increase in Cash, Cash Equivalents, and Restricted Cash

  1,636   1,107 

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

  7,577   5,810 

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

 $9,213  $6,917 
         

Supplementary Information of Cash Flows

        

Cash paid during the period for:

        

Interest

 $84  $69 

Income taxes

 $342  $203 
         

Reconciliation of Cash, Cash Equivalents, and Restricted Cash

        

Cash

  7,478   5,178 

Restricted Term-Deposits in Noncurrent Assets

  1,735   1,739 

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

 $9,213  $6,917 
UNAUDITED (IN THOUSANDS)
 
 
Six Months Ended
 
 
 
Dec. 31,
 
 
Dec. 31,
 
 
 
2017
 
 
2016
 
 
 
(Unaudited)
 
 
(Unaudited)
 
Cash Flow from Operating Activities
 
 
 
 
 
 
Net income
 $1,275 
 $709 
Adjustments to reconcile net income to net cash flow provided by operating activities
    
    
Depreciation and amortization
  1,019 
  916 
Stock option expenses
  2 
  1 
Reversal of provision for obsolete inventories
  (3)
  (4)
Bad debt recovery, net
  - 
  (16)
Accrued interest expense, net of accrued interest income
  95 
  95 
Write off of property, plant and equipment - continued operations
  11 
  8 
Issuance of shares to service provider
  51 
  - 
Warranty recovery, net
  3 
  (9)
Deferred tax provision
  (25)
  51 
Changes in operating assets and liabilities, net of acquisition effect
    
    
Trade accounts receivable
  (484)
  1,265 
Other receivables
  (147)
  280 
Other assets
  (37)
  (226)
Inventories
  (1,153)
  (275)
Prepaid expenses and other current assets
  (54)
  (99)
Accounts payable and accrued liabilities
  934 
  1,001 
Income tax payable
  59 
  (26)
Net Cash Provided by Operating Activities
  1,546 
  3,671 
 
    
    
Cash Flow from Investing Activities
    
    
Proceeds from maturing of unrestricted and restricted term deposits and short-term deposits, net
  484 
  - 
Investments in restricted and unrestricted deposits
  (281)
  (421)
Additions to property, plant and equipment
  (1,507)
  (764)
Proceeds from disposal of plant, property and equipment
  - 
  83 
Net Cash Used in Investing Activities
  (1,304)
  (1,102)
 
    
    
Cash Flow from Financing Activities
    
    
Repayment on lines of credit
  (4,978)
  (4,503)
Proceeds from bank loans and capital leases
  5,045 
  3,516 
Proceeds from exercising of stock option
  41 
  - 
Dividends paid to non-controlling interest
  (123)
  (117)
Repayment of long-term bank loans and capital leases
  (373)
  (371)
Net Cash Used in by Financing Activities
  (388)
  (1,475)
 
    
    
Effect of Changes in Exchange Rate
  433 
  (565)
 
    
    
NET INCREASE IN CASH AND CASH EQUIVALENTS
  287 
  529 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
  4,772 
  3,807 
CASH AND CASH EQUIVALENTS, END OF PERIOD
 $5,059 
 $4,336 
 
    
    
Supplementary Information of Cash Flows
    
    
Cash paid during the period for:
    
    
Interest
 $91 
 $91 
Income taxes
 $119 
 $83 
 
    
    
Non-Cash Transactions
    
    
Capital lease of property, plant and equipment
 $228 
 $49 

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 noncurrent assets as they relate to long-term obligations and will become unrestricted only upon discharge of the obligations.

-6-

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” hereafter) was incorporated in fiscal year 1958 under the laws of the State of California. TTI provides third-partythird-party semiconductor testing and burn-in services primarily through its laboratories in Southeast Asia. In addition, TTI operates testing facilities in the United States. 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 secondthird quarter of fiscal year 2018,2022, 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
(49% owned by Trio-Tech International Pte. Ltd. and 51% owned by Trio-Tech International (Thailand) Co. Ltd.)

 

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.)

55%

 

Selangor, Malaysia

Prestal Enterprise Sdn. Bhd.

76%Selangor, Malaysia

(76% owned by Trio-Tech International Pte. Ltd.)

76%

 

Selangor, Malaysia

Trio-Tech (SIP) Co., Ltd. *

100%

Suzhou, China

Trio-Tech (Chongqing) Co. Ltd. *

100%

Chongqing, China

SHI International Pte. Ltd. (Dormant)

(55% owned by Trio-Tech International Pte. Ltd)

55%

Singapore

PT SHI Indonesia (Dormant)

(100% owned by SHI International Pte. Ltd.)

55%

Batam, Indonesia

Trio-Tech (Tianjin) Co., Ltd. *

100%

Tianjin, China

Trio-Tech (Jiangsu) Co., Ltd.

51%

Suzhou, China

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

The accompanying un-auditedunaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principlesUnited States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q10-Q and Article 10 of Regulation S-X.S-X. All significant inter-companyintercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements are presented in U.S. dollars. The accompanying condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the six months ended December 31, 2017 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2018. 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, 2017.

2021. The Company’s operating results are presented based on the translation of foreign currencies using the respective quarter’s average exchange rate.

Certain accounting matters that generally require consideration of forecasted financial information were assessed regarding impacts from the COVID-19 pandemic as of March 31, 2022, and through the Quarterly Report dated May 16, 2022 using reasonably available information as of those dates. Those accounting matters assessed included, but were not limited to, allowance for doubtful accounts, the carrying value of long-lived tangible assets and the valuation allowances for tax assets. While the assessments resulted in no material impacts to the consolidated financial statements as of and for the quarter ended March 31, 2022, the Company believes the full impact of the pandemic remains uncertain and the Company will continue to assess if ongoing developments related to the pandemic may cause future material impacts to our consolidated financial statements. As of March 31, 2022, the Company had cash and cash equivalents and short-term deposits totaling $12,431 and unused lines of credit of $5,158. We finance operations primarily through our existing cash balances, cash collected from operations, bank borrowings and capital lease financing. We believe these sources are sufficient to fund our operations for the foreseeable future. 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, 2021.

-7-
- 7-

2.   NEW ACCOUNTING PRONOUNCEMENTS

Basis of Presentation and Summary of Significant Accounting Policies

The following amendmentsCompany’s core businesses — testing services, manufacturing and distribution — operate inAccounting Standards Update a volatile industry, whereby its average selling prices and product costs are influenced by competitive factors. These factors create pressures on sales, costs, earnings and cash flows, which will impact liquidity.  

All dollar amounts in the consolidated financial statements and in the notes herein are presented in thousands of United States dollars (US$’000) unless otherwise designated.

Liquidity — The Company earned net income attributable to common shareholders of $1,605 and earned net income attributable to common shareholders of $405 for the nine months ended March 31, 2022, and March 31, 2021, respectively.

Foreign Currency Translation and Transactions— The U.S. dollar is the functional currency of the U.S. parent company. The Singapore dollar, the national currency of Singapore, is the primary currency of the economic environment in which the operations in Singapore are conducted. The Company also has business entities in Malaysia, Thailand, China and Indonesia of which the Malaysian ringgit (“ASU”RM”), Thai baht, Chinese renminbi (“RMB”) and Indonesian rupiah, are the national currencies. The Company uses the U.S. dollar for financial reporting purposes.

The Company translates assets and liabilities of its subsidiaries outside the U.S. into U.S. dollars using the rate of exchange prevailing at the period end, and the consolidated statements of operations and comprehensive income or loss is translated at average rates during the reporting period. Adjustments resulting from the translation of the subsidiaries’ financial statements from foreign currencies into U.S. dollars are recorded in shareholders' equity as part of accumulated other comprehensive gain - translation adjustments. Gains or losses resulting from transactions denominated in currencies other than functional currencies of the Company’s subsidiaries are reflected in income for the reporting period.

Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 asset allowance. Actual results could materially differ from those estimates.

Revenue Recognition — The Company follows ASU No.2014-09, ASC Topic 606,Revenue from Contracts with Customers (“ASC Topic 606”). This standard update outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.

We apply a five-step approach as defined in ASC Topic 606 in determining the amount and timing of revenue to be recognized: (1) identifying the contract with customer; (2) identifying the performance obligations in the contracts; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied.

Revenue derived from testing services is recognized when testing services are rendered. Revenue generated from sale of products in the manufacturing and distribution segments are recognized when persuasive evidence of an arrangement exists, delivery of the products has occurred, customer acceptance has been obtained (which means the significant risks and rewards of ownership have been adoptedtransferred to the customer), the price is fixed or determinable and collectibility is reasonably assured. Certain customers can request for installation and training services to be performed for certain products sold in the manufacturing segment. These services are mainly for helping customers with the test runs of the machines sold and are considered a separate performance obligation. Such services can be provided by other entities as well and these do not significantly modify the product. The Company recognizes the revenue at a point in time when the Company has satisfied its performance obligation.

In the real estate segment: (1) revenue from property development is earned and recognized on the earlier of the dates when the underlying property is sold or upon the maturity of the agreement; if this amount is uncollectible, the agreement empowers the repossession of the property, and (2) rental revenue is recognized on a straight-line basis over the terms of the respective leases. This means that, with respect to a particular lease, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue is commenced when the tenant assumes possession of the leased premises. Accrued straight-line rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements.

GST / Indirect Taxes The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis. The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenues or expenses.

- 8-

Trade Accounts Receivables and Allowance for Doubtful Accounts During the normal course of business, the Company extends unsecured credit to its customers in all segments. Typically, credit terms require payment to be made between 30 to 90 days from the date of the sale. The Company generally does not require collateral from our customers.

The Company’s management considers the following factors when determining the collectibility of specific customer accounts: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. The Company includes any account balances that are determined to be uncollectible, along with a general reserve, in the overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available to management, the Company believed that its allowance for doubtful accounts was adequate as of March 31, 2022, and June 30, 2021.

Warranty CostsThe Company provides for the estimated costs that may be incurred under its warranty program at the time the sale is recorded in its manufacturing segment. The Company estimates 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.

Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Term DepositsTerm deposits consist of bank balances and interest-bearing deposits having maturities of three to six months.

Restricted Term Deposits — The Company held certain term deposits in the Singapore and Malaysia operations which were considered restricted, as they were held as security against certain facilities granted by the Company asfinancial institutions

Inventories — Inventories in the Company’s manufacturing and distribution segments, consisting principally of December 31, 2017.

The amendmentsraw materials, works in ASU 2015-11 ASC Topic 330:Simplifying the Measurement of Inventory(“ASC Topic 330”) specify that an entity should measure inventoryprogress, and finished goods, are stated at the lower of cost, using the first-in, first-out (“FIFO”) method, or market value. The semiconductor industry is characterized by rapid technological change, short-term customer commitments and net realizable value. Net realizablerapid fluctuations in demand. Provisions for estimated excess and obsolete inventory are based on our regular reviews of inventory quantities on hand and the latest forecasts of product demand and production requirements from our customers. Inventories are written down for not-saleable, excess or obsolete raw materials, works-in-process and finished goods by charging such write-downs to cost of sales. In addition to write-downs based on newly introduced parts, statistics and judgments are used for assessing provisions of the remaining inventory based on salability and obsolescence.

Property, Plant and Equipment and Investment Properties — Property, plant and equipment and investment properties are stated at cost, less accumulated depreciation and amortization. Depreciation is provided for over the estimated useful lives of the assets using the straight-line method. Amortization of leasehold improvements is provided for over the lease terms or the estimated useful lives of the assets, whichever is shorter, using the straight-line method.

Maintenance, repairs and minor renewals are charged directly to expense as incurred. Additions and improvements to the assets are capitalized. When assets are disposed of, the related cost and accumulated depreciation thereon are removed from the accounts and any resulting gain or loss is included in the consolidated statements of operations and comprehensive income or loss.

Long-Lived Assets and Impairment The Company’s business requires heavy investment in manufacturing facilities and equipment that are technologically advanced but can quickly become significantly underutilized or rendered obsolete by rapid changes in demand.

The Company evaluates the long-lived assets, including property, plant and equipment and investment property, for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors considered important that could result in an impairment review include significant underperformance relative to expected historical or projected future operating results, significant changes in the manner of use of the assets or the strategy for our business, significant negative industry or economic trends, and a significant decline in the stock price for a sustained period of time. Impairment is recognized based on the difference between the fair value of the asset and its carrying value, and fair value is generally measured based on discounted cash flow analysis if there is significant adverse change.

The Company applies the provisions of ASC Topic 360,Accounting for the Impairment or Disposal of Long-Lived Assets (“ASC Topic 360”), to property, plant and equipment. ASC Topic 360 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated selling prices inundiscounted cash flows expected to result from the ordinary courseuse and eventual disposition of business, less reasonably predictable coststhe assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Leases - Company as Lessee

Accounting Standards Codification Topic 842 ("ASC Topic 842") introduced new requirements to increase transparency and comparability among organizations for leasing transactions for both lessees and lessors. It requires a lessee to record a right-of-use asset and a lease liability for all leases with terms longer than 12 months. These leases will be either finance or operating, with classification affecting the pattern of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using Last-In-First-Out orexpense recognition.

- 9-

The Company applies the retail inventory method. The amendmentsguidance in ASC Topic 330842 to its individual leases of assets. When the Company receives substantially all the economic benefits from and directs the use of specified property, plant and equipment, the transactions give rise to leases. The Company’s classes of assets include real estate leases.

Operating leases are effectiveincluded in operating lease right-of-use ("ROU") assets under the noncurrent asset portion of our consolidated balance sheets and under the current portion and noncurrent liabilities portion of our consolidated balance sheets. ROU assets represent our right to use an underlying asset for public business entities for fiscal years beginning after December 15, 2016,the lease term and interim periods within those fiscal years. A reporting entity should applylease liabilities represent our obligation to make lease payments arising from the amendments retrospectively to all periods presented. related lease. Finance leases are included in property, plant and equipment under the noncurrent asset portion of our consolidated balance sheets and under the current portion and noncurrent liabilities portion of our consolidated balance sheets.

The Company has adoptedelected the ASUpractical expedient within ASC Topic 842 to not separate lease and concludednon-lease components within lease transactions for all classes of assets. Additionally, the Company has elected the short-term lease exception for all classes of assets, does not apply the recognition requirements for leases of 12 months or less, and recognizes lease payments for short-term leases as expense either straight-line over the lease term or as incurred depending on whether the lease payments are fixed or variable. These elections are applied consistently for all leases.

When discount rates implicit in leases cannot be readily determined, the Company uses the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and to measure lease liabilities and ROU assets. The incremental borrowing rate used by the Company was based on baseline rates and adjusted by the credit spreads commensurate with the Company’s secured borrowing rate over a similar term. At each reporting period when there is a new lease initiated, the rates established for that quarter will be used.

Leases - Company as Lessor

All the leases under which the Company is the lessor will continue to be classified as operating leases and sales-type leases under the standard.

Comprehensive Income or LossASC Topic 220,Reporting Comprehensive Income (“ASC Topic 220”),establishes standards for reporting and presentation of comprehensive income or loss and its components in a full set of general-purpose consolidated financial statements. The Company has chosen to report comprehensive income or loss in the statements of operations. Comprehensive income or loss is comprised of net income or loss and all changes to shareholders’ equity except those due to investments by owners and distributions to owners.

Income Taxes The Company accounts for income taxes using the liability method in accordance with ASC Topic 740,Accounting for Income Taxes (“ASC Topic 740”). ASC Topic 740 requires an entity to recognize deferred tax liabilities and assets. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements, which will result in taxable or deductible amounts in future years. Further, the effects of enacted tax laws or rate changes are included as part of deferred tax expenses or benefits in the period that covers the enactment date.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. The Company recognizes potential liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

Retained Earnings It is the intention of the Company to reinvest earnings of its foreign subsidiaries in the operations of those subsidiaries. These taxes are undeterminable at this time. The amount of earnings retained in subsidiaries was $17,803 and $16,683 at March 31, 2022, and June 30, 2021 respectively.

- 10-

Stock-based compensation — The Company calculates compensation expense related to stock option awards made to employees and directors based on the fair value of stock-based awards on the date of grant. The Company determines the grant date fair value of our stock option awards using the Black-Scholes option pricing model and for awards without performance conditions, the related stock-based compensation is recognized over the period in which a participant is required to provide service in exchange for the stock-based award, which is generally four years. The Company recognizes stock-based compensation expense in the consolidated statements of shareholders’ equity based on awards ultimately expected to vest. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates.

Determining the fair value of stock-based awards at the grant date requires significant judgment. The determination of the grant date fair value of stock-based awards using the Black-Scholes option pricing model is affected by our estimated common stock fair value as well as other subjective assumptions including the expected term of the awards, the expected volatility over the expected term of the awards, expected dividend yield and risk-free interest rates. The assumptions used in our option pricing model represent management’s best estimates and are as follows:

Fair Value of Common Stock. We determined the fair value of each share of underlying common stock based on the closing price of our common stock on the date of grant.

Expected Term. The expected term of employee stock options reflects the period for which we believe the option will remain outstanding based on historical experience and future expectations.

Expected Volatility. We base expected volatility on our historical information over a similar expected term.

(Loss) / Earnings per Share — Computation of basic earnings per share is conducted by dividing net income available to common shares (numerator) by the weighted average number of common shares outstanding (denominator) during a reporting period. Computation of diluted earnings per share gives effect to all dilutive potential common shares outstanding during a reporting period. In computing diluted earnings per share, the average market price of common shares for a reporting period is used in determining the number of shares assumed to be purchased from the exercise of stock options.

Fair Values of Financial Instruments — Carrying values of trade account receivables, accounts payable, accrued expenses, and term deposits approximate their fair value due to their short-term maturities. Carrying values of the Company’s lines of credit and long-term debt are considered to approximate their fair value because the interest rates associated with the lines of credit and long-term debt are adjustable in accordance with market situations when the Company tries to borrow funds with similar terms and remaining maturities. See Note 22 for detailed discussion of the fair value measurement of financial instruments.

ASC Topic 820,Fair Value Measurements and Disclosures (“ASC Topic 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The financial assets and financial liabilities that require recognition under the guidance include available-for-sale investments, employee deferred compensation plan and foreign currency derivatives. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the effectivenessobservable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. As such, fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Financial assets utilizing Level 1 inputs include U.S. treasuries, most money market funds, marketable equity securities and our employee deferred compensation plan;

Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, directly or indirectly. Financial assets and liabilities utilizing Level 2 inputs include foreign currency forward exchange contracts, most commercial paper and corporate notes and bonds; and

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Concentration of Credit Risk — Financial instruments that subject the Company to credit risk compose trade account receivables. The Company performs ongoing credit evaluations of its customers for potential credit losses. The Company generally does not require collateral. The Company believes that its credit policies do not result in significant adverse risk and historically it has not experienced significant credit related losses.

- 11-

Investments — The Company (a) evaluates the sufficiency of the total equity at risk, (b) reviews the voting rights and decision-making authority of the equity investment holders as a group, and whether there are any guaranteed returns, protection against losses, or capping of residual returns within the group, and (c) establishes whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this updateVariable Interest Entity (“VIE”) determination. The Company would consolidate an investment that is determined to be a VIE if it was the primary beneficiary. The primary beneficiary of a VIE is determined by a primarily qualitative approach, whereby the variable interest holder, if any, has the power to direct the VIE’s most significant activities and is the primary beneficiary. A new accounting standard became effective and changed the method by which the primary beneficiary of a VIE is determined. Through a primarily qualitative approach, the variable interest holder who has the power to direct the VIE’s most significant activities is determined to be the primary beneficiary. To the extent that the investment does not have qualify as VIE, the Company further assesses the existence of a controlling financial interest under a voting interest model to determine whether the investment should be consolidated.

Equity Method — The Company analyzes its investments to determine if they should be accounted for using the equity method. Management evaluates both Common Stock and in-substance Common Stock to determine whether they give the Company the ability to exercise significant effectinfluence over operating and financial policies of the investment even though the Company holds less than 50% of the Common Stock and in-substance Common Stock. The net income of the investment, if any, will be reported as “Equity in earnings of unconsolidated joint ventures, net of tax” in the Company’s consolidated statements of operations and comprehensive income.

Cost Method Investee companies not accounted for under the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, the Company’s share of the earnings or losses of such investee companies is not included in the consolidated balance sheet or statements of operations and comprehensive income or loss. However, impairment charges are recognized in the consolidated statements of operations and comprehensive income or loss. If circumstances suggest that the value of the investee company has subsequently recovered, such recovery is not recorded.

Loan Receivables from Property Development Projects — The loan receivables from property development projects are classified as current assets, carried at face value, and are individually evaluated for impairment. The allowance for loan losses reflects management’s best estimate of probable losses determined principally on the basis of historical experience and specific allowances for known loan accounts. All loans or portions thereof deemed to be uncollectible or to require an excessive collection cost are written off to the allowance for losses.

Interest income on the loan receivables from property development projects are recognized on an accrual basis. Discounts and premiums on loans are amortized to income using the interest method over the remaining period to contractual maturity. The amortization of discounts into income is discontinued on loans that are contractually 90 days past due or when collection of interest appears doubtful.

Contingent Liabilities — Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial positionstatements. If the assessment indicates that a potential material loss contingency is not probable, but is reasonably possible, or resultsis probable but cannot be estimated, then the nature of operations.

The following amendmentsthe contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, inAccounting Standards Update (“ASU”) have not been adopted which case the nature of the guarantee would be disclosed.

Consolidation of subsidiaries- A subsidiary is an investee that is controlled by the CompanyGroup. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The Group elects voting interest entity model (referred to as the “VOE” model) in consolidation as the Group has a controlling financial interest in an entity. A controlling financial interest is generally based on the concept that a reporting entity should have the unilateral right to make the significant financial and operating decisions of December 31, 2017.

an entity without regard to probability. In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

The consolidated financial statements of Group include the accounts of Trio-Tech International and its subsidiaries. Intercompany transactions and balances have been eliminated.

 
The amendments in

2.NEW ACCOUNTING PRONOUNCEMENTS

In March 2020, FASB issued ASU 2017-11:Earnings Per Share(2020-04 ASC Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives848:Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and Hedging (Topic 815). For public companies, theseexceptions 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. The amendments are effective for annual periods beginning after December 15, 2018, including interim periods within those periods. While early application is permitted, including adoption in an interim period,all entities as of March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company has not elected to early adopt. The effectiveness ofcompleted its assessment and concluded that this update is not expectedhas no significant impact to have a significant effect on the Company’s presentation of consolidated financial position or results of operations.

The amendments in ASU 2017-09 —Compensation—Stock Compensation(ASC Topic 718 ): Scope of Modification Accounting: These amendments provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. For public companies, these amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s presentation of consolidated financial position or results of operations.
The amendments in ASU 2017-08 ASC Subtopic 310-20 —'Receivables—Nonrefundable Fees and Other Costs(“ASC Subtopic 310-20”): These amendments shorten the amortization period for certain callable debt securities held at a premium. For public companies, these amendments are effective for annual periods beginning after December 15, 2018, including interim periods within those periods. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s presentation of consolidated financial position or results of operations.
The amendments in ASU 2017-07 ASC Topic 715 —'Compensation — Retirement Benefits: These amendments improve the presentation of net periodic pension Cost and Net Periodic Postretirement Benefit Cost. For public companies, these amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s presentation of consolidated financial position or results of operations.
The amendments in ASU 2017-05 ASC Subtopic 610-20 —'Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets(“ASC Subtopic 610-20”): These amendments clarify the scope of asset derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. For public companies, these amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s presentation of consolidated financial position or results of operations.
The amendments in ASU 2017-04 ASC Topic 350 —'Intangibles - Goodwill and Other: These amendments simplify the test for goodwill impairment. For public companies, these amendments are effective for annual periods beginning after December 15, 2019, including interim periods within those periods. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s presentation of consolidated financial position or results of operations.
The amendments in ASU 2017-01 ASC Topic 805 —'Business Combinations: These amendments clarify the definition of a business. The amendments affect all companies and other reporting organizations that must determine whether they have acquired or sold a business. For public companies, these amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s presentation of consolidated financial position or results of operations.
-8-
The amendments in ASU 2016-18 ASC Topic 230 —'Statement of Cash Flows: These amendments provide cash flow statement classification guidance. For public business entities, these amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s presentation of consolidated financial position and statement of cash flows.
The amendments in ASU 2016-17 ASC Topic 810 —Consolidation: These amendments require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. For public business entities, these amendments are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. While early application is permitted, including interim reporting periods within those annual reporting periods, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s consolidated financial position or resultsstatements.

- 12-

The amendments in

In June 2016, FASB issued ASU 2016-162016-13 ASC Topic 740 326,Financial Instruments Income Taxes: These amendments require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. For public business entities, these amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

The amendments in ASU 2016-15 Credit Losses (“ASC Topic 230 —Statement of Cash Flows: These amendments provide cashflow statement classification guidance. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. While early application is permitted, including adoption in an interim period, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s consolidated financial position or results of operations.
The amendments in ASU 2016-13 ASC Topic 326:Financial InstrumentsCredit lossesare issued326”) 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. For public companies that are not SEC filers,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. ASC Topic 326 is effective for fiscal yearsthe Company for annual periods beginning after December 15, 2020, and interim periods within those fiscal years. While early application will be permitted for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, the2022. The Company has not yet determined if it will early adopt. The effectiveness ofcompleted its assessment and concluded that this update is has no significant impact to the Company’s consolidated financial statements.

Other new pronouncements issued but not yet effective until after March 31, 2022, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

 
The amendments in ASU 2016-09 ASC Topic 718:Compensation–Stock Compensation are issued to simplify several aspects of the accounting for share-based payment award transactions, including (a) income tax consequences (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. For public business entities, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company has adopted the ASU and concluded that the effectiveness of this update does not have a significant effect on the Company’s consolidated financial position or results of operations.
The amendments in ASU 2016-02 ASC Topic 842:Leasesrequire companies to recognize the following for all leases (with the exception of short-term leases) at the commencement date of the applicable lease: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset, which is as an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. These amendments become effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, for a variety of entities including a public company. While early adoption is permitted, the Company has not elected to early adopt. The effectiveness of this update is not expected to have a significant effect on the Company’s consolidated financial position or results of operations.
-9-
The Financial Accounting Standards Board (“FASB”) has issued converged standards on revenue recognition. Specifically, the Board has issued ASU 2014-09, ASC Topic 606 (“ASU 2014-09”). ASU 2014-09 affects any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). ASU 2014-09 will supersede the revenue recognition requirements in ASC Topic 605, Revenue Recognition (“ASC Topic 605”), and most industry-specific guidance. ASU 2014-09 also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts. In addition, the existing requirements for the recognition of a gain or loss on the transfer of non-financial assets that are not in a contract with a customer (e.g., assets within the scope of ASC Topic 360, Property, Plant, and Equipment, (“ASC Topic 360”), and intangible assets within the scope of Topic 350, Intangibles—Goodwill and Other) are amended to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in ASU 2014-09. For a public entity, the amendments in ASU 2014-09 would be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. However, ASU 2015-14 ASC Topic 606:Deferral of the Effective Date(“ASC Topic 606”) defers the effective date of ASU 2014-09 for all entities by one year. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company has not adopted these standards. As the new standards, will supersede substantially all existing revenue guidance affecting the Company under GAAP, it could impact revenue and cost recognition on sales across all the Company's business segments. The Company carried out an initial evaluation of the impact of this standard on its business and anticipates that the adoption of this standard will not have a significant effect on its Consolidated Financial Statements. While we are continuing to assess all potential impacts, the Company has not presently selected a transition method as we believe there will not be any significant impact of this new guidance on the Company.
Other new pronouncements issued but not yet effective until after December 31, 2017 are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

3.TERM DEPOSITS

 
 
Dec. 31,
 2017
(Unaudited)
 
 
June 30,
 2017
 
 
 
 
 
 
 
 
Short-term deposits
 $598 
 $824 
Currency translation effect on short-term deposits
  44 
  (37)
Total short-term deposits
  642 
  787 
Restricted term deposits
  1,660 
  1,722 
Currency translation effect on restricted term deposits
  57 
  (65)
Total restricted term deposits
  1,717 
  1,657 
Total Term deposits
 $2,359 
 $2,444 

  

Mar. 31,

2022

(Unaudited)

  

June 30,

2021

 
         

Short-term deposits

 $4,961  $6,353 

Currency translation effect on short-term deposits

  (8)  298 

Total short-term deposits

  4,953   6,651 

Restricted term deposits

  1,736   1,682 

Currency translation effect on restricted term deposits

  (1)  59 

Total restricted term deposits

  1,735   1,741 

Total term deposits

 $6,688  $8,392 

Restricted deposits represent the amount of cash pledged to secure loans payable granted byto 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 non-currentnoncurrent assets, as they relate to long-term obligations and will become unrestricted only upon discharge of the obligations. Short-term deposits represent bank deposits, thatwhich do not qualify as cash equivalents.

 
-10-

4.TRADE ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

Accounts receivable consists ofare customer obligations due under normal trade terms. AlthoughThe 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. Management periodically performs credit evaluations of customers’ financial conditions.

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 DecemberMarch 31, 2017 2022, and June 30, 2017 2021, was adequate.  

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

  

Mar. 31,

2022

(Unaudited)

  

June 30,

2021

 

Beginning

 $311  $314 

Additions charged to expenses

  44   5 

Recovered

  (105)  (14

)

Write-off

  0   (16

)

Currency translation effect

  3   22 

Ending

 $253  $311 

- 13-

 
 
 
Dec. 31,
 2017
(Unaudited)
 
 
June 30,
 2017
 
Beginning
 $247 
 $270 
Additions charged to expenses
  - 
  65 
Recovered
  (1)
  (78)
Write-off
  - 
  (2)
Currency translation effect
  9 
  (8)
Ending
 $255 
 $247 

 

5.LOANS RECEIVABLE FROM PROPERTY DEVELOPMENT PROJECTS

The following table presents Trio-Tech (Chongqing) Co. Ltd (‘TTCQ’(“TTCQ”)’s loan receivablereceivables from property development projects in China as of December 31, 2017. The exchange rate is based on the date published by the Monetary Authority of Singapore as of March 31, 2015, since the net2022.

 

Loan Expiry

Date

 

Loan Amount

(RMB)

  

Loan Amount

(U.S. Dollars)

 

Short-term loan receivables

         

JiangHuai (Project – Yu Jin Jiang An)

May 31, 2013

  2,000   314 

Less: allowance for doubtful receivables

   (2,000

)

  (314

)

Net loan receivables from property development projects

   0   0 
          

Long-term loan receivables

         

Jun Zhou Zhi Ye

Oct 31, 2016

  5,000   788 

Less: transfer – downpayment for purchase of investment property

   (5,000

)

  (788

)

Net loan receivables from property development projects

   0   0 

The short-term loan receivable was “nil” as at December 31, 2017.

 
Loan Expiry
Date
 
Loan Amount
(RMB)
 
 
Loan Amount
(U.S. Dollars)
 
Short-term loan receivables 
 
 
 
 
 
 
JiangHuai (Project – Yu Jin Jiang An)May 31, 2013
  2,000 
  325 
Less: allowance for doubtful receivables 
  (2,000)
  (325)
Net loan receivables from property development projects 
  - 
  - 
 
    
    
Long-term loan receivables 
    
    
Jun Zhou Zhi YeOct 31, 2016
  5,000 
  814 
Less: transfer – down-payment for purchase of investment property 
  (5,000)
  (814)
Net loan receivables from property development projects 
  - 
  - 
The following table presents TTCQ’s loan receivable from property development projects in China as of June 30, 2017. The exchange rate is based on the date published by the Monetary Authority of Singapore as of March 31, 2015, since the net loan receivable was “nil” as at June 30, 2017.
 
Loan Expiry
Date
 
Loan Amount
(RMB)
 
 
Loan Amount
(U.S. Dollars)
 
Short-term loan receivables 
 
 
 
 
 
 
JiangHuai (Project – Yu Jin Jiang An)May 31, 2013
  2,000 
  325 
Less: allowance for doubtful receivables 
  (2,000)
  (325)
Net loan receivables from property development projects 
  - 
  - 
 
    
    
Long-term loan receivables 
    
    
Jun Zhou Zhi YeOct 31, 2016
  5,000 
  814 
Less: transfer – down-payment for purchase of investment property 
  (5,000)
  (814)
Net loan receivables from property development projects 
  - 
  - 
-11-
On November 1, 2010,receivables amounting to renminbi (“RMB”) 2,000, or approximately $314 arose due to TTCQ enteredentering 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. Due to the short-term natureChina in fiscal 2011. Based on TTI’s financial policy, a provision for doubtful receivables of $314 on the investment in JiangHuai was recorded during fiscal 2014. TTCQ did not generate other income from JiangHuai for the amount was classified as a loan based on ASC Topic 310-10-25 Receivables, amounting to Renminbi (“RMB”) 2,000, quarter ended March 31, 2022 or approximately $325. The loan was renewed, but expired on May 31, 2013. for the fiscal year ended June 30, 2021. TTCQ is in the legal process of recovering the outstanding amount of $325.approximately $314.

The loan amounting to RMB 5,000, or approximately $788, arose due to TTCQ did not generate other income from JiangHuai for the quarter ended December 31, 2017, or for the fiscal year ended June 30, 2017. Based on TTI’s financial policy, a provision for doubtful receivables of $325 on the investment in JiangHuai was recorded during the second quarter of fiscal 2014 based on TTI’s financial policy. TTCQ is in the legal process of recovering the outstanding amount of $325.

On November 1, 2010, TTCQ enteredentering into a Memorandum Agreement with JiaSheng Property Development Co. Ltd. (“JiaSheng”) to invest in their property development projects (Project B-48B-48 Phase 2)2) located in Chongqing City, China. Due to the short-term nature of the investment, the amount was classified as a loan based on ASC Topic 310, amounting to RMB 5,000, or approximately $814 based on the exchange rate as at March 31, 2015 published by the Monetary Authority of Singapore.China in fiscal 2011. The amount was unsecured and repayable at the end of the term. The loan was renewed in November 2011 for a period of one year, which expired on October 31, 2012 and was again renewed in November 2012 and expired in November 2013. On November 1, 2013 the loan was transferred by JiaSheng to, and is now payable by, Chong Qing Jun Zhou Zhi Ye Co. Ltd. (“Jun Zhou Zhi Ye”), and the transferred agreement expired on October 31, 2016. Prior to the second quarter of fiscal year 2015, the loan receivable was classified as a long-term receivable. The book value of the loan receivable approximates its fair value. In the second quarter ofDuring fiscal year 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(See Note 8)8).

 

6.INVENTORIES

Inventories consisted of the following:

 
 
Dec. 31,
 2017
 (Unaudited)
 
 
June 30,
 2017
 
 
 
 
 
 
 
 
Raw materials
 $1,107 
 $1,047 
Work in progress
  1,890 
  1,045 
Finished goods
  598 
  365 
Less: provision for obsolete inventories
  (697)
  (686)
Currency translation effect
  74 
  (15)
 
 $2,972 
 $1,756 

  

Mar. 31,

2022

(Unaudited)

  

June 30,

2021

 
         

Raw materials

 $1,340  $1,152 

Work in progress

  1,332   1,218 

Finished goods

  319   325 

Less: provision for obsolete inventories

  (709

)

  (679

)

Currency translation effect

  (10

)

  64 
  $2,272  $2,080 

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

  

Mar. 31,

2022

(Unaudited)

  

June 30,

2021

 
         

Beginning

 $679  $678 

Additions charged to expenses

  25   13 

Usage – disposition

  0   (28)

Currency translation effect

  5

 

  16 

Ending

 $709  $679 

- 14-

 
 
Dec. 31,
 2017
(Unaudited)
 
 
June 30,
 2017
 
 
 
 
 
 
 
 
Beginning
 $686 
 $697 
Additions charged to expenses
  - 
  6 
Usage - disposition
  (3)
  (6)
Currency translation effect
  14 
  (11)
Ending
 $697 
 $686 
 

 
-12-
8. INVESTMENTS
Investments were nil as at December 31, 2017 and June 30, 2017.
During the second quarter of fiscal year 2011, the Company entered into a joint-venture agreement with JiaSheng to develop real estate projects in China. The Company invested RMB 10,000, or approximately $1,606 based on the exchange rate as of March 31, 2014 published by the Monetary Authority of Singapore, for a 10% interest in the newly formed joint venture, which was incorporated as a limited liability company, Chong Qing Jun Zhou Zhi Ye Co. Ltd. (the “joint venture”), in China. The agreement stipulated that the Company would nominate two of the five members of the Board of Directors of the joint venture and had the ability to assign two members of management to the joint venture. The agreement also stipulated that the Company would receive a fee of RMB 10,000, or approximately $1,606 based on the exchange rate as of March 31, 2014 published by the Monetary Authority of Singapore, for the services rendered in connection with obtaining priority to bid in certain real estate projects from the local government. Upon signing of the agreement, JiaSheng paid the Company RMB 5,000 in cash, or approximately $803 based on the exchange rate published by the Monetary Authority of Singapore as of March 31, 2014. The remaining RMB 5,000, which was not recorded as a receivable as the Company considered the collectability uncertain, would be paid over 72 months commencing in 36 months from the date of the agreement when the joint venture secured a property development project stated inside the joint venture agreement. The Company considered the RMB 5,000, or approximately $803 based on the exchange rate as of March 31, 2014 published by the Monetary Authority of Singapore, received in cash from JiaSheng, the controlling venturer in the joint venture, as a partial return of the Company’s initial investment of RMB10,000, or approximately $1,606 based on the exchange rate as of March 31, 2014 published by the Monetary Authority of Singapore. Therefore, the RMB 5,000 received in cash was offset against the initial investment of RMB 10,000, resulting in a net investment of RMB 5,000 as of March 31, 2014. The Company further reduced its investments by RMB 137, or approximately $22, towards the losses from operations incurred by the joint-venture, resulting in a net investment of RMB 4,863, or approximately $781 based on exchange rates published by the Monetary Authority of Singapore as of March 31, 2014.
“Investments” in the real estate segment were the cost of an investment in a joint venture in which we had a 10% interest. During the second quarter of fiscal year 2014, TTCQ disposed of its 10% interest in the joint venture. The joint venture had to raise funds for the development of the project. As a joint-venture partner, TTCQ was required to stand guarantee for the funds to be borrowed; considering the amount of borrowing, the risk involved was higher than the investment made and hence TTCQ decided to dispose of the 10% interest in the joint venture investment. On October 2, 2013, TTCQ entered into a share transfer agreement with Zhu Shu. Based on the agreement, the purchase price was to be paid by (1) RMB 10,000 worth of commercial property in Chongqing China, or approximately $1,634 based on exchange rates published by the Monetary Authority of Singapore as of October 2, 2013, by non-monetary consideration and (2) the remaining RMB 8,000, or approximately $1,307 based on exchange rates published by the Monetary Authority of Singapore as of October 2, 2013, by cash consideration. The consideration consisted of (1) commercial units measuring 668 square meters to be delivered in June 2016 and (2) sixteen quarterly equal installments of RMB500 per quarter commencing from January 2014. Based on ASC Topic 845 Non-monetary Consideration, the Company deferred the recognition of the gain on disposal of the 10% interest in joint venture investment until such time that the consideration is paid, so that the gain can be ascertained. The recorded value of the disposed investment amounting to $783, based on exchange rates published by the Monetary Authority of Singapore as of June 30, 2014, is classified as “other assets” under non-current assets, because it is considered a down payment for the purchase of the commercial property in Chongqing. TTCQ performed a valuation on a certain commercial unit and its market value was higher than the carrying amount. The first three installment amounts of RMB 500 each due in January 2014, April 2014 and July 2014 were all outstanding until the date of disposal of the investment in the joint venture. Out of the outstanding RMB 8,000, TTCQ had received RMB 100 during May 2014.
On October 14, 2014, TTCQ and Jun Zhou Zhi Ye entered into a memorandum of understanding. Based on the memorandum of understanding, both parties have agreed to register a sales and purchase agreement upon Jun Zhou Zhi Ye obtaining the license to sell the commercial property (the Singapore Themed Resort Project) located in Chongqing, China. The proposed agreement is for the sale of shop lots with a total area of 1,484.55 square meters as consideration for the outstanding amounts owed to TTCQ by Jun Zhou Zhi Ye as follows:
a)
Long term loan receivable RMB 5,000, or approximately $814, as disclosed in Note 5, plus the interest receivable on long term loan receivable of RMB 1,250;
b)
Commercial units measuring 668 square meters, as mentioned above; and
c)
RMB 5,900 for the part of the unrecognized cash consideration of RMB 8,000 relating to the disposal of the joint venture.
-13-
The consideration does not include the remaining outstanding amount of RMB 2,000, or approximately $326, which will be paid to TTCQ in cash.
The shop lots are to be delivered to TTCQ upon completion of the construction of the shop lots in the Singapore Themed Resort Project. The initial targeted date of completion was December 31, 2016. Based on subsequent discussions with the developer and the overall China market outlook, the completion date is currently estimated to be December 31, 2019.
The share transfer (10% interest in the joint venture) was registered with the relevant authorities in China as of end October 2016.
9.   

7.INVESTMENT PROPERTIES

The following table presents the Company’s investment in properties in China (with estimated 20 years useful life in years) as of DecemberMarch 31, 2017. 2022. The exchange rate is based on the market rate as of DecemberMarch 31, 2017.

 Investment Date
 
Investment
Amount (RMB)
 
 
Investment Amount
 (U.S. Dollars)
 
Purchase of rental property – Property I - MaoYeJan 04, 2008
  5,554 
  894 
Purchase of rental property – Property II - JiangHuaiJan 06, 2010
  3,600 
  580 
Purchase of rental property – Property III - Fu LiApr 08, 2010
  4,025 
  648 
Currency translation 
  - 
  (95)
Gross investment in rental property 
  13,179 
  2,027 
Accumulated depreciation on rental property  Dec 31, 2017
  (5,266)
  (810)
Net investment in property – China 
  7,913 
  1,217 
2022.

 

Investment

Date / Reclassification Date

 

Investment

Amount (RMB)

  

Investment Amount

(U.S. Dollars)

 

Purchase of rental property – Property I – MaoYe Property

Jan 04, 2008

  5,554   894 

Currency translation

   0   (87

)

Reclassification as “Assets held for sale”

July 01, 2019

  (5,554

)

  (807

)

Reclassification from “Assets held for sale”

Mar 31, 2020

  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

   0   (15

)

Gross investment in rental property

   9,649   1,514 

Accumulated depreciation on rental property

Mar 31, 2022

  (7,402

)

  (1,145

)

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

)

    (5,488

)

  (878

)

Net investment in property China

   4,161   636 

The following table presents the Company’s investment in properties in China (with estimated 20 years useful life in years) as of June 30, 2017. 2021. The exchange rate is based on the market rate as of June 30, 2017.

 Investment Date
 
Investment
Amount (RMB)
 
 
Investment Amount
 (U.S. Dollars)
 
Purchase of rental property – Property I - MaoYeJan 04, 2008
  5,554 
  894 
Purchase of rental property – Property II - JiangHuaiJan 06, 2010
  3,600 
  580 
Purchase of rental property – Property III - Fu LiApr 08, 2010
  4,025 
  648 
Currency translation 
  - 
  (178)
Gross investment in rental property 
  13,179 
  1,944 
Accumulated depreciation on rental property  June 30, 2017
  (4,937)
  (728)
Net investment in property – China 
  8,242 
  1,216 
The following table presents the Company’s investment properties in Malaysia as of December 31, 2017 and June 30, 2017. The exchange rate is based on the exchange rate as of June 30, 2015 published by the Monetary Authority of Singapore.
 Investment Date
 
Investment
Amount (RM)
 
 
Investment Amount
(U.S. Dollars)
 
Reclassification of Penang Property IDec 31, 2012
  681 
  181 
Gross investment in rental property 
  681 
  181 
 
    
    
Accumulated depreciation on rental propertyJune 30, 2015
  (310)
  (83)
Reclassified as “Assets held for sale”June 30, 2015
  (371)
  (98)
Net investment in rental property - Malaysia 
  - 
  - 
-14-
2021.

 

Investment

Date / Reclassification Date

 

Investment

Amount (RMB)

  

Investment Amount

(U.S. Dollars)

 

Purchase of rental property – Property I – MaoYe Property

Jan 04, 2008

  5,554   894 

Currency translation

   0   (87

)

Reclassification as “Assets held for sale”

Jul 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

   0   (36

)

Gross investment in rental property

   9,649   1,493 

Accumulated depreciation on rental property

Jun 30, 2021

  (7,040

)

  (1,079

)

Reclassified as “Assets held for sale” - MaoYe Property

Jul 01, 2019

  2,822   410 

Reclassification from “Assets held for sale” - MaoYe Property

Mar 31, 2020

  (1,029

)

  (143

)

    (5,247

)

  (812

)

Net investment in properties China

   4,402   681 

Rental Property I – Mao Ye

- MaoYe Property

In fiscal 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. TTCQ identified a new tenant and signed a new rental agreement (653 square meters at a monthly rental of RMB 39, or approximately $6) on August 1, 2015. This rental agreement provides for a rent increase of 5% every year on January 31, commencing with 2017 until the rental agreement expires on July 31, 2020. TTCQ signed a new rental agreement (451 square meters at a monthly rental of RMB 27, or approximately $4) on January 29, 2016. This rental agreement provides for a rent increase of 5% every year on January 29, commencing with 2017 until the rental agreement expires on February 28, 2019.

Property purchased from MaoYe generated a rental income of $26$nil and $53 for$4 during the three and sixnine months ended DecemberMarch 31, 2017, respectively,2022, as compared to $6 and $26 and $52$9 for the same periods, respectively, in last fiscal year.

Depreciation expense for MaoYe was $4 and $12 for the three and nine months ended March 31, 2022 and 2021, respectively as compared to $4 and $11 for the same period in the lastlsat fiscal year, respectively.year.

- 15-

Rental Property II - JiangHuai

In fiscal year 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. TTCQ rented all of these commercial units to a third party until the agreement expired in January 2012. TTCQ then rented three of the eight commercial units to another party during the fourth quarter of fiscal year 2013 under a rental agreement that expired on March 31, 2014. Currently all the units are vacant and TTCQ is working with the developer to find a suitable buyer to purchase all the commercial units. TTCQ has yet to receive the title deed for these properties; however,properties. TTCQ has the vacancies in possession with the exception of two units, which are in the process of clarification. TTCQ iswas in the legal process to obtainof obtaining the title deed whichuntil the developer encountered cash flow difficulties in recent years. Since fiscal year 2018, JiangHuai has been under liquidation and is dependent onnow undergoing asset distribution. During the third quarter of fiscal 2022, TTCQ agreed to the local court’s administration’s proposal for the amounts owed by JiangHuai completingto be paid to TTCQ in the entire project. In August 2016, TTCQ performed a valuation on oneform of assets after the fall through of the commercial units3 auctions conducted. Nonetheless, this is not expected to affect the property’s recoverable amount but, in view of the COVID-19 pandemic and its market value was higher than the carrying amount.

complexity of this case, the process and execution will take some time.

Property purchased from JiangHuai did not generate any rental income duringfor the three and sixnine months ended DecemberMarch 31, 2017 2022 and2021.

Depreciation expense for JiangHuai was $7 and $21 for the three and nine months ended March 31, 2022, as compared to $6 and $19 for the same periodsperiod in the last fiscal year.

Other Properties

Rental Property III Fu Li

FuLi

In fiscal 2010, TTCQ entered into a Memorandum of 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. Although TTCQ currently rents its office premises from a third party, it intends to use the office space as its office premises. The total purchase price committed and paid was RMB 4,025, or approximately $649.$648. The development was completed, and the property was handed over during to TTCQ in April 2013 and the title deed was received during the third quarter of fiscal 2014.

The

One of the two commercial properties werewas leased from TTCQ by a third party under a two-year lease to third parties under two separate rental agreements, onerent 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.

For the other leased property, TTCQ renewed the lease agreement to rent out the 161 square meter space at a monthly rate of RMB10, or approximately $1, from November 1, 2019, to October 31, 2020. After which, will expire in TTCQ renewed the lease agreement at a monthly rate of RMB10, or approximately $1, from November 1, 2020, to April 2019 which provides30, 2021, and May 1, 2021, to October 31, 2021. As the space is currently vacant, TTCQ is actively searching for a rent increase of 5% every year on May 1, commencing with 2017 until the rental agreement expires on April 30, 2019 and the other of which will expire in March 31, 2018 which providestenant for a rent increase of 5% every year on April 1, commencing with 2016 until the rental agreement will expire on March 31, 2018.

this space.

Properties purchased from Fu LiFuLi generated a rental income of $11$4 and $19 for the three and nine months ended March 31, 2022, as compared to $5 and $12 for the same period in the last fiscal year.

Depreciation expense for FuLi was $8 and $23 for the three and sixnine months ended DecemberMarch 31, 2017, 2022, respectively, while it generated a rental income of $13as compared to $7 and $26, respectively,$22 for the same periodsperiod in the last fiscal year.

Penang Property I
During the fourth quarter of 2015, TTM planned to sell its factory building in Penang, Malaysia. In accordance to ASC Topic 360, the property was reclassified from investment property, which had a net book value of RM 371, or approximately $98, to assets held for sale since there was an intention to sell the factory building. In May 2015, TTM was approached by a potential buyer to purchase the factory building. On September 14, 2015, application to sell the property was rejected by Penang Development Corporation (‘PDC’). The rejection was based on the business activity of the purchaser not suitable to the industry that is being promoted on the said property. PDC made an offer to purchase the property, which was not at the expected value and the offer expired on March 28, 2016. However, management is still actively looking for a suitable buyer. As of December 31, 2017 the net book value was RM 369, or approximately $91.
-15-

Summary

Total rental income for all investment properties in China was $37$4 and $76$23 for the three and sixnine months ended DecemberMarch 31, 2017, respectively,2022, as compared to $11 and was $39 and $78, respectively,$21 for the same periods, respectively, in the last fiscal year.

Depreciation expenses for all investment properties in China were $24$19 and $49$56 for the three and sixnine months ended DecemberMarch 31, 2017, 2022, respectively, as compared to $17 and were $24 and $47, respectively, for the$52 same periods, respectively, in the last fiscal year.

year.

 
10.

8.OTHER ASSETS

Other assets consisted of the following:

  

Mar. 31,

2022

(Unaudited)

  

June 30,

2021

 

Down payment for purchase of investment properties *

 $0  $0 

Down payment for purchase of property, plant and equipment

  6   372 

Deposits for rental and utilities and others

  153   160 

Currency translation effect

  (18)  (270

)

Total

 $141  $262 

- 16-

 
 
Dec. 31, 2017
(Unaudited)
 
 

June 30, 2017 
 
Down payment for purchase of investment properties
 $1,645 
 $1,645 
Down payment for purchase of property, plant and equipment
  219 
  280 
Deposits for rental and utilities
  140 
  139 
Currency translation effect
  (54)
  (142)
Total
 $1,950 
 $1,922 

*Down payment for purchase of investment properties included:

  

RMB

  

US Dollars

 

Original Investment (10% of Jun Zhou 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   788 

Interest Receivable

  1,250   197 

Less: Impairment of Interest

  (906)  (143

)

Transferred to Down Payment (Note *b)

  5,344   842 

* Down Payment for Purchase of Investment Properties

  10,207   1,623 

Less: Provision of Impairment loss on other assets

  (10,207

)

  (1,623

)

* Down Payment for Purchase of Investment Properties

  -   - 

a)

In fiscal year 2011, the Company signed a Joint Venture agreement (“agreement”) with Jia Sheng Property Development Co. Ltd. (“Developer”) to form a new company, Jun Zhou Co., Limited (“Joint Venture” or “Jun Zhou”) to joint develop the “Singapore Themed Park” project (the “project”), where the Company paid RMB 10 million for a 10% investment in the joint venture. The Developer paid the Company a management fee of RMB5 million in cash upon signing of the agreement with a remaining fee of RMB5 million payable upon fulfilment of certain conditions in accordance with the agreement. The Company further reduced its investment by RMB 137, or approximately $22, towards the losses from operations incurred by the joint venture.

In fiscal year 2014, the Company disposed of its entire 10% interest in the joint venture. The Company recognized the disposal of its 10% investment in Jun Zhou based on the recorded net book value of RMB5 million or equivalent to $788, from net considerations paid, in accordance with US GAAP under ASC Topic 845Non-monetary Consideration, and it’s 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. As of Mar 31, 2022, asset reorganization undertaken by local government still in process.

b)

Amounts of RMB 5,000, or approximately $788, as disclosed in Note 5, plus the interest receivable on long term loan receivable of RMB 1,250, or approximately $197, and impairment on interest of RMB 906, or approximately $143.

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 fiscal year 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 shop lots in the Singapore Theme Resort Project in Chongqing, China, which the impairment loss translated based on the exchange rate used in the fiscal year 2021. The Company accounted for this noncash impairment charge because of increased uncertainties regarding the project’s viability given the developer’s weakening financial condition as well as uncertainties arising from the negative real estate environment in China, implementation of control measures on real estate lending and its relevant government policies, together with effects of the ongoing pandemic.

 
11.

9. LINES OF CREDIT

The carrying

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.

maturities.

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

As of DecemberMarch 31, 2017, 2022, the Company had certain lines of credit that are collateralized by restricted deposits.

- 17-

Entity withType ofInterest
 
Expiration
 
 
Credit
 
 
Unused
 
FacilityFacility
 
Rate
 
 
Date
 
 
Limitation
 
 
Credit
 
Trio-Tech International Pte. Ltd., SingaporeLines of CreditRanging from 1.6% to 5.5%
  - 
 $4,636 
 $3,368 
Trio-Tech (Malaysia) Sdn. Bhd.Lines of CreditRanging from 6.3% to 6.7%
  - 
 $776 
 $776 
Trio-Tech (Tianjin) Co., Ltd.Lines of CreditRanging from 4.9% to 6.3%
  - 
 $923 
 $2 
 

Entity with

 

Type of

 

Interest

 

Expiration

  

Credit

  

Unused

 

Facility

 

Facility

 

Rate

 

Date

  

Limitation

  

Credit

 

Trio-Tech International Pte. Ltd., Singapore

 

Lines of Credit

 

Ranging from 1.85% to 5.5%, SIBOR rate +1.25% and LIBOR rate +1.25%

  -  $4,214  $3,900 
Universal (Far East) Pte. Ltd. Lines of Credit Ranging from 1.85% to 5.5%  -  $1,109  $900 
Trio-Tech Malaysia Sdn. Bhd. Revolving Credit Cost of Funds Rate +2%  -  $358  $358 

As of June 30, 2017, 2021, the Company had certain lines of credit that are collateralized by restricted deposits.

Entity with

 

Type of

 

Interest

 

Expiration

  

Credit

  

Unused

 

Facility

 

Facility

 

Rate

 

Date

  

Limitation

  

Credit

 

Trio-Tech International Pte. Ltd., Singapore

 

Lines of Credit

 

Ranging from 1.85% to 5.5%, SIBOR rate +1.25% and LIBOR rate +1.30%

  -  $4,806  $4,806 
Universal (Far East) Pte. Ltd. Lines of Credit Ranging from 1.85% to 5.5%  -  $359  $187 
Trio-Tech Malaysia Sdn. Bhd. Revolving Credit Cost of Funds Rate +2%  -  $350  $350 

 
Entity withType of
 
Interest
 
 
Expiration
 
 
Credit
 
 
Unused
 
FacilityFacility
 
Rate
 
 
Date
 
 
Limitation
 
 
Credit
 
Trio-Tech International Pte. Ltd., SingaporeLines of Credit
 
Ranging from 3.96% to 7.5%
 
  - 
 $4,496 
 $2,815
 
Trio-Tech (Malaysia) Sdn. Bhd.Lines of Credit
 
Ranging from 6.3% to 6.7%
 
  - 
 $734 
 $734 
Trio-Tech (Tianjin) Co., Ltd.Lines of Credit
  5.22% 
  - 
 $885 
 $10 
-16-
12.

10.ACCRUED EXPENSES

Accrued expenses consisted of the following:

 
 
Dec. 31, 2017
(Unaudited)
 
 
June 30,
2017
 
Payroll and related costs
 $1,554 
 $1,568 
Commissions
  143 
  107 
Customer deposits
  481 
  218 
Legal and audit
  298 
  283 
Sales tax
  129 
  80 
Utilities
  95 
  142 
Warranty
  52 
  49 
Accrued purchase of materials
  352 
  33 
Provision for re-instatement
  289 
  295 
Other accrued expenses
  476 
  319 
Currency translation effect
  116 
  (51)
Total
 $3,985 
 $3,043 

  

Mar. 31,

2022

(Unaudited)

  

June 30,

2021

 

Payroll and related costs

 $1,641  $1,362 

Commissions

  81   51 

Legal and audit

  412   321 

Sales tax

  488   9 

Utilities

  153   91 

Warranty

  16   14 

Accrued purchase of materials and property, plant and equipment

  362   144 

Provision for reinstatement

  309   290 

Deferred income

  60   67 

Other accrued expenses

  347   279 

Currency translation effect

  1   62 

Total

 $3,870  $2,690 

 
13.

11.ASSURANCE WARRANTY ACCRUAL

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

  

Mar. 31,

2022

(Unaudited)

  

June 30,

2021

 

Beginning

 $14  $12 

Additions charged to cost and expenses

  2   7 

Reversal

  0   (4

)

Currency translation effect

  0   (1

)

Ending

 $16  $14 

- 18-

 
 
Dec. 31,
 2017
(Unaudited)
 
 
June 30,
 2017
 
Beginning
 $48 
 $76 
Additions charged to cost and expenses
  19 
  46 
Utilization/reversal
  (15)
  (73)
Currency translation effect
  1 
  (1)
Ending
 $53 
 $48 
 

14.   

12.BANK LOANS PAYABLE

Bank loans payable consisted of the following:

 
 
Dec. 31, 2017
(Unaudited)
 
 
June 30, 2017
 
Note payable denominated in RM for expansion plans in Malaysia, maturing in August 2024, bearing interest at the bank’s prime rate less 1.50% (5.25% and 5.25% at December 31, 2017 and June 30, 2017) per annum, with monthly payments of principal plus interest through August 2024, collateralized by the acquired building with a carrying value of $2,800 and 2,671, as at December 31, 2017 and June 30, 2017, respectively.
  1,518 
  1,735 
 
    
    
Note payable denominated in U.S. dollars for expansion plans in Singapore and its subsidiaries, maturing in April 2020, bearing interest at the bank’s lending rate (3.96% and 3.96% for December 31, 2017 and June 30, 2017) with monthly payments of principal plus interest through June 2020. This note payable is secured by plant and equipment with a carrying value of $215 and $224, as at December 31, 2017 and June 30, 2017, respectively.
  363 
  196 
 
    
    
      Total bank loans payable
 $1,881 
 $1,931 
Current portion of bank loans payable
  346 
  271 
Currency translation effect on current portion of bank loans
  10 
  (11)
                              Current portion of bank loans payable
  356 
  260 
Long term portion of bank loans payable
  1,535 
  1,660 
Currency translation effect on long-term portion of bank loans
  82 
  (108)
                           Long term portion of bank loans payable
 $1,617 
 $1,552 
-17-

  

Mar. 31, 2022

(Unaudited)

  

June 30, 2021

 

Note payable denominated in RM for expansion plans in Malaysia, maturing in August 2028, bearing interest at the bank’s prime rate less 2.00% (3.60% for March 31, 2022 and June 30, 2021) per annum, with monthly payments of principal plus interest through August 2028, collateralized by the acquired building with a carrying value of $2,543 and $2,579, as at March 31, 2022 and June 30, 2021, respectively.

  1,571   1,885 
         

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

  145   175 
         

Financing arrangement at fixed interest rate 3.0% per annum, with monthly payments of principal plus interest through Dec 2026.

  246   0 

Total bank loans payable

 $1,962  $2,060 
         

Current portion of bank loans payable

  498   428 

Currency translation effect on current portion of bank loans

  (5

)

  11 

Current portion of bank loans payable

  493   439 

Long-term portion of bank loans payable

  1,487   1,564 

Currency translation effect on long-term portion of bank loans

  (17

)

  57 

Long-term portion of bank loans payable

 $1,470  $1,621 

Future minimum payments (excluding interest) as at DecemberMarch 31, 2017(unaudited) 2022, were as follows:

2018
 $356 
2019
  373 
2020
  298 
2021
  244 
2022
  127 
Thereafter
  575 
Total obligations and commitments
 $1,973 

Remainder of fiscal 2022

 $459 

2023

  512 

2024

  311 

2025

  233 

2026

  227 

Thereafter

  221 

Total obligations and commitments

 $1,962 

Future minimum payments (excluding interest) as at June 30, 2017 2021, were as follows:

2022

 $439 

2023

  457 

2024

  462 

2025

  208 

2026

  171 

Thereafter

  323 

Total obligations and commitments

 $2,060 

 
2018
 $260 
2019
  273 
2020
  274 
2021
  225 
2022
  236 
Thereafter
  544 
Total obligations and commitments
 $1,812 
15.   

13.COMMITMENTS AND CONTINGENCIES

TTM

Trio-Tech (Malaysia) Sdn. Bhd. has 0 capital commitments for the purchase of equipment and other related infrastructure costs amounting to RM 409, or approximately $101, based on the exchange rate as at DecemberMarch 31, 2017 published by the Monetary Authority of Singapore, 2022, as compared to the capital commitment of $93 as at June 30, 2017 amounting to RM 684, or approximately $159.2021.

- 19-

Trio-Tech (Tianjin) Co. Ltd. in China has capital commitments for the purchase
Deposits with banks in China are not insured by the local government or agency, and are consequently exposed to risk of loss. The Company believes the probability of a bank failure, causing loss to the Company, is remote.

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

 
16.

14.BUSINESS SEGMENTS

In fiscal year 2018,

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 Company operatesrights of the parties are identified, payment terms are identified, the contract has commercial substance and collectibility of consideration is probable. The Company’s revenues are measured based on consideration stipulated in four segments; the testingarrangement 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 industry (which performs structural and electronic tests of semiconductor devices),to the designing and manufacturing of equipment (which equipment tests the structural integrity of integrated circuits and other products), distribution of various products from other manufacturers in Singapore and Southeast Asia and the real estate segment in China.

customer.

The revenue allocated to individual countries was based on where the customers were located. The allocation of the cost of equipment, the current year investment in new equipment and depreciation expense have been made based on the basis of the primary purpose for which the equipment was acquired.

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).

- 20-

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. The Company has concluded that the warranty provided for standard products are assurance type warranties and are not separate performance obligations. Warranty provided for customized products are service warranties and are separate performance obligations. Transaction prices are allocated to this performance obligation using cost plus method. The portion of revenue associated with warranty service is deferred and recognized as revenue over the warranty period, as the customer simultaneously receives and consumes the benefits of warranty services provided by the Company.

Testing

The Company renders testing services to manufacturers and purchasers of semiconductors and other entities who either lack testing capabilities or whose in-house screening facilities are insufficient. The Company primarily derives testing revenue from burn-in services, manpower supply and other associated services. SSP is directly observable from the sales orders. Revenue is allocated to performance obligations satisfied at a point in time depending upon terms of the sales order. Generally, there is no other performance obligation other than what has been stated inside the sales order for each of these sales.

Terms of contract that may indicate potential variable consideration include warranty, late delivery penalty and reimbursement to solve nonconformance issues for rejected products. Based on historical and recent data trends, it is concluded that these terms of the contract do not represent potential variable consideration. The transaction price is not contingent on the occurrence of any future event.

Distribution

The Company distributes complementary products, particularly equipment, industrial products and components by manufacturers mainly from the U.S., Europe, Taiwan and Japan. 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. 

All inter-segmentintersegment revenue was from the manufacturing segment to the testing and distribution segments. Total inter-segmentintersegment revenue was $587 and $681$232 for the three and six months ended DecemberMarch 31, 2017, respectively, 2022, as compared to $20 and $302, respectively,$375 for the same periodsperiod in the last fiscal year. Corporate assets mainly consisted of cash and prepaid expenses. Corporate expenses mainly consisted of stock option expenses, salaries, insurance, professional expenses and directors' fees. Corporate expenses are allocated to the four segments. The following segment information table includes segment operating income or loss after including the corporate expenses allocated to the segments, which gets eliminated in the consolidation.

-18-

The following segment information is unaudited for the period referenced below:nine months ended March 31, 2022 and March 31, 2021:

Business Segment Information:

 

Nine Months

Ended

Mar. 31,

 

Net

Revenue

  

Operating

Income / (Loss)

  

Total

Assets

  

Depr.

And

Amort.

  

Capital

Expenditures

 

Manufacturing

2022

 $10,187   107   14,204   318   103 
 

2021

 $9,324   277   12,576   310   214 
                      

Testing Services

2022

  13,983   1,000   24,030   1,884   1,040 
 

2021

  10,018   (993

)

  21,364   1,859   407 
                      

Distribution

2022

  8,038   1,108   1,601   0   - 
 

2021

  3,790   407   983   0   - 
                      

Real Estate

2022

  23   (86

)

  1,730   61   1 
 

2021

  22   (84

)

  3,784   55   - 
                      

Corporate &

2022

  -   (632

)

  238   0   - 

Unallocated

2021

  -   (36

)

  418   0   - 
                      

Total Company

2022

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

2021

 $23,154   (429

)

  39,125   2,224   621 

- 21-

Business Segment Information:
 
 
Six months Ended Dec. 31
 
 
Net Revenue
 
 
Operating Income / (Loss)
 
 
Total Assets
 
 
Depr. and Amort.
 
 
Capital Expenditures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
2017
 
 $8,738 
 $293 
 $8,837 
 $56 
 $37 
     
2016 
 $6,991 
 $(322)
 $8,114 
 $99 
 $78 
    
    
    
    
    
    
    
 
Testing Services
 
2017 
  9,541 
  853 
  23,591 
  913 
  1,558 
     
2016 
  8,227 
  790 
  18,325 
  765 
  686 
    
    
    
    
    
    
    
 
Distribution
 
2017 
  3,142 
  220 
  621 
  - 
  - 
     
2016 
  2,779 
  134 
  651 
  2 
  - 
    
    
    
    
    
    
    
 
Real Estate
 
2017 
  76 
  (19)
  3,624 
  50 
  - 
     
2016 
  78 
  (6)
  3,147 
  50 
  - 
    
    
    
    
    
    
    
 
Fabrication *
 
2017 
  - 
  - 
  28 
  - 
  - 
 
Services
 
2016 
  - 
  - 
  29 
  - 
  - 
    
    
    
    
    
    
    
 
Corporate &
 
2017 
  - 
  (102)
  88 
  - 
  - 
 
Unallocated
 
2016 
  - 
  59 
  430 
  - 
  - 
    
    
    
    
    
    
    
 
Total
 
2017 
 $21,497 
 $1,245 
 $36,789 
 $1,019 
 $1,595 
     
2016 
 $18,075 
 $655 
 $30,696 
 $916 
 $764 

The following segment information is unaudited for the period referenced below:

three months ended March 31, 2022, and March 31, 2021:

Business Segment Information:

 

Three Months

Ended

Mar. 31,

 

Net

Revenue

  

Operating

Income / (Loss)

  

Total

Assets

  

Depr.

And

Amort.

  

Capital

Expenditures

 

Manufacturing

2022

 $3,097   (145

)

  14,204   110   8 
 

2021

 $3,130   214   12,576   98   60 
                      

Testing Services

2022

  4,417   (124

)

  24,030   633   341 
 

2021

  3,504   (320

)

  21,364   637   344 
                      

Distribution

2022

  3,620   576   1,601   (2)  - 
 

2021

  1,467   163   983   0   - 
                      

Real Estate

2022

  4   (35

)

  1,730   20   - 
 

2021

  11   (23

)

  3,784   20   - 
                      

Corporate &

2022

  -   (402

)

  238   0   - 

Unallocated

2021

  -   (99

)

  418   0   - 
                      

Total Company

2022

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

2021

 $8,112   (65)  39,125   755   404 

 
Business Segment Information:
 
 
 
 
Three months Ended Dec. 31
 
 
Net Revenue
 
 
Operating Income / (Loss)
 
 
Total Assets
 
 
Depr. and Amort.
 
 
Capital Expenditures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manufacturing
 
2017
 
 $3,973 
 $107 
 $8,837 
 $28 
 $2 
     
2016 
 $3,320 
 $(229)
 $8,114 
 $49 
 $67 
    
    
    
    
    
    
    
 
Testing Services
 
2017 
  4,936 
  517 
  23,591 
  466 
  976 
     
2016 
  4,070 
  388 
  18,325 
  377 
  336 
    
    
    
    
    
    
    
 
Distribution
 
2017 
  1,606 
  119 
  621 
  - 
  - 
     
2016 
  1,675 
  100 
  651 
  1 
  - 
    
    
    
    
    
    
    
 
Real Estate
 
2017 
  37 
  (9)
  3,624 
  25 
  - 
     
2016 
  39 
  (8)
  3,147 
  25 
  - 
    
    
    
    
    
    
    
 
Fabrication *
 
2017 
  - 
  - 
  28 
  - 
  - 
 
Services
 
2016 
  - 
  - 
  29 
  - 
  - 
    
    
    
    
    
    
    
 
Corporate &
 
2017 
  - 
  (36)
  88 
  - 
  - 
 
Unallocated
 
2016 
  - 
  27 
  430 
  - 
  - 
    
    
    
    
    
    
    
 
Total
 
2017 
 $10,552 
 $698 
 $36,789 
 $519 
 $1,066 
    
2016 
 $9,104 
 $278 
 $30,696 
 $452 
 $403 
* Fabrication services is a discontinued operation (Note 19)

15.

-19-
17. OTHER INCOME NET

Other income / (expenses) consisted of the following:

  

Three Months Ended

  

Nine Months Ended

 
  

Mar. 31,

  

Mar. 31,

  

Mar. 31,

  

Mar. 31,

 
  

2022

  

2021

  

2022

  

2021

 
  

Unaudited

  

Unaudited

  

Unaudited

  

Unaudited

 

Interest income

 $13  $26  $51  $96 

Other rental income

  30   25   88   70 

Exchange (loss) / Gain

  (9)  58   (13

)

  (79)

Bad debt recovery

  0   0   104   10 

Dividend income

  0   0   0   32 

Government grant

  62   152   160   412 

Commission income

  0   0   200   0 

Other miscellaneous income

  31   12   79   86 

Total

 $127  $273  $669  $627 

The Company received financial assistance in the form of government grants from the Malaysia and Thailand governments amid the COVID-19 pandemic. The grants amounted to $nil and $61 for the three and nine months ended March 31, 2022, respectively.

The Company received financial assistance in the form of government grants from the Singapore and Malaysia governments amid the COVID-19 pandemic. The grants amounted to $107 and $350 for the three and nine months ended March 31, 2021, respectively.

- 22-

 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
Dec. 31,
 
 
Dec. 31,
 
 
Dec. 31,
 
 
Dec. 31,
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Unaudited)
 
Interest income
  12 
  8 
  20 
  12 
Other rental income
  27 
  25 
  53 
  50 
Exchange (loss) / gain
  (25)
  120 
  (31)
  182 
Other miscellaneous income
  28 
  50 
  158 
  69 
      Total
 $42 
 $203 
 $200 
 $313 

 
18.  

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 20042014 to 20172020 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.

The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017,in fiscal year 2018, and permanently reducesreduced the U.S. federal corporate tax rate from 35% to 21%, eliminated corporate Alternative Minimum Tax, modified rules for expensing capital investment, and limitslimited the deduction of interest expense for certain companies. The Act is a fundamental change to the taxation of multinational companies, including a shift from a system of worldwide taxation with some deferral elements to a territorial system, current taxation of certain foreign income, a minimum tax on low-taxlow tax foreign earnings, and new measures to curtail base erosion and promote U.S. production.

As

Due to the Company has a June 30 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a lower US statutory federal rate. Accounting Standard Codification (“ASC”) 740 requires filers to record the effect of tax law changes in the period enacted. However, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), that permits filers to record provisional amounts during a measurement period ending no later than one year from the date of enactment. We have estimated the net impact on the 2018 effective tax rate and tax expense is not material due to our existing net operating loss carryforwards and other tax credits. We have not made any provisional adjustments as a result of the Tax Act.

The Tax Act includes a one-time mandatory repatriation transition tax on certain net accumulated earnings and profits of our foreign subsidiaries. We are still in the process of analyzing the earnings and profits and tax pools of our foreign subsidiaries to reasonably estimate the effects of the one-time transition tax and, therefore, have not recorded a provisional impact. The tax expense impact of the one-time transition tax to be determined may be partially or fully offset by a release of valuation allowance for the utilization of existing net operating losses and tax credits that may reduce the amount of related taxes payable. We expect the accounting for this aspectenactment of the Tax Act, the Company is subject to be complete bya 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 end of fiscal 2018.
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 had no material adjustmentshas elected to its liabilitiesaccount for unrecognized income tax benefits according toGILTI as a period cost. GILTI expense was $Nil for the provisions of ASC Topic 740 Income Tax.
period ended March 31, 2022.

The Company had anCompany's income tax expense of $13was $170 and $55$503 for the three3 months and six9 months ended DecemberMarch 31, 2017, 2022, respectively as compared to $118 and $125 for the 3 months and 9 months endedMarch 31, 2021. Our effective tax rate (“ETR”) from continuing operations was 500.0% and 64.5% for the quarters ended March 31, 2022 and March 31, 2021, respectively. The increase in effective tax rate was due to Singapore operations incurring higher income tax expensedue to full utilization of $67 and $150, respectively,tax allowances coupled with the additional tax arising from under provision of tax expenses for the same periods in the last fiscal year. The decrease in income tax expenses was mainly due to higher incomes generated by the subsidiaries which has carry forward tax losses which was partially offset by increase in deferred tax for timing differences recorded by Singapore and Malaysia operation. The income tax expenses included with-holding tax held by related companies that were not recoverable from the Inland Revenue Board in Singapore.

financial year ended 2020.

The Company accrues penalties and interest related to unrecognized tax benefits when necessary as a component of penalties and interest expenses, respectively. The Company had not0 unrecognized tax benefits or related accrued any penalties or interest expenses relatingat March 31, 2022.

In assessing the ability to unrecognizedrealize 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 full valuation allowance has been established.

17.CONTRACT BALANCES

The timing of revenue recognition, billings and collections may result in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (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.

  

Mar. 31,

2022

(Unaudited)

  

June 30,

2021

 

Trade Accounts Receivable

  10,585   8,293 

Accounts Payable

  2,220   3,702 

Contract Assets

  594   337 

Contract Liabilities

  1,172   673 

- 23-

Remaining Performance Obligation

As at DecemberMarch 31, 20172022, the Company had $636 of remaining performance obligations, which represents our obligation to deliver products and services within 2 years

As at June 30, 2017.

-20-
19.   DISCONTINUED OPERATION AND CORRESPONDING RESTRUCTURING PLAN
The Company’s Indonesia operation and the Indonesia operation’s immediate holding company, which comprise the fabrication services segment, suffered continued operating losses from fiscal year 2010 to 2014, and the cash flow was minimal from fiscal year 2009 to 2014. The Company established a restructuring plan to close the fabrication services operation, and in accordance with ASC Topic 205, Presentation of Financial Statement Discontinued Operations (“ASC Topic 205”), from fiscal year 2015 onwards, 2021, the Company presented the operation results from fabrication services as a discontinued operation as the Company believed that no continued cash flow would be generated by the discontinued componenthad $924 of remaining performance obligations, which represents our obligation to deliver products and that the Company would have no significant continuing involvement in the operationsservices.

Refer to Note 15 “Business Segments” of the discontinued component.

Notes to Condensed Consolidated Financial Statements for information related to revenue.

 
In accordance with the restructuring plan, the Company’s Indonesia operation is negotiating with its suppliers to settle the outstanding balance of accounts payable of $57 and has no collection for accounts receivable. The Company’s fabrication operation in Batam, Indonesia is in the process of winding up the operations. Management has assessed the costs and expenses to be immaterial, thus no accrual has been made.
The discontinued operations in Indonesia did not incur general and administrative expenses for both three and six months ended December 31, 2017 and 2016. The Company anticipates that it may incur additional costs and expenses when the winding up of the business of the subsidiary through which the facilities operated takes place. Management has assessed the costs and expenses to be immaterial, thus no accrual has been made.
Loss from discontinued operations was as follows:
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
Dec. 31, 2017
 
 
Dec. 31, 2016
 
 
Dec. 31, 2017
 
 
Dec. 31, 2016
 
 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 $- 
 $- 
 $- 
 $- 
Cost of sales
  - 
  - 
  - 
  - 
Gross margin
  - 
  - 
  - 
  - 
 
    
    
    
    
Operating expenses:
    
    
    
    
  General and administrative
  - 
  1 
  - 
  - 
      Total
  - 
  1 
  - 
  - 
 
    
    
    
    
Other expenses
  (2)
  (3)
  (5)
  (3)
 
    
    
    
    
Loss from discontinued operations
  (2)
  (4)
  (5)
  (3)
 
    
    
    
    
Less: Loss attributable to Non-controlling interest
  (3)
  (2)
  (1)
  (3)
 
    
    
    
    
Loss from discontinued operations
 $(5)
 $(6)
 $(6)
 $(6)
The Company does not provide a separate cash flow statement for the discontinued operation, as the impact of the discontinued operation was immaterial.
-21-
20.

18.   (LOSSES) / EARNINGS PER SHARE

The Company adopted ASC Topic 260,Earnings Per Share.Basic earnings

Options to purchase 698,875 shares of Common Stock at exercise prices ranging from $3.28 to $7.76 per share (“EPS”) are computed by dividing net income available to common shareholders (numerator) bywere outstanding as of March 31, 2022. 140,500 stock options were excluded in the weighted average numbercomputation of common shares outstanding (denominator) during the period.  Diluted EPS give effect to all dilutive potential common shares outstanding during a period.  In, computing diluted EPS the average price for the period is used in determining the numberthree and nine months ended March 31, 2022, because they were anti-dilutive.

Options to purchase 674,500 shares of shares assumedCommon Stock at exercise prices ranging from $2.53 to be purchased from the exercise$5.98 per share were outstanding as ofMarch 31, 2021. 140,000 stock options were excluded in the computation of diluted EPS for threeand warrants.

nine months ended March 31, 2021 because they were anti-dilutive

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

  

Three Months Ended

  

Nine Months Ended

 
  

Mar. 31,

  

Mar. 31,

  

Mar. 31,

  Mar. 31, 
  

2022

  

2021

  

2022

  2021 
  

(Unaudited)

  

(Unaudited)

  

(Unaudited)

  (Unaudited) 
                 

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

 $(167) $177  $1,603  $418 

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

  0   1   2   (13

)

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

 $(167) $178  $1,605  $405 
                 

Weighted average number of common shares outstanding - basic

  3,949   3,913   3,949   3,913 
                 

Dilutive effect of stock options

  272   133   191   117 

Number of shares used to compute earnings per share - diluted

  4,221   4,046   4,140   4,030 
                 

Basic (losses) / earnings per share from continuing operations attributable to Trio-Tech International

 $(0.04)  0.05   0.40   0.11 

Basic earnings per share from discontinued operations attributable to Trio-Tech International

  0   0   0   0 

Basic earnings per share from net income attributable to Trio-Tech International

 $(0.04

)

 $0.05  $0.40  $0.11 
                 

Diluted earnings per share from continuing operations attributable to Trio-Tech International

 $(0.04)  0.04   0.38   0.10 

Diluted earnings per share from discontinued operations attributable to Trio-Tech International

  0   0   0   0 

Diluted earnings per share from net income attributable to Trio-Tech International

 $(0.04) $0.04  $0.38  $0.10 

- 24-

 
 
Three Months Ended
 
 
 Six Months Ended
 
 
 
Dec. 31,
 
 
Dec. 31,
 
 
 Dec. 31,
 
 Dec. 31,
 
 
2017
 
 
2016
 
 
 2017
 
 
 2016
 
 
 
(Unaudited)
 
 
(Unaudited)
 
 
 (Unaudited)
 
 (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Income attributable to Trio-Tech International common shareholders from continuing operations, net of tax
 $678 
 $316 
 $1,254 
 $619 
(Loss) / income attributable to Trio-Tech International common shareholders from discontinued operations, net of tax
  (5)
  (6)
  (6)
  (6)
Net Income Attributable to Trio-Tech International Common Shareholders
 $673 
 $310 
 $1,248 
 $613 
 
    
    
    
    
Weighted average number of common shares outstanding - basic
  3,548 
  3,513 
  3,548 
  3,513 
 
    
    
    
    
Dilutive effect of stock options
  245 
  56 
  222 
  39 
Number of shares used to compute earnings per share - diluted
  3,793 
  3,569 
  3,770 
  3,552 
 
    
    
    
    
Basic earnings per share from continuing operations attributable to Trio-Tech International
 $0.19 
  0.09 
  0.35 
  0.18 
Basic earnings per share from discontinued operations attributable to Trio-Tech International
  - 
  - 
  - 
  - 
Basic earnings per share from net income attributable to Trio-Tech International
 $0.19 
 $0.09 
 $0.35 
 $0.18 
 
    
    
    
    
Diluted earnings per share from continuing operations attributable to Trio-Tech International
 $0.18 
  0.09 
  0.34 
  0.17 
Diluted earnings per share from discontinued operations attributable to Trio-Tech International
  - 
  - 
  - 
  - 
Diluted earnings per share from net income attributable to Trio-Tech International
 $0.18 
 $0.09 
 $0.34 
 $0.17 
 

 
-22-
21.  

19.STOCK OPTIONS

On September 24, 2007, the Company’s Board of Directors unanimously adopted the 2007 Employee Stock Option Plan (the “2007“2007 Employee Plan”) and the 2007 Directors Equity Incentive Plan (the “2007“2007 Directors Plan”), each of which was approved by the shareholders on December 3, 2007. Each of those plans was amended byduring the Board in 2010term of such plan to increase the number of shares covered thereby, which amendments were approved bythereby. As of the shareholders on December 14, 2010. The Board also amendedlast amendment thereof, the 2007 Employee Plan covered an aggregate of 600,000 shares of the Company’s Common Stock and the 2007 Directors Plan in November 2013 to further increase the numbercovered an aggregate of shares covered thereby from 400,000 shares to 500,000 shares which amendment was approvedof the Company’s Common Stock. Each of those plans terminated by the shareholdersits respective terms on December 9, 2013. September 24, 2017. These two plans arewere administered by the Board, which also establishesestablished the terms of the awards.

On September 14, 2017, the Company’s Board of Directors unanimously adopted the 2017 Employee Stock Option Plan (the “2017“2017 Employee Plan”) and the 2017 Directors Equity Incentive Plan (the “2017“2017 Directors Plan”), each of which was approved by the shareholders on December 4, 2017. At present, the 2017 Employee Plan provides for awardsEach of up to 300,000 shares of the Company’s Common Stock to its employees, consultants and advisors. At present, the 2017 Directors Plan provides for awards of up to 300,000 shares of the Company’s Common Stock to the members of the Company’s Board of Directors in the form of non-qualified options and restricted stock. These twothese plans areis administered by the Board which also establishes the termsof Directors of the awards.

Company.

Assumptions

The fair value for the stock options granted wereto both employees and directors was estimated using the Black-Scholes option pricing model with the following weighted average assumptions, assuming no expected dividends: 

  
Six Months Ended
December 31, 
   
  2017  2016  
        
Expected volatility  60.41% to 104.94%   62.05% to 104.94% 
Risk-free interest rate  0.30% to 0.78%   0.30% to 0.78% 
Expected life (years)  2.50   2.50 
The expected volatilities are based on the historical volatility of the Company’s stock. Due to higher volatility, the observation is made on a daily basis. The observation period covered is consistent with the expected life of options. The expected life of the options granted to employees has been determined utilizing the “simplified” method as prescribed by ASC Topic 718 Stock Based Compensation, which, among other provisions, allows companies without access to adequate historical data about employee exercise behavior to use a simplified approach for estimating the expected life of a "plain vanilla" option grant. The simplified rule for estimating the expected life of such an option is the average of the time to vesting and the full term of the option. The risk-free rate is consistent with the expected life of the stock options and is based on the United States Treasury yield curve in effect at the time of grant.
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 2.35% (2021: 0.14% to 2.35%);

0 expected dividend payments and

expected volatility of 45.38% to 55.59% (2021: 45.38% to 76.85%).

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 third quarter of fiscal year 2022, 40,500 stock options were granted under the 2017 Employee Plan. There were 41,125 stock options exercised during the nine-month period ended March 31, 2022. The Company did not grant anyrecognized $106 stock-based compensation expenses during the nine months ended March 31, 2022.

During the third quarter of fiscal year 2021, the Company granted options to purchase 71,000 shares of its Common Stock to employees pursuant to the 2017 Employee planPlan. There were 0 stock options granted under the 2017 Employee Plan exercised during the sixnine-month period ended March 31, 2021. The Company recognized $45 in stock-based compensation expenses during the nine months ended DecemberMarch 31, 2017.

2021.

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

As of March 31, 2021, there were vested stock options granted under the 2017 Employee Plan covering a total of 149,750 shares of Common Stock. The weighted-average exercise price was $4.46 and the weighted average remaining contractual term was 2.99 years.

-23-
- 25-

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

  

Options

  

Weighted Average

Exercise

Price

  

Weighted Average Remaining

Contractual Term

(Years)

  

Aggregate

Intrinsic

Value

 
                 

Outstanding at July 1, 2021

  267,000  $4.21   3.22  $290 

Granted

  40,500   -   -   - 

Exercised

  (41,125

)

  2.86   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at March 31, 2022

  266,375  $4.96   2.80  $621 

Exercisable at March 31, 2022

  170,500  $4.81   2.24  $415 

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

  

Options

  

Weighted

Average

Grant-Date

Fair Value

 
         

Non-vested at July 1, 2021

  102,250  $2.29 

Granted

  40,500   - 

Vested

  (46,875

)

  - 

Forfeited

  -   - 

Non-vested at March 31, 2022

  95,875  $5.23 

A summary of option activities under the 2017 Employee Plan during the nine months period ended March 31, 2021, is presented as follows:

  

Options

  

Weighted Average

Exercise

Price

  

Weighted Average Remaining

Contractual Term

(Years)

  

Aggregate

Intrinsic

Value

 
                 

Outstanding at July 1, 2020

  196,000  $3.92   3.72  $36.00 

Granted

  71,000   5.03   -   - 

Exercised

  -   -   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at March 31, 2021

  267,000  $4.21   3.47  $210.40 

Exercisable at March 31, 2021

  149,750  $4.46   2.99  $106.07 

A summary of the status of the Company’s non-vested employee stock options during the nine months ended March 31, 2021, is presented below:

  

Options

  

Weighted

Average

Grant-Date

Fair Value

 
         

Non-vested at July 1, 2020

  98,000  $3.39 

Granted

  71,000   - 

Vested

  (51,750

)

  - 

Forfeited

  -   - 

Non-vested at March 31, 2021

  117,250  $3.90 

- 26-

2007 Employee Stock Option Plan

The Company’s 2007 Employee Plan terminated by its terms on September 24, 2017 and no further options may be granted thereunder. However, the options outstanding thereunder continue to remain outstanding and in effect in accordance with their terms. The 2007Employee Plan permitted the grantissuance of stock options to its employees covering up to an aggregate of 600,000 shares of Common Stock. Underemployees.

As the 2007 Employee Plan all options were required to be granted with an exercise price of not less than fair value as ofhas terminated, the grant date and the options granted were required to 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 were permitted to 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 2007 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 2007 Employee Plan).

The Company did not grant any options pursuant to the 2007 Employee Plan during the sixnine months ended DecemberMarch 31, 2017. 2022, and March 31, 2021 respectively.

There were no37,500 options exercised during the sixnine months ended DecemberMarch 31, 2017. 2022 and none exercised in March 31, 2021. The Company recognizeddid not recognize any stock-based compensation expenses of $3 induring the sixnine months ended DecemberMarch 31, 2017 under the 2007 Employee Plan. The balance unamortized stock-based compensation2022, and March 31, 2021.

As of $3 based on fair value on the grant date related toMarch 31, 2022, there were no vested stock options granted under the 2007 Employee Plan is to be recognized over a periodPlan.

As of three years. The weighted-average remaining contractual term for non-vested options was 3.77 years.

The Company did not grant any options pursuant to the 2007 Employee Plan during the six months ended DecemberMarch 31, 2016. There2021, there were no options exercised during the six months ended December 31, 2016. The Company recognized stock-based compensation expenses of $1 in the six months ended December 31, 2016 under the 2007 Employee Plan. The balance unamortized stock-based compensation of $3 based on fair value on the grant date related tovested stock options granted under the 2007 Employee Plan is to be recognized over a period of three years. The weighted-average remaining contractual term for non-vested options was 4.22 years.
As of December 31, 2017, there were vested employee stock options covering a total of 79,37537,500 shares of Common Stock. The weighted-average exercise price was $3.36$4.14 and the weighted average remaining contractual term was 1.860.99 years.
As of December 31, 2016, there were vested employee stock options covering a total of 60,000 shares of Common Stock. The weighted-average exercise price was $3.26 and the weighted average contractual term was 2.26 years.

A summary of option activities under the 2007 Employee Plan during the six-month periodnine months ended DecemberMarch 31, 2017 2022, is presented as follows:

 
 
Options
 
 
Weighted Average
Exercise
Price
 
 
Weighted Average Remaining
Contractual
Term (Years)
 
 
Aggregate
Intrinsic
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at July 1, 2017
  127,500 
 $3.52 
  3.10 
 $187 
Granted
  - 
  - 
  - 
  - 
Exercised
  - 
  - 
  - 
  - 
Forfeited or expired
  - 
  - 
  - 
  - 
Outstanding at December 31, 2017
  127,500 
 $3.52 
  2.60 
 $445 
Exercisable at December 31, 2017
  79,375 
 $3.36 
  1.86 
 $290 
-24-

  

Options

  

Weighted Average

Exercise

Price

  

Weighted Average Remaining

Contractual

Term (Years)

  

Aggregate

Intrinsic

Value

 

Outstanding at July 1, 2021

  37,500  $4.14   0.75  $34 

Granted

  -   -   -   - 

Exercised

  (37,500)  4.14   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at March 31, 2022

  -  $-   -  $- 

There were 0 non-vested employee stock options during the nine months ended March 31, 2022.

A summary of option activities under the 2007 Employee Plan during the six-month periodnine months ended DecemberMarch 31, 2016 2021, is presented as follows:

 
 
Options
 
 
Weighted Average
Exercise
Price
 
 
Weighted Average Remaining
Contractual
Term (Years)
 
 
Aggregate
Intrinsic
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at July 1, 2016
  90,000 
 $3.26 
  3.42 
 $30 
Granted
  - 
  - 
  - 
  - 
Exercised
  - 
  - 
  - 
  - 
Forfeited or expired
  - 
  - 
  - 
  - 
Outstanding at December 31, 2016
  90,000 
 $3.26 
  2.91 
 $10 
Exercisable at December 31, 2016
  60,000 
 $3.26 
  2.26 
 $8 
A summary of the status of the Company’s

  

Options

  

Weighted Average

Exercise

Price

  

Weighted Average Remaining

Contractual

Term (Years)

  

Aggregate

Intrinsic

Value

 

Outstanding at July 1, 2020

  77,500  $3.69   1.22  $- 

Granted

  -   -   -   - 

Exercised

  (40,000)  3.26   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at March 31, 2021

  37,500  $4.14   0.99  $13.13 

Exercisable at March 31, 2021

  37,500  $4.14   0.99  $13.13 

There were 0 non-vested employee stock options during the sixnine months ended DecemberMarch 31, 2021.

2017 is presented below: 

 
 
Options
 
 
Weighted Average Grant-Date
Fair Value
 
 
 
 
 
 
 
 
Non-vested at July 1, 2017
  48,125 
 $3.77 
Granted
  - 
  - 
Vested
  - 
  - 
Forfeited
  - 
  - 
Non-vested at December 31, 2017
  48,125 
 $3.77 
 
    
    
A summary Directors Equity Incentive Plan

The 2017 Directors Plan initially covered an aggregate of the status300,000 shares of the Company’s non-vested employee stock options duringcommon stock. The Company’s board of directors approved an amendment to the six months ended 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 31, 2016 is presented below: 

 
 
Options
 
 
Weighted Average Grant-Date
Fair Value
 
 
 
 
 
 
 
 
Non-vested at July 1, 2016
  38,750 
 $3.22 
Granted
  - 
  - 
Vested
  (8,750)
  (3.10)
Forfeited
  - 
  - 
Non-vested at December 31, 2016
  30,000 
 $3.26 
 
    
    
2017 Directors Equity Incentive Plan
2020. The 2017 Directors Plan permits the grant of options covering up to an aggregate of 300,000 shares of Common Stock to its directors in the form of non-qualifiednonqualified options and restricted stock. The exercise price of the non-qualifiednonqualified options is required to be 100% of the fair value of the underlying shares on the grant date. The options have five-yearfive-year contractual terms and are generally exercisable immediately as of the grant date.

- 27-

During the third quarters of fiscal year 2022, the Company did not grant anygranted options to purchase 100,000 shares of its Common Stock pursuant to the 2017 Employee plan Directors Plan. There were 0 stock options exercised during the sixnine months ended DecemberMarch 31, 2017.2022. The Company recognize $353 stock-based compensation expenses during the nine months ended March 31, 2022.

During the third quarter of fiscal year 2021, the Company granted options to purchase 80,000 shares of its Common Stock pursuant to the 2017 Directors Plan. There were 0 stock options exercised during the nine months ended March 31, 2021. The Company recognized $99 stock-based compensation expenses during the nine months ended March 31, 2021.

As all the stock options granted under the 2017 Directors Plan vest immediately on the date of grant, there were 0 unvested stock options granted under the 2017 Directors Plan as of March 31, 2022, or March 31, 2021.

As of March 31, 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 3.10 years.

As of March 31, 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 3.47 years.

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

  

Options

  

Weighted Average

Exercise

Price

  

Weighted Average Remaining

Contractual Term

(Years)

  

Aggregate

Intrinsic

Value

 
                 

Outstanding at July 1, 2021

  320,000  $4.27   3.22  $340 

Granted

  100,000   7.76   -   - 

Exercised

  -   -   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at March 31, 2022

  420,000   5.10   0.60   942 

Exercisable at March 31, 2022

  420,000   5.10   3.07   942 

- 28-

A summary of option activities under the 2017 Directors Plan during the nine months ended March 31, 2021, is presented as follows: 

  

Options

  

Weighted Average

Exercise

Price

  

Weighted Average Remaining

Contractual Term

(Years)

  

Aggregate

Intrinsic

Value

 
                 

Outstanding at July 1, 2020

  240,000  $3.93   3.75  $48.00 

Granted

  80,000   5.27   4.89   - 

Exercised

  -   -   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at March 31, 2021

  320,000  $4.27   3.47  $253.6 

Exercisable at March 31, 2021

  320,000  $4.27   3.47  $253.6 

2007 Directors Equity Incentive Plan

The 2007 Directors Plan terminated by its terms on September 24, 2017 and no further options may be granted thereunder. However, the options outstanding thereunder continue to remain outstanding and in effect in accordance with their terms. The Director2007 Directors Plan permitted the grantissuance of options covering up to an aggregate of 500,000 shares of Common Stock to its directors indirectors.

As the form of non-qualified options and restricted stock. The exercise price of the non-qualified options is 100% of the fair value of the underlying shares on the grant date. The options have five-year contractual terms and are generally exercisable immediately as of the grant date.

During the first two quarters of fiscal year 2018,2007 Plan has terminated, the Company did not grant any options pursuant to the 2007 Directors Plan. Plan during the nine months ended March 31, 2022, and March 31, 2021.

There were 15,000 worth of50,000 stock options exercised during the six-month periodnine months ended DecemberMarch 31, 2017. 2022. The Company did not recognize any stock-based compensation expenses during the sixnine months ended DecemberMarch 31, 2017.

During the first two quarters2022.

200,000 shares of fiscal year 2017, the Company did not grant anystock options pursuant to the 2007 Directors Plan. There were no stock options exercised during the six-month periodnine months ended DecemberMarch 31, 2016. 2021. The Company did not recognize any stock-based compensation expenses during the sixnine months ended DecemberMarch 31, 2016.

2021.

As of March 31, 2022, there were no vested stock options granted under the 2007 Directors Plan

As of March 31, 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 0.99 years.

A summary of option activities under the 2007 Directors Plan during the sixthree months ended DecemberMarch 31, 2017 2022, is presented as follows: 

  

Options

  

Weighted Average

Exercise

Price

  

Weighted

Average

Remaining

Contractual

Term

(Years)

  

Aggregate

Intrinsic

Value

 
                 

Outstanding at July 1, 2021

  50,000  $4.14   0.75  $45 

Granted

  -   -   -   - 

Exercised

  (50,000

)

  4.14   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at March 31, 2022

  -  $-   -  $- 

Exercisable at March 31, 2022

  -  $-   -  $- 

- 29-

 
 
Options
 
 
Weighted Average
Exercise
Price
 
 
Weighted Average Remaining
Contractual
Term (Years)
 
 
Aggregate
Intrinsic
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at July 1, 2017
  415,000 
 $3.36 
  2.93 
 $673 
Granted
  - 
  - 
  - 
  - 
Exercised
  (15,000)
  2.76 
  - 
  - 
Forfeited or expired
  - 
  - 
  - 
  - 
Outstanding at December 31, 2017
  400,000 
 $3.38 
  2.49 
 $1,452 
Exercisable at December 31, 2017
  400,000 
 $3.38 
  2.49 
 $1,452 

A summary of option activities under the 2007 Directors Plan during the sixnine months ended DecemberMarch 31, 2016 2021 is presented as follows: 

  

Options

  

Weighted Average

Exercise

Price

  

Weighted

Average

Remaining

Contractual

Term

(Years)

  

Aggregate

Intrinsic

Value

 
                 

Outstanding at July 1, 2020

  250,000  $3.32   0.83  $22.00 

Granted

  -   -   -   - 

Exercised

  (200,000

)

  3.12   -   - 

Forfeited or expired

  -   -   -   - 

Outstanding at March 31, 2021

  50,000  $4.14   0.99  $17.50 

Exercisable at March 31, 2021

  50,000  $4.14   0.99  $17.50 

 

20.LEASES

Company as Lessor

Operating leases where we are lessor arise from the leasing of the Company’s commercial and residential real estate investment property. 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 expenses relating to the property held as investments in operating leases was $56 for and $52 for both the 9 months endedMarch 31, 2022, and March 31, 2021.

Future minimum rental income in China and Thailand to be received from fiscal year 2022 to fiscal year 2023 on noncancelable operating leases is contractually due as follows as of March 31, 2022:

Remainder of fiscal 2022

 $39 

Fiscal 2023

  8 
  $47 

Future minimum rental income in China and Thailand to be received from fiscal year 2022 to fiscal year 2023 on noncancelable operating leases is contractually due as follows as of June 30, 2021:

Fiscal 2022

 $145 

Fiscal 2023

  16 
  $161 

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 3 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

 

March 31,

 
  

2022

 

Assets

    

Gross financial sales receivable

 $48 

Unearned finance income

  (4)

Financed sales receivable

 $44 
     

Net financed sales receivables due within one year

 $21 

Net financed sales receivables due after one year

 $23 

 
 
Options
 
 
Weighted Average
Exercise
Price
 
 
Weighted Average Remaining
Contractual
Term (Years)
 
 
Aggregate
Intrinsic
Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at July 1, 2016
  415,000 
 $3.14 
  3.29 
 $198 
Granted
  - 
  - 
  - 
  - 
Exercised
  - 
  - 
  - 
  - 
Forfeited or expired
  (50,000)
  2.30 
  - 
  - 
Outstanding at December 31, 2016
  365,000 
 $3.25 
  3.18 
 $68 
Exercisable at December 31, 2016
  365,000 
 $3.25 
  3.18 
 $68 
- 30-

As of March 31, 2022, the financed sale receivables had a weighted average effective interest rate of 11.2% and weighted average remaining lease term of 2.0 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 three years and finance leases for plant and equipment.

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

  

Mar. 31, 2022

(Unaudited)

  

June 30,

2021

 
         

Finance Leases (Plant and Equipment)

        

Plant and equipment, at cost

  1,819   1,413 

Accumulated depreciation

  (1,182)  (1,199)

Plant and Equipment, Net

  637   214 

Current portion of finance leases

  136   197 

Net of current portion of finance leases

  152   253 

Total Finance Lease Liabilities

  288   450 
         

Operating Leases (Corporate Offices, Research and Development Facilities)

        

Operating lease right-of-use assets

  2,602   1,876 

Current portion of operating leases

  758   672 

Net of current portion of operating leases

  1,844   1,204 

Total Operating Lease Liabilities

  2,602   1,876 

  

Three Months Ended

  

Nine Months Ended

 
  

Mar. 31,

  

Mar. 31,

  

Mar. 31,

  Mar. 31, 
  

2022

  

2021

  

2022

  2021 
  

(Unaudited)

  

(Unaudited)

  

(Unaudited)

  (Unaudited) 
                 

Lease Cost

                

Finance lease cost:

                

Interest on finance lease

 $9  $15  $20  $35 

Amortization of right-of-use assets

  60   135   150   260 

Total finance lease cost

  69   150   170   295 
                 

Operating Lease Costs

 $331  $191  $801  $566 

- 31-

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

  

Nine months ended

  

Nine months ended

 
  

Mar. 31,

  

Mar. 31,

 
  

2022

  

2021

 
  

(Unaudited)

  

(Unaudited)

 

Cash Paid for Amounts Included in the Measurement of Lease Liabilities

        

Operating cash flows from finance leases

 $(20) $(32)

Operating cash flows from operating leases

  (801)  (565)

Finance cash flows from finance leases

  (168)  (192)

Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities

  132   2,070 
         

Weighted-Average Remaining Lease Term:

        

Finance leases

  3.62   2.85 

Operating leases

  3.23   3.36 

Weighted-Average Discount Rate:

        

Finance leases

  3.60%  3.35%

Operating leases

  4.83%  4.83%

As of March 31, 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 2022

  309   42 

2023

  841   136 

2024

  595   109 

2025

  581   22 

2026

  446   0 

Thereafter

  73   0 

Total future minimum lease payments

  2,845   309 

Less: amount representing interest

  (243)  (21)

Present value of net minimum lease payments

  2,602   288 
         

Presentation on statement of financial position

 

$

  

$

 

Current

  758   136 

Noncurrent

  1,844   152 

As of June 30, 2021, future minimum lease payments under finance leases and noncancelable operating leases were as follows:

  

Operating Lease Liabilities

  

Finance Lease Liabilities

 

Fiscal Year

 

$

  

$

 

2022

  748   218 

2023

  537   137 

2024

  313   111 

2025

  291   22 

Thereafter

  156   0 

Total future minimum lease payments

  2,045   488 

Less: amount representing interest

  (169)  (38)

Present value of net minimum lease payments

  1,876   450 
         

Presentation on statement of financial position

 

$

  

$

 

Current

  672   197 

Noncurrent

  1,204   253 

- 32-

 

 
-26-
22.  

21.FAIR VALUE OF FINANCIAL INSTRUMENTS APPROXIMATE CARRYING VALUE

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

hierarchy:

There were no transfers between Levels 1 and 2 during the three and six months ended DecemberMarch 31, 2017 2022 and 2016.

2021.

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

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

Lines of credit (Level 3)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)3) – The carrying value of the Company’s bank loan payablesloans 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 Mar 31,

 
  

2022

  

2021

 
  (unaudited)  (unaudited) 

Revenue

        

-   Customer A

  41.6%  37.7%

-   Customer B

  19.5%  9.7%

Trade Account Receivables

        

-   Customer A

  39.6%  34.7%

-   Customer B

  20.1%  11.8%

- 33-

 

 
-27-

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

ITEM 2. MANAGEMENT’SMANAGEMENTS 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 unaudited financial statements and notes in Item I above and with the audited consolidated financial statements and notes, and the information under the headings “Risk Factors”Managements discussion and “Management’s Discussionanalysis of financial condition and Analysisresults of Financial Condition and Results of Operations”operations in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.

2021.

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 16139 Wyandotte Street, Van Nuys, California 91406,Block 1008 Toa Payoh North, Unit 03-09 Singapore 318996, and our telephone number is (818) 787-7000.

(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.

TTI generated approximately 99.7%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 during the three months ended DecemberMarch 31, 2017. To reduce our risks associated with sole industry focus and customer concentration, the Company expanded its business into the real estate investment and oil and gas equipment fabrication businesses in 2007 and 2009, respectively. The Company’s Indonesia operation and the Indonesia operation’s immediate holding company, which comprised the fabrication services segment, suffered continued operating losses since it commenced its operations, and the cash flow was minimal in the past years. The Company established a restructuring plan to close the fabrication services operation, and in accordance with ASC Topic 205, Presentation of Financial Statement Discontinued Operations (“ASC Topic 205”), the Company presented the operation results from fabrication services as a discontinued operation.2022. The Real Estate segment contributed only 0.3%0.1% to the total revenue and has been insignificant sinceduring the property market in China has slowed down due to control measures in China.

three months ended March 31, 2022.

Manufacturing

TTI develops and manufactures an extensive range of test equipment used in the "front end""front-end" and the "back end""back-end" manufacturing processes of semiconductors. Our equipment includes leak detectors, autoclaves, centrifuges, burn-in systems and boards, HAST testers, temperature controlledtemperature-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 U.S. Our customers include both manufacturers and end-usersend 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, Taiwan and Japan. 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-screentouch 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 3three years to 7seven years.

Real Estate

Beginning in 2007, TTI has invested in real estate property in Chongqing, China, which has generated investment income from the rental revenue from real estate we purchased in Chongqing, China, and investment returns from deemed loan receivables, which are classified as other income. The rental income is generated from the rental properties in MaoYe and FuLi in Chongqing, China. In the second quarter of fiscal 2015, the investment in JiaSheng, which was deemed as loans receivable, was transferred to down payment for purchase of investment property in China.

-34-

Second Quarter Fiscal 2018 Highlights
Total revenue increased by $1,448, or 15.9%

Impact of COVID-19 on our Business

In December 2019, a novel strain of coronavirus (“COVID-19”), was reported to $10,552 for the second quarterhave surfaced in China, resulting in shutdowns of fiscal 2018, as compared to $9,104 for the same period in fiscal 2017.

Manufacturing segment revenue increased by $653, or 19.7%, to $3,973 for the second quarter of fiscal 2018, as compared to $3,320 for the same period in fiscal 2017.
Testing segment revenue increased by $866, or 21.3%, to $4,936 for the second quarter of fiscal 2018, as compared to $4,070 for the same period in fiscal 2017.
Distribution segment revenue decreased by $69, or 4.1%, to $1,606 for the second quarter of fiscal 2018, as compared to $1,675 for the same period in fiscal 2017.
Real estate segment revenue decreased by $2, or 5.1%, to $37 for the second quarter of fiscal 2018, as compared to $39 for the same period in fiscal 2017.
Gross profit margin in absolute dollars increased by $501, or 21.8%, to $2,795 for the second quarter of fiscal 2018, as compared to $2,294 for the same period in fiscal 2017.
The overall gross profit margin increased by 1.3% to 26.5% for the second quarter of fiscal 2018, from 25.2% for the same period in fiscal 2017.
Income from operations for the second quarter of fiscal 2018 was $698, an increase of $420 or 151.1%, as compared to $278 for the same period in fiscal 2017.
Generalmanufacturing and administrative expenses decreased by $49, or 2.8%, to $1,727 for the second quarter of fiscal year 2018, from $1,776 for the same period in fiscal year 2017.
Selling expenses increased by $72, or 40.0%, to $252 for the second quarter of fiscal year 2018, from $180 for the same period in fiscal year 2017.
Other income decreased by $161 to $42commerce in the second quarter of fiscal year 2018 comparedmonths that followed. Since then, the COVID-19 pandemic has spread to $203multiple countries worldwide and has resulted in authorities implementing numerous measures to try to contain the same period in fiscal year 2017.
Tax expense for the second quarter of fiscal year 2018 was $13, a decrease of $54,disease and slow its spread, such as compared to $67 in the same period in fiscal year 2017.
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.

During the second quarter ended March 31, 2022, the Company was required to close its facility in Tianjin, China in compliance with the Tianjin city government's imposed lockdown measures for mandatory testing of fiscal year 2018, incomeTianjin city's residents and China’s ZERO-COVID policy. The Company then resumed 100% operating capacity in Tianjin, China operation by January 21, 2022. The Company had suffered negative financial impact from continuingthese twelve days closed down, which had lost its revenue of approximately $260.

The health and safety of our employees and our customers are a top priority for us. In an effort to protect our employees, we took and continue to take proactive and aggressive actions, starting with the earliest signs of the outbreak, to adopt social distancing policies at our locations, including working from home and suspending employee travel. Our operations before non-controlling interest, nethave been classified as part of tax was $675, an increasethe global supply chain and essential businesses in many jurisdictions, and employees who are working onsite are required to adhere to strict safety measures, including the use of $309,masks and sanitizer, wellness screenings prior to accessing work sites, staggered break times to prevent congregation, prohibitions on physical contact with coworkers or customers, restrictions on access through only a single point of entry and exit, and utilizing video conferencing. We have also incorporated other rules such as comparedrestricting visitors to $366any of our facilities that remain open and proactively providing employees with hand sanitizer. Most of these safeguards and procedures have been removed in our Singapore and Malaysia operations subsequent to the quarter ended March 31, 2022.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for the same period in fiscal year 2017.

Net income attributable to non-controlling interest for the second quarter of fiscal year 2018 was nil, as compared to $52 in the same period in fiscal year 2017.
Working capital increased by $1,183, or 15.8%, to $8,671 as of December 31, 2017, compared to $7,488 as of June 30, 2017.
Earnings per sharefair presentation have been included. Operating results for the three months ended DecemberMarch 31, 2017 was $0.19, an increase2022, are not necessarily indicative of $0.10, as compared to $0.09the results that may be expected for the samefiscal year ending June 30, 2022. Certain accounting matters that generally require consideration of forecasted financial information were assessed regarding impacts from the COVID-19 pandemic as of March 31, 2022, and through the date of filing of this Quarterly Report dated May 16, 2022 using reasonably available information as of those dates. Those accounting matters assessed included, but were not limited to, allowance for doubtful accounts, the carrying value of long-lived tangible assets and the valuation allowances for tax assets. While the assessments resulted in no material impacts to the consolidated financial statements as of and for the quarter ended March 31, 2022, the Company believes the full impact of the pandemic remains uncertain and the Company will continue to assess if ongoing developments related to the pandemic may cause future material impacts to our consolidated financial statements.

As of March 31, 2022, the Company had cash and cash equivalents and short-term deposits totaling $12,431 and an unused line of credit of $5,158. We finance operations primarily through our existing cash balances, cash collected from operations, bank borrowings and capital lease financing. We believe these sources are sufficient to fund our operations for the foreseeable future.

While we have implemented safeguards and procedures to counter the impact of the COVID-19 pandemic, the full extent to which the pandemic has and will directly or indirectly impact us, including our business, financial condition, and result of operations, will depend on future developments that are highly uncertain and cannot be accurately predicted. This may include further mitigation efforts taken to contain the virus or treat its impact and the economic impact on local, regional, national and international markets. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by the governments or that we determine are in the best interests of our employees, customers, suppliers and stockholders.

Critical Accounting Estimates & Policies

The discussion and analysis of the Company’s financial condition presented in this section are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. During the preparation of the consolidated financial statements, we are required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to sales, returns, pricing concessions, bad debts, inventories, investments, fixed assets, intangible assets, income taxes and other contingencies. Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. These estimates and assumptions may change as new events occur and additional information is obtained. Actual results may differ from these estimates under different assumptions or conditions.

In response to the SEC’s Release No. 33-8040, Cautionary Advice Regarding Disclosure about Critical Accounting Policy, we have identified the most critical accounting policies upon which our financial status depends. We determined that those critical accounting policies are related to inventory valuation; allowance for doubtful accounts; revenue recognition; impairment of property, plant and equipment; investment properties and income tax. These accounting policies are discussed in the relevant sections in this management’s discussion and analysis, including the Recently Issued Accounting Pronouncements discussed below.

Account Receivables and Allowance for Doubtful Accounts

During the normal course of business, we extend unsecured credit to our customers in all segments. Typically, credit terms require payment to be made between 30 to 90 days from the date of the sale. We generally do not require collateral from customers. We maintain our cash accounts at creditworthy financial institutions.

The Company’s management considers the following factors when determining the collectibility of specific customer accounts: customer creditworthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. The Company includes any account balances that are determined to be uncollectible, along with a general reserve, in the overall allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available to management, the Company believed that its allowance for doubtful accounts was adequate as of March 31, 2022.

Inventory Valuation

Inventories of our manufacturing and distribution segments, consisting principally of raw materials, works in progress, and finished goods, are stated at the lower of cost, using the first-in, first-out (“FIFO”) method, or market value. The semiconductor industry is characterized by rapid technological change, short-term customer commitments and swiftly changing demand. Provisions for estimated excess and obsolete inventory are based on regular reviews of inventory quantities on hand and the latest forecasts of product demand and production requirements from our customers. Inventories are written down for not-saleable, excess or obsolete raw materials, works-in-process and finished goods by charging such write-downs to cost of sales. In addition to write-downs based on newly introduced parts, statistics and judgments are used for assessing provisions of the remaining inventory based on salability and obsolescence.

Property, Plant and Equipment & Investment Properties

Property, plant and equipment and investment properties are stated at cost, less accumulated depreciation and amortization. Depreciation is provided for over the estimated useful lives of the assets using the straight-line method. Amortization of leasehold improvements is provided for over the lease terms or the estimated useful lives of the assets, whichever is shorter, using the straight-line method.

Maintenance, repairs and minor renewals are charged directly to expense as incurred. Additions and improvements to property and equipment are capitalized. When assets are disposed of, the related cost and accumulated depreciation thereon are removed from the accounts and any resulting gain or loss is included in the consolidated statements of operations and comprehensive income or loss.

Foreign Currency Translation and Transactions

The United States dollar (“U.S. dollar”) is the functional currency of the U.S. parent company. The Singapore dollar, the national currency of Singapore, is the primary currency of the economic environment in which the operations in Singapore are conducted. We also have business entities in Malaysia, Thailand, China and Indonesia, of which the Malaysian ringgit (“RM”), Thai baht, Chinese renminbi (“RMB”) and Indonesian rupiah, are the national currencies. The Company uses the U.S. dollar for financial reporting purposes.

The Company translates assets and liabilities of its subsidiaries outside the U.S. into U.S. dollars using the rate of exchange prevailing at the balance sheet date, and the statement of operations is measured using average rates in effect for the reporting period. Adjustments resulting from the translation of the subsidiaries’ financial statements from foreign currencies into U.S. dollars are recorded in shareholders' equity as part of accumulated comprehensive income or loss translation adjustment. Gains or losses resulting from transactions denominated in currencies other than functional currencies of the Company’s subsidiaries are reflected in income for the reporting period.

Revenue Recognition

The Company adopted Accounting Standards Update (“ASU”) No. 2014-09, ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.

We apply a five-step approach as defined in ASC Topic 606 in determining the amount and timing of revenue to be recognized: (1) identifying the contract with customer; (2) identifying the performance obligations in the contracts; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when the corresponding performance obligation is satisfied.

Revenue derived from testing services is recognized when testing services are rendered. Revenue generated from sale of products in the manufacturing and distribution segments are recognized when persuasive evidence of an arrangement exists, delivery of the products has occurred, customer acceptance has been obtained (which means the significant risks and rewards of ownership have been transferred to the customer), the price is fixed or determinable and collectibility is reasonably assured. Certain customers can request for installation and training services to be performed for certain products sold in the manufacturing segment. These services are mainly for helping customers with the test runs of the machines sold and are considered a separate performance obligation. Such services can be provided by other entities as well, and these do not significantly modify the product. The Company recognizes the revenue at the point in time when the Company has satisfied its performance obligation.

In the real estate segment: (1) revenue from property development is earned and recognized on the earlier of the dates when the underlying property is sold or upon the maturity of the agreement; if this amount is uncollectible, the agreement empowers the repossession of the property, and (2) rental revenue is recognized on a straight-line basis over the terms of the respective leases. This means that, with respect to a particular lease, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. Straight-line rental revenue is commenced when the tenant assumes possession of the leased premises. Accrued straight-line rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements.

Investment

The Company (a) evaluates the sufficiency of the total equity at risk, (b) reviews the voting rights and decision-making authority of the equity investment holders as a group, and whether there are any guaranteed returns, protection against losses, or capping of residual returns within the group and (c) establishes whether activities within the venture are on behalf of an investor with disproportionately few voting rights in making this Variable Interest Entity (“VIE”) determination. The Company would consolidate a venture that is determined to be a VIE if it was the primary beneficiary. Beginning January 1, 2010, a new accounting standard became effective and changed the method by which the primary beneficiary of a VIE is determined. Through a primarily qualitative approach, the variable interest holder, if any, who has the power to direct the VIE’s most significant activities is the primary beneficiary. To the extent that the investment does not qualify as VIE, the Company further assesses the existence of a controlling financial interest under a voting interest model to determine whether the venture should be consolidated.

Long-Lived Assets & Impairment

Our business requires heavy investment in manufacturing facilities and equipment that are technologically advanced but can quickly become significantly underutilized or rendered obsolete by rapid changes in demand. We have recorded intangible assets with finite lives related to our acquisitions.

We evaluate our long-lived assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Factors considered important that could result in an impairment review include significant underperformance relative to expected historical or projected future operating results, significant changes in the manner of use of the assets or the strategy for our business, significant negative industry or economic trends, and a significant decline in our stock price for a sustained period of time. Impairment is recognized based on the difference between the fair value of the asset and its carrying value, and fair value is generally measured based on discounted cash flow analysis if there is significant adverse change.

While we have not identified any changes in circumstances requiring further impairment test in fiscal year 2017.2022 other than the circumstances related to the Singapore Theme Resort Project, we will continue to monitor impairment indicators, such as disposition activity, stock price declines or changes in forecasted cash flows in future periods. If the fair value of our reporting unit declines below the carrying value in the future, we may incur additional impairment charges.

-37-

During the fourth quarter of fiscal 2021, The Company recorded an impairment charge of $1,580 related to the doubtful recovery of a down payment on shop lots in the Singapore Theme Resort Project in Chongqing, China. The Company elected to take this noncash impairment charge because of 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 and its relevant government policies, together with effects of the ongoing pandemic.

Fair Value Measurements

Under the standard ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”), fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between participants in the market in which the reporting entity transacts its business. ASC Topic 820 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, ASC Topic 820 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy.

Income Tax

We account for income taxes using the liability method in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes (“ASC Topic 740”), which requires an entity to recognize deferred tax liabilities and assets. Deferred tax assets increased by $3,291and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or 9.8% to $36,789deductible amounts in future years. Further, the effects of enacted tax laws or rate changes are included as part of deferred tax expenses or benefits in the period that covers the enactment date. Management believed it was more likely than not that the future benefits from these timing differences would not be realized. Accordingly, a full allowance was provided as of DecemberMarch 31, 2017, compared2022 and 2021.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. We recognize potential liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and the extent to $33,498which, additional taxes will be due. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

Stock-Based Compensation

We calculate compensation expense related to stock option awards made to employees and directors based on the fair value of stock-based awards on the date of grant. We determine the grant date fair value of our stock option awards using the Black-Scholes option pricing model and for awards without performance condition the related stock-based compensation is recognized over the period in which a participant is required to provide service in exchange for the stock-based award, which is generally four years. We recognize stock-based compensation expense in the consolidated statements of shareholders' equity based on awards ultimately expected to vest. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from original estimates.

Determining the fair value of stock-based awards at the grant date requires significant judgment. The determination of the grant date fair value of stock-based awards using the Black-Scholes option pricing model is affected by our estimated common stock fair value as well as other subjective assumptions including the expected term of June 30, 2017.the awards, the expected volatility over the expected term of the awards, expected dividend yield and risk-free interest rates. The assumptions used in our option-pricing model represent management’s best estimates and are as follows:

Fair Value of Common Stock. We determined the fair value of each share of underlying common stock based on the closing price of our common stock on the date of grant.

Expected Term. The expected term of employee stock options reflects the period for which we believe the option will remain outstanding based on historical experience and future expectations.

Expected Volatility. We base expected volatility on our historical information over a similar expected term.

Noncontrolling Interests in Consolidated Financial Statements

We adopted ASC Topic 810, Consolidation (“ASC Topic 810”). This guidance establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance requires that noncontrolling interests in subsidiaries be reported in the equity section of the controlling company’s balance sheet. It also changes the manner in which the net income of the subsidiary is reported and disclosed in the controlling company’s income statement.

-38-

Total liabilities increased by $1,082 or 9.0% to $13,053 asTable of December 31, 2017, compared to $11,971 as of June 30, 2017.Contents

Third Quarter Fiscal Year 2022 Highlights

Total revenue increased by $3,026, or 37.3%, to $11,138 in the third quarter of fiscal year 2022, compared to $8,112 for the same period in fiscal year 2021.

Manufacturing segment revenue decreased by $33, or 1.1%, to $3,097 for the third quarter of fiscal year 2022, compared to $3,130 for the same period in fiscal year 2021.

Testing segment revenue increased by $913, or 26.1%, to $4,417 for the third quarter of fiscal year 2022, compared to $3,504 for the same period in fiscal year 2021.

Distribution segment revenue increased by $2,153, or 146.8%, to $3,620 for the third quarter of fiscal year 2022, compared to $1,467 for the same period in fiscal year 2021.

Real estate segment rental revenue decreased by $7 to $4 for the third quarter of fiscal year 2022, compared to $11 for the same period in fiscal year 2021.

The overall gross profit margin decreased by 3.2% to 22.2% for the third quarter of fiscal year 2022, from 25.4% for the same period in fiscal year 2021.

General and administrative expenses increased by $455, or 23.7%, to $2,378 for the third quarter of fiscal year 2022, from $1,923 for the same period in fiscal year 2021.

Selling expenses increased by $23, or 18.7%, to $146 for the third quarter of fiscal year 2022, from $123 for the same period in fiscal year 2021.

Other income decreased by $146, or 53.5% to $127 in the third quarter of fiscal year 2022, compared to $273 in the same period in fiscal year 2021.

Loss from operations was $130 for the third quarter of fiscal year 2022, an increase of $65 as compared to $65 for the same period in fiscal year 2021.

Income tax expenses was $170 in the third quarter of fiscal year 2022, an increase of $52 as compared to $118 in the same period in fiscal year 2021.

During the third quarter of fiscal year 2022, loss from continuing operations before noncontrolling interest, net of tax was $204, as compared to income from continuing operations before noncontrolling interest of $65 for the same period in fiscal year 2021.

Net loss attributable to noncontrolling interest for the third quarter of fiscal year 2022 was $37, an improvement of $75 as compared to $112 in the same period in fiscal year 2021.

Basic earnings per share for the third quarter of fiscal year 2022 were negative $0.04, as compared to earnings per share of $0.05 for the same period in fiscal year 2021.

Dilutive earnings per share for the third quarter of fiscal year 2022 were negative $0.04, as compared to earnings per share of 0.04 for the same period in fiscal year 2021.

Total assets increased by $3,497 to $41,803 as of March 31, 2022, compared to $38,306 as of June 30, 2021.

Total liabilities increased by $1,173 to $13,426 as of March 31, 2022, compared to $12,253 as of June 30, 2021.

Results of Operations and Business Outlook

The following table sets forth our revenue components for theboth three months and sixnine months ended DecemberMarch 31, 20172022 and 2016,2021, respectively.

 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
Dec. 31,
 
 
Dec. 31,
 
 
Dec. 31,
 
 
Dec. 31,
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manufacturing
  37.7%
  36.5%
  40.6%
  38.7%
Testing Services
  46.8 
  44.7 
  44.4 
  45.5 
Distribution
  15.2 
  18.4 
  14.6 
  15.4 
Real Estate
  0.3 
  0.4 
  0.4 
  0.4 
Total
  100.0%
  100.0%
  100.0%
  100.0%

Revenue Components

 

Three Months Ended

  

Nine Months Ended

 
  

Mar. 31,

  

Mar. 31,

  

Mar. 31,

  

Mar. 31,

 
  

2022

  

2021

  

2022

  

2021

 
                 

Manufacturing

  27.8

%

  38.6

%

  31.6

%

  40.3

%

Testing Services

  39.6   43.2   43.4   43.3 

Distribution

  32.5   18.1   24.9   16.3 

Real Estate

  0.1   0.1   0.1   0.1 
                 

Total

  100.0

%

  100.0

%

  100.0

%

  100.0

%

-29-
-39-

Revenue for the three months and sixnine months ended DecemberMarch 31, 20172022 was $10,552$11,138 and $21,497,$32,231, respectively, an increase of $1,448$3,026 and $3,422,$9,077, respectively, when compared to the revenue for the same periodsperiod of the prior fiscal year. As a percentage, revenue increased by 15.9%37.3% and 18.9%39.2% for the three and sixnine months ended DecemberMarch 31, 2017,2022, respectively, when compared to total revenue for the same periodsperiod of the prior year.

For the three and nine months ended DecemberMarch 31, 2017,2022, the $1,448$3,026 and $9,077 increase in overall revenue was primarily due to

an increase in the manufacturing segment in the U.S. and Singapore operations; and
an increase in the testing segment in the Singapore, Malaysia and Tianjin, China operations.

an increase in the testing segment in Singapore, China, Malaysia and Thailand operations; and

an increase in the distribution segment in Singapore operations;

These increases were partially offset by the

decrease in the manufacturing segment in the Suzhou, China operations;
decrease in the testing segment in the Suzhou, China and Bangkok, Thailand operations;
decrease in the distribution segment in the Singapore and Suzhou, China operations; and
decrease in the real estate segment in China.
For the six months ended December 31, 2017, the $3,422 increase in overallby:

a decrease in the manufacturing segment in the U.S. operation.

Total revenue was primarily due to

an increase in the manufacturing segment in the U.S., Singapore and Suzhou, China operations;
an increase in the testing segment in the Singapore, Malaysia and Tianjin, China operations;
an increase in the distribution segment in the Singapore operations.
These increases were partially offset by the
decrease in the testing segment in the Bangkok, Thailand operations;
decrease in the distribution segment in the Suzhou, China operations; and
decrease in the testing segment in China.
Revenue into and within China, the Southeast Asia regions and other countries (except revenue into and within the U.S.)United States) increased by $1,294$3,214 (or 14.5%41.7%), to $10,927 and by $9,318 (or 42.4%) to $10,200, and by $3,287 (or 18.9%) to $20,619$31,262 for the three months and sixnine months ended DecemberMarch 31, 2017,2022, respectively, as compared with $8,906$7,713 and $17,332,$21,944, respectively, for the same periodsperiod of last fiscal year. 
Revenue

Total revenue into and within the U.S. was $352$222 and $878$988 for the three months and sixnine months ended DecemberMarch 31, 2017,2022, respectively, an increasea decrease of $154$177 and $135, respectively,$222 from $198$399 and $743$1,210 for the same periods of last fiscalthe prior year, respectively.

Revenue within our four current segments for the three and sixnine months ended DecemberMarch 31, 20172022, is discussed within the four segments as follows:

below.

Manufacturing Segment

Revenue in the manufacturing segment was 27.8% and 31.6% as a percentage of total revenue was 37.7% and 40.6% for the three and sixnine months ended DecemberMarch 31, 2017,2022, respectively, an increasea decrease of 1.2%10.8% and 1.9%8.7% of total revenue, respectively, when compared to the same periods of the last fiscal year. The absolute amount of revenue increaseddecreased by $653$33 to $3,973$3,097 from $3,320$3,130 and increased by $1,747$863 to $8,738$10,187 from $6,991$9,324 for the three and sixnine months ended DecemberMarch 31, 2017,2022, respectively, compared to the same periods of the last fiscal year. 

The revenue

Revenue in the manufacturing segment from a majorone customer accounted for 47.5%44.2% and 55.7%23.1% of our total revenue in the manufacturing segment for the three months ended DecemberMarch 31, 20172022 and 2016,2021, respectively, and 42.3%40.3% and 57.0%27.5% of our total revenue in the manufacturing segment for the sixnine months ended DecemberMarch 31, 20172022 and 2016,2021, respectively.

The future revenue in our manufacturing segment will be significantly affected by thethis one customer's purchase and capital expenditure plans of this major customer, if the customer base cannot be increased.

-30-

Testing Services Segment

The testing segment's revenue was 39.6% for the three months ended March 31, 2022, representing a decrease of 3.6%, compared to 43.2% for the same periods of the last fiscal year. Revenue in the testing segment was 43.4% as a percentage of total revenue was 46.8% and 44.4% for the three and sixnine months ended DecemberMarch 31, 2017, an increase of 2.1% and a decrease of 1.1%, respectively, of total revenue when2022, remaining consistent compared to the same periodsperiod of the last fiscal year. The absolute amount of revenue increased by $866$913 to $4,936$4,417 from $4,070$3,504 and increased by $1,314$3,965 to $9,541$13,983 from $8,227$10,018 for the three and sixnine months ended DecemberMarch 31, 2017,2022, respectively, as compared to the same periods of the last fiscal year. 

During the third quarter of fiscal year 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.

Based on our current visibility, revenue attributable to this joint venture is not expected to be material this fiscal year, as the joint venture company is in the development stage at this time.

The revenue in the testing segment from the one customer noted above accounted for 59.5% and 58.6% of our revenue in the testing segment for the three months ended March 31, 2022 and 2021, respectively, and 62.09% and 58.8% of our total revenue in the testing segment for the nine months ended March 31, 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 difficultchallenging to accurately forecast fluctuations in the market accurately, management believes it is necessary to maintain testing facilities in close proximity to ourthe 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.

-40-

Distribution Segment

Revenue in the distribution segment was 32.5% and 24.9% as a percentage of total revenue was 15.2% and 14.6% for the three and sixnine months ended DecemberMarch 31, 2017, a decrease2022, respectively, an increase of 3.2%14.4% and 0.8%8.6%, respectively, when compared to the same periods of the prior fiscal year.  The absolute amount of revenue decreased by $69 to $1,606 from $1,675, and increased by $363 to $3,142 from $2,779 for the three and six months ended December 31, 2017, respectively, compared to the same periods of the last fiscal year. 

The absolute amount of revenue increased by $2,153 to $3,620 from $1,467 and increased by $4,248 to $8,038 from $3,790 for the three and nine months ended March 31, 2022, respectively, compared to the same periods of the last fiscal year. 

Demand infor the distribution segment varies depending on the demand for our customers’ products, and the changes taking place in the market, and our customers’ forecasts.  Hence it is difficult to accurately forecast fluctuations in the market.

market accurately.

Real Estate Segment

The real estate segment accounted for 0.3% and 0.4%0.1% of total net revenue for both the three and sixnine months ended DecemberMarch 31, 2017.2022, respectively. The absolute amount of revenue in the real estate segment decreased by $2$7 to $37$4 from $39$11 and by $2 to $76 from $78remained comparable for the three and sixnine months ended DecemberMarch 31, 2017,2022, respectively, compared to the same periods of the last fiscal year. The decrease was primarily due to a decrease in rental income in the real estate segment for the three and six months ended December 31, 2017.

During fiscal year 2007, TTI invested in real estate property in Chongqing, China, which has generated investment income from rental revenue and investment returns from deemed loan receivables, which are classified as other income. The rental income is generated from the rental properties in MaoYe, JiangHuai and FuLi in Chongqing, China. In the second quarter of fiscal 2015, the investment in JiaSheng, which was deemed as loans receivable, was transferred to down payment for purchase of investment property in China.
Trio-Tech Chongqing Co., Ltd. (“TTCQ”) invested RMB 5,554 in rental properties in Maoye during fiscal year 2008, RMB 3,600 in rental properties in JiangHuai during fiscal year 2010 and RMB 4,025 in rental properties in FuLi during fiscal year 2010. The total investment in properties in China was RMB 13,179, or approximately $2,027 and $1,944 as at December 31, 2017 and June 30, 2017, respectively. The carrying value of these investment properties in China was RMB 7,913 and RMB 8,242, or approximately $1,217 and $1,216 as at December 31, 2017 and June 30, 2017, respectively. For the three and six months ended December 31, 2017, these properties generated a total rental income of $37 and $76, respectively, as compared to $39 and $78, respectively, for the same periods of the last fiscal year. TTCQ’s investment in properties that generated rental income is discussed further in this Form 10-Q.
TTCQ has yet to receive the title deed for properties purchased from JiangHuai. TTCQ is in the legal process of obtaining the title deed, which is dependent on JiangHuai completing the entire project. JiangHuai property did not generate any income during the three and six months ended December 31, 2017, and 2016.
-31-
“Investments” in the real estate segment were the cost of an investment in a joint venture in which we had a 10% interest. During the second quarter of fiscal year 2014, TTCQ disposed of its 10% interest in the joint venture. The joint venture had to raise funds for the development of the project. As a joint-venture partner, TTCQ was required to stand guarantee for the funds to be borrowed; considering the amount of borrowing, the risk involved was higher than the investment made and hence TTCQ decided to dispose of the 10% interest in the joint venture investment. On October 2, 2013, TTCQ entered into a share transfer agreement with Zhu Shu. Based on the agreement, the purchase price was to be paid by (1) RMB 10,000 worth of commercial property in Chongqing China, or approximately $1,634 based on exchange rates published by the Monetary Authority of Singapore as of October 2, 2013, by non-monetary consideration and (2) the remaining RMB 8,000, or approximately $1,307 based on exchange rates published by the Monetary Authority of Singapore as of October 2, 2013, by cash consideration. The consideration consisted of (1) commercial units measuring 668 square meters to be delivered in June 2016 and (2) sixteen quarterly equal installments of RMB500 per quarter commencing from January 2014. Based on ASC Topic 845 Non-monetary Consideration, the Company deferred the recognition of the gain on disposal of the 10% interest in joint venture investment until such time that the consideration is paid, so that the gain can be ascertained. The recorded value of the disposed investment amounting to $783, based on exchange rates published by the Monetary Authority of Singapore as of June 30, 2014, is classified as “other assets” under non-current assets, because it is considered a down payment for the purchase of the commercial property in Chongqing. TTCQ performed a valuation on a certain commercial unit and its market value was higher than the carrying amount. The first three installment amounts of RMB 500 each due in January 2014, April 2014 and July 2014 were all outstanding until the date of disposal of the investment in the joint venture. Out of the outstanding RMB 8,000, TTCQ received RMB 100 during May 2014.
On October 14, 2014, TTCQ and Jun Zhou Zhi Ye entered into a memorandum of understanding. Based on the memorandum of understanding, both parties have agreed to register a sales and purchase agreement upon Jun Zhou Zhi Ye obtaining the license to sell the commercial property (the Singapore Themed Resort Project) located in Chongqing, China. The proposed agreement is for the sale of shop lots with a total area of 1,484.55 square meters as consideration for the outstanding amounts owed to TTCQ by Jun Zhou Zhi Ye as follows:
a)
Long term loan receivable RMB 5,000, or approximately $814, as disclosed in Note 5, plus the interest receivable on long term loan receivable of RMB 1,250;
b)
Commercial units measuring 668 square meters, as mentioned above; and
c)
RMB 5,900 for the part of the unrecognized cash consideration of RMB 8,000 relating to the disposal of the joint venture.
The consideration does not include the remaining outstanding amount of RMB 2,000, or approximately $326, which will be paid to TTCQ in cash.
The shop lots are to be delivered to TTCQ upon completion of the construction of the shop lots in the Singapore Themed Resort Project. The initial targeted date of completion was December 31, 2016. Based on subsequent discussions with the developer and the overall China market outlook, the completion date is currently estimated to be December 31, 2019.
The share transfer (10% interest in the joint venture) was registered with the relevant authorities in China as of end October 2016.

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 minutelast-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 stock piling.stockpiling. We believe that we have improved customer service from staff by keeping our staff 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 offor higher technology chips.

-32-
We are in the process of implementing an Enterprise Resource Planning (“ERP”) system, as part of a multi-year plan to integrate and upgrade our systems and processes. The implementation of this ERP system is scheduled to occur in phases over the next few years, and began with the migration of certain of our operational and financial systems in our Singapore operations to the new ERP system during the second quarter of fiscal 2017. This implementation effort continues in fiscal 2018, when the operational and financial systems in Singapore will be substantially transitioned to the new system. Implementation of a new ERP system involves risks and uncertainties. Any disruptions, delays or deficiencies in the design or implementation of the new system could result in increased costs and adversely affect our ability to timely report our financial results, which could negatively impact our business and results of operations.

The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar-denominated sales and operating expenses 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 spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, and cancellation of physical participation in meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interest of our employees, customers, partners, and suppliers. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus and our ability to perform critical functions could be harmed.

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 several influencing factors which create uncertainties when forecasting performanceno 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.

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 real estate segment,common stock or could limit or hinder our ability to offer or continue to offer securities to investors and cause the value of such as obtainingsecurities to significantly decline or be worthless. Recently, the rights by the joint venturePeoples Republic of China (“PRC”) government initiated a series of regulatory actions and statements to develop the real estate projectsregulate business operations in China inflationwith little advance notice, including cracking down on illegal activities in China, currency fluctuationsthe 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 devaluation,expanding the efforts in anti-monopoly enforcement.

The Company and changesits 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, defense sectors, 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 laws, regulations, or their interpretation.

government.

Comparison of the Three Months Ended DecemberMarch 31, 20172022, and DecemberMarch 31, 2016

2021

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the three months ended DecemberMarch 31, 20172022 and 2016,2021 respectively:

 
 
Three Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
 
 
 
 
 
 
 
Revenue
  100.0%
  100.0%
Cost of sales
  73.5 
  74.8 
Gross Margin
  26.5%
  25.2%
Operating expenses
    
    
General and administrative
  16.4%
  19.5%
Selling
  2.4 
  2.0 
Research and development
  1.1 
  0.6 
Loss on disposal of property, plant and equipment
  - 
  0.1 
Total operating expenses
  19.9%
  22.2%
Income from Operations
  6.6%
  3.0%

  

Three Months Ended

March 31,

 
  

2022

  

2021

 

Revenue

  100.0%  100.0%

Cost of sales

  77.8   74.6 

Gross Margin

  22.2%  25.4%

Operating expenses

        

General and administrative

  21.4%  23.7%

Selling

  1.3   1.5 

Research and development

  0.7   1.0 

Total operating expenses

  23.4%  26.2%

Loss from Operations

  (1.2)%  (0.8)%

Overall Gross Margin

Overall gross margin as a percentage of revenue increaseddecreased by 1.3%3.2% to 26.5%22.2% for the three months ended DecemberMarch 31, 2017,2022, from 25.2% in25.4% for the same period of the last fiscal year. In terms of absolute dollar amounts, gross profits increased by $501 to $2,795 for the three months ended December 31, 2017, from $2,294 as compared to the same period of the last fiscal year. There was an increase in gross profit margin, in absolute dollars, across all segments except for real estate.

-33-

Gross profit margin as a percentage of revenue in the manufacturing segment increaseddecreased by 1.8%13.1% to 22.8%18.3% for the three months ended DecemberMarch 31, 2017,2022, as compared to 31.4% for the same period in the last fiscal year. In absolute dollar amounts, gross profits in the manufacturing segment decreased by $415 to $567 for the three months ended March 31, 2022, from 21.0%$982 for the same period in the last fiscal year. The decrease in gross profit margin was primarily due to a higher proportion of lower profit margin product sales for the three months ended March 31, 2022.

Gross profit margin as a percentage of revenue in the testing segment increased by 4.0% to 28.3% for the three months ended March 31, 2022, compared to 24.3% in the same period of the last fiscal year. The increase in gross margin was due to the change in product mix in the U.S. and Singapore operations, where there was an increase in sales of products that had higher profit margins and a decrease in sales of products that had lower profit margins as compared to the same period of last fiscal year. As a result, the increase in cost was lower than the increase in manufacturing revenue for the three months ended December 31, 2017, as compared to the same period last fiscal year. In absolute dollar amounts, gross profits in the manufacturing segment increased by $207 to $905 for the three months ended December 31, 2017 from $698 for the same period of last fiscal year.

Gross profit margin as a percentage of revenue in the testing segment decreased by 0.6% to 34.1% for the three months ended December 31, 2017, from 34.7% in the same period of the last fiscal year.  The decrease in profit margin as a percentage of revenue was mainly due to a decrease in high margin testing revenue the Bangkok, Thailand operations. Furthermore, there was an increase in compliance costs inorders across the Malaysia operations which increased inGroup, coupled with the cost of sales. This decrease in gross margin as a percentage of revenue was partially offset by the increase in the Singapore and Tianjin, China operations where significantprice adjustments. Significant portions of our cost of goods sold are fixed andin the testing segment.  Thus, as the demand offor services and factory utilization increase,increases, the fixed costs are spread over the increased output, which increases the gross profit margin. In absolute dollar amounts, gross profit in the testing segment increased by $273$395 to $1,685$1,248 for the three months ended DecemberMarch 31, 20172022, from $1,412$853 for the sameperiod of the last fiscal year.

Gross profit margin of the distribution segment is not only affected by the market price of ourthe products we distribute, but also by our productthe mix of products we distribute, which frequently changes frequently as a result of changesfluctuations in market demand. Gross profit margin as a percentage of revenue in the distribution segment increased by 1.9%2.7% to 12.3%18.6% for the three months ended DecemberMarch 31, 2017,2022, from 10.4%15.9% in the same period of the last fiscal year.  In absolute dollar amounts, gross profit in the distribution segment for the three months ended March 31, 2022, was $675, indicating an increase of $442, compared to $233 in the same period of the last fiscal year. The increase in gross margin as a percentage of revenue was due to the change in product mixan increase in the distribution revenue.

In absolute dollar amounts, for the three months ended March 31, 2022, gross loss in the real estate segment was $16, as compared to $8 for the same period of last fiscal year.

Operating Expenses

Operating expenses for the Singaporethree months ended March 31, 2022 and Suzhou, China operations resulting in an increase in sales2021 were as follows:

  

Three Months Ended

March 31,

 

(Unaudited)

 

2022

  

2021

 

General and administrative

 $2,378  $1,923 

Selling

  146   123 

Research and development

  80   79 

Total

 $2,604  $2,125 

General and a decline in sales of products that had lower profit margin, asadministrative expenses increased by $455, or 23.7%, from $1,923 to $2,378 for the three months ended March 31, 2022, compared to the same period of last fiscal year. In termsThe increase in general and administrative expenses was mainly attributable to the higher stock option compensation expenses led by the higher volatility of absolute dollar amounts, gross profit in the distribution segmentstock prices.

Selling expenses increased by $23, or 18,7%, from $123 to $146 for the three months ended DecemberMarch 31, 2017 was $197, an increase of $23 as2022, compared to $174 in the same period of last fiscal year. 

Gross profit margin as a percentage of revenue in the real estate segment was 21.6% for the three months ended December 31, 2017, as compared to 25.6% in the same period of the last fiscal year. In absolute dollar amounts, gross profitThe increase in selling expenses was primarily attributable to an increase in commission expenses in the real estatedistribution segment of the Singapore operations as a result of an increase in commissionable revenue, coupled with an increase in payroll-related expenses in Thailand operation.

Loss from Operations

Loss from operations was $130 for the three months ended DecemberMarch 31, 2017 was $8, a decrease2022, an increase of $2$65, compared to $65 loss from $10 inoperations for the same period of last fiscal year. The result was mainly due to the increase in operating expenses, offset with the increase in gross profit margin, as previously discussed.

Interest Expense

Interest expense for the three months ended March 31, 2022 and 2021 were as follows:

  

Three Months Ended

March 31,

 

(Unaudited)

 

2022

  

2021

 

Interest expenses

 $31  $25 

Interest expense was $31 for the three months ended March 31, 2022, an increase of $6, or 24.0%, compared to $25 for the three months ended March 31, 2021. As of March 31, 2022, the Company had an unused line of credit of $5,158 as compared to $5,520 at March 31, 2021.

Other Income

Other income for the three months ended March 31, 2022 and 2021 were as follows:

  

Three Months Ended March 31,

 

(Unaudited)

 

2022

  

2021

 

Interest income

 $13   26 

Other rental income

  30   25 

Exchange (loss) / gain

  (9

)

  58 

Government grant

  62   152 

Other miscellaneous income

  31   12 

Total

 $127  $273 

Other income decreased by $146 from $273 to $127 for the three months ended March 31, 2022 compared to the same period in the last fiscal year. The decrease was primarily due to a decrease in rental incomethe government grant received amounting to $90, coupled with an increase of 67 in exchange loss.

In the three months ended March 31, 2022, the Company received government grants aggregating $62 from the MaoYe investment property, as compared to the same periodlocal government in the last fiscal year.

OperatingMalaysia and Thailand operations, of which $nil reflects financial assistance to mitigate the negative impact on the businesses amid the pandemic.

In the three months ended March 31, 2021, the Company received government grants aggregating $152 from the local government in the Singapore and Malaysia operations, of which $107 reflects financial assistance to mitigate the negative impact on the businesses amid the pandemic.

Income Tax Expenses

Operating expenses

The Company's income tax expense was $170 and $118 for the three months ended DecemberMarch 31, 20172022, and 2016 were as follows:

 
 
Three Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
General and administrative
 $1,727 
 $1,776 
Selling
  252 
  180 
Research and development
  118 
  52 
Loss on disposal of property, plant and equipment
  - 
  8 
Total
 $2,097 
 $2,016 
General and administrative expenses decreased by $49, or 2.8%, from $1,776 to $1,727 for the three months ended DecemberMarch 31, 2017 compared to the same period of last fiscal year. The decrease in the general and administrative expenses was mainly attributable to the decrease in the Singapore, Malaysia and Suzhou, China operations, which was partially offset by the increase in the Tianjin, China operations.
The decrease in general and administrative expenses was primarily due to the decrease in payroll related expenses in the Singapore and Suzhou, China operations and decrease in bonus expenses in the Malaysia operations. This decrease was partially offset by an increase in the Tianjin, China operations as a result of wage increment in the three months ended December 31, 2016 as compared to the same period of last fiscal year.
-34-
Selling2021, respectively. Income tax expenses increased by $72, or 40.0%, for the three months ended December 31, 2017, from $180 to $252, as compared to the same perioddespite increased of the last fiscal year. The increase wasloss mainly due to an increase in commission expenses in the U.S and Singapore operations as the commissionable revenue increased, and an increase in travel expenses in the Singapore, Malaysia and Tianjin, China in the three months ended December 31, 2017 as compared to the same period of last fiscal year.
Research and development expenses increased by $66, for the three months ended December 31, 2017, from $52 to $118, as compared to the same period of the last fiscal year. The increase was mainlyincurring higher income tax due to a change in cost allocation infull utilization of tax allowances coupled with the three months ended December 31, 2017 as compared to the same periodadditional tax arising from under provision of last fiscal year.
Income from Operations
Income from operations was $698 for the three months ended December 31, 2017, as compared to $278 for the same period of last fiscal year. The increase was mainly due to the increase in gross profit margin being greater than the increase in operating expenses, as discussed earlier.
Interest Expense
Interest expense for the second quarter of fiscal years 2018 and 2017 were as follows:
 
 
Three Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Interest expense
 $52 
 $48 

Interest expense increased by $4 to $52 from $48 for the three months ended December 31, 2017. We are trying to keep our debt at a minimum in order to save financing costs. As of December 31, 2017, the Company had unused lines of credit of $4,146.
Other Income
Other income for the three months ended December 31, 2017 and 2016 were as follows:
 
 
Three Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Interest income
 $12 
 $8 
Other rental income
  27 
  25 
Exchange (loss)/ gain
  (24)
  120 
Other miscellaneous income
  27 
  50 
Total
 $42 
 $203 
Other income for the three months ended December 31, 2017 was $42, a decrease of $161 as compared to $203 for the same period last fiscal year. This decrease was mainly attributable to foreign currency exchange difference between functional currency and U.S. dollars contributing to an exchange loss of $24 for the three months ended December 31, 2017 as compared to an exchange gain of $120 for the same period in last fiscal year.
Income Tax Expenses
Income tax expenses for the three monthsfinancial year ended December 31, 2017 were $13, a decrease2020.

-43-

Non-controlling

Noncontrolling Interest

As of DecemberMarch 31, 2017,2022, we held a 55% interest in Trio-Tech (Malaysia) Sdn. Bhd., Trio-Tech (Kuala Lumpur) Sdn. Bhd., SHI International Pte. Ltd., and PTSHI Indonesia, andPT. SHI Indonesia. We also held a 76% interest in Prestal Enterprise Sdn. Bhd.Bhd and 51% of interest in Trio-Tech JiangSu Ltd. The non-controllingshare of net loss from the subsidiaries by the noncontrolling interest for the three months ended DecemberMarch 31, 2017, in the net income2022 was $37, a decrease of subsidiaries was nil,$75 compared to $52the share of net loss from the subsidiaries by the noncontrolling interest of $112 for the same period of the previous fiscal year. The decrease in the non-controllingnet loss of the noncontrolling interest in the net income of subsidiaries was attributable to the decrease in net incomeloss generated by the Malaysia testing operation dueoperation.

Net (loss) / Income Attributable to a decrease in other income and increase in corporate overhead allocation as comparedTrio-Tech International Common Shareholders

Net loss attributable to the same period in the last fiscal year.

Loss from Discontinued Operations
Loss from discontinued operations was $2Trio-Tech International common shareholders for the three months ended DecemberMarch 31, 2017, as2022, was $167, a change of $345, compared to a lossnet income of $4$178 for the same period of the last fiscal year.
Net Income
Net income was $673 for the three months ended December 31, 2017, an increase of $363 as compared to net income of $310 for the three months ended December 31, 2016. The increase in net income was mainly due to the increase operating income, as discussed earlier.

Earnings per Share

Basic earnings per share from continuing operations was $0.19were negative $0.04 for the three months ended DecemberMarch 31, 2017 as2022, compared to $0.09$0.05 for the same period in the last fiscal year. Basic earnings per share from discontinued operations were nil$nil for both the three months ended DecemberMarch 31, 20172022 and 2016.

2021.

Diluted earnings per share from continuing operations was $0.18were negative $0.04 for the three months ended DecemberMarch 31, 20172022, as compared to $0.09$0.04 for the same period in the last fiscal year. Diluted earnings per share from discontinued operations were nil$nil for both the three months ended DecemberMarch 31, 20172022 and 2016.

2021.

Segment Information

The revenue, gross margin and income or loss from operations for each segment forduring the secondthird quarter of fiscal years 2018year 2022 and 2017, respectively,fiscal year 2021 are presented below. As the revenue and gross margin for each segment have been discussed in the previous section, only the comparison of income or loss from operations is discussed below.

Manufacturing Segment

The revenue, gross margin and incomeloss / (loss)income from operations for the manufacturing segment for the three months ended DecemberMarch 31, 20172022 and 20162021 were as follows:

 
 
Three Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Revenue
 $3,973 
 $3,320 
Gross margin
  22.8%
  21.0%
Income / (loss) from operations
 $107 
 $(229)
-36-
Incomefollows

  

Three Months Ended

March 31,

 

(Unaudited)

 

2022

  

2021

 

Revenue

 $3,097  $3,130 

Gross margin

  18.3

%

  31.4

%

(Loss) / Income from operations

 $(145

)

 $214 

Loss from operations infrom the manufacturing segment was $107$145 compared to income from operations of $214 in the same period of the last fiscal year, primarily due to a decrease in gross margin of $415, offset with a decrease in operating expenses of $56. Operating expenses for the manufacturing segment were $712 and $768 for the three months ended DecemberMarch 31, 2017, an improvement of $336, as compared2022 and 2021, respectively. The decrease in operating expenses was mainly due to a decrease of $49 in general and administrative expenses and $11 in selling expenses, offset with an increase of $4 in corporate overhead expenses. The decrease in general and administrative expenses was mainly attributable to a decrease in payroll-related expenses in the Singapore operations.

Testing Segment

The revenue, gross margin and loss / income from operations for the testing segment for the three months ended March 31, 2022 and 2021 were as follows:

  

Three Months Ended

March 31,

 

(Unaudited)

 

2022

  

2021

 

Revenue

 $4,417  $3,504 

Gross margin

  28.3

%

  24.3

%

Loss from operations

 $(124

)

 $(320

)

Loss from operations in the testing segment for the three months ended March 31, 2022, was $124, a decrease of $229$196 from loss from operations of $320 in the same period of the last fiscal year. The improvement was primarily duemainly attributable to an increase of $207$395 in the gross margin,profit, as discussed earlier, and a decreaseoffset by an increase of $129$199 in operating expenses. Operating expenses for the manufacturing segment were $798$1,372 and $927$1,173 for the three months ended DecemberMarch 31, 20172022 and 2016,2021, respectively. The decreaseincrease of $199 in operating expenses was mainly due to a decreasean increase of $7 in selling expenses, and an increase of $204 in general and administrative expenses of $349, which was partially offset by an increase in selling expenses of $50, increase in corporate overhead by $141, as compared to the same period of last fiscal year.expenses. The decrease in general and administrative expenses was primarily due to a revision in the method of allocation of payroll related expenses between segments in the Singapore operations, fixed assets being fully depreciated and absence of provision for doubtful debt expenses in the Singapore operations. The increase in selling expenses was due to an increase in commission expenses in the U.S. and Singapore operations as the commissionable revenue increased as compared to the same period last fiscal year. The increase in corporate overhead expenses was due to a change in the corporate overhead allocation as compared to the same period last fiscal year. Corporate charges are allocated on a pre-determined fixed charge basis.

Testing Segment
The revenue, gross margin and income from operations for the testing segment for the three months ended December 31, 2017 and 2016increases were as follows:
 
 
Three Months Ended 
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Revenue
 $4,936 
 $4,070 
Gross margin
  34.1%
  34.7%
Income from operations
 $517 
 $388 
Income from operations in the testing segment for the three months ended December 31, 2017 was $517, an increase of $129 compared to $388 in the same period of last fiscal year. The increase in operating income was mainly attributable to an increase of $273 in gross margin, as discussed earlier, which was partially offset by an increase of $144 in operating expenses. Operating expenses were $1,168 and $1,024 for the three months ended December 31, 2017 and 2016, respectively. The increase in operating expenses was mainly attributable to an increase in general and administrative expenses by $222, which was partially offset by a decrease of $12 in corporate overhead expenses by $127.expenses. The increase in general and administrative expenses was mainly due to a revision in the method of allocation of payroll related expenses between segments in the Singapore operations andhigher payroll related expenses in the Tianjin,Singapore operation and higher staff benefit expenses in China operations. The decrease in corporate overhead expenses was due to a change in the corporate overhead allocation as compared to the same period last fiscal year. Corporate charges are allocated on a pre-determined fixed charge basis.

-44-

Distribution Segment

The revenue, gross margin and income from operations for the distribution segment for the three months ended DecemberMarch 31, 20172022 and 20162021 were as follows:

 
 
Three Months Ended 
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Revenue
 $1,606 
 $1,675 
Gross margin
  12.3%
  10.4%
Income from operations
 $119 
 $100 

  

Three Months Ended

March 31,

 

(Unaudited)

 

2022

  

2021

 

Revenue

 $3,620  $1,467 

Gross margin

  18.6

%

  15.9

%

Income from operations

 $576  $163 

Income from operations infor the distribution segment increased by $19 to $119 for the three months ended DecemberMarch 31, 2017, as2022 was $576 compared to $100 in$163 for the same period of last fiscal year. The increase in operating incomeof $413 was primarilymainly due to an increase of $442 in the gross margin, as discussed earlier, which was partially offset by an increase in operating expenses of $4.expenses. Operating expenses were $78$99 and $74$70 for the three months ended DecemberMarch 31, 20172022 and 2016,2021, respectively.

-37-

Real Estate Segment

The revenue, gross margin and loss from operations for the real estate segment for the three months ended DecemberMarch 31, 20172022 and 20162021 were as follows:

 
 
Three Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Revenue
 $37 
 $39 
Gross margin
  21.6%
  25.6%
Loss from operations
 $(9)
 $(8)

  

Three Months Ended

March 31,

 

(Unaudited)

 

2022

  

2021

 

Revenue

 $4  $11 

Gross margin

  (400.0

)%

  (82.0

)%

Loss from operations

 $(35

)

 $(23

)

Loss from operations in the real estate segment for the three months ended DecemberMarch 31, 20172022, was $9, an increase of $1, as$35 compared to $38$23 for the same period of the last fiscal year. The decrease in operating loss was mainly due to a decrease in gross margin as discussed earlier, which was partially offset by a decrease in operating expenses of $1. Operating expenses were $17$19 and $18$15 for the three months ended DecemberMarch 31, 20172022 and 2016,2021, respectively.

Corporate

The (loss) / income from operations for corporateCorporate for the three months ended DecemberMarch 31, 20172022 and 2016 were2021 was as follows:

 
 
Three Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
(Loss) / income from operations
 $(36) 
 $27 

  

Three Months Ended

March 31,

 

(Unaudited)

 

2022

  

2021

 

Income from operations

 $(402

)

 $(99

)

Corporate operating income changed by $63 to a loss of $36was $402 for the three months ended DecemberMarch 31, 2017 from an income2022, compared to loss of $27$99 in the same period of the last fiscal year. The change from an operating income to anincrease in operating loss was mainly attributable to an increase in general and administrative expenses by $74 due to an increase in payroll relatedthe stock option compensation expenses and professional fees during the three months ended December 31, 2017, as compared to the same period last fiscal year.incurred.

-45-

Comparison of the SixNine Months Ended DecemberMarch 31, 20172022, and DecemberMarch 31, 2016

2021

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the sixnine months ended DecemberMarch 31, 20172022 and 2016,2021, respectively:

 
 
Six Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
 
 
 
 
 
 
 
Revenue
  100.0%
  100.0%
Cost of sales
  74.2 
  74.3 
Gross Margin
  25.8%
  25.7%
Operating expenses:
    
    
General and administrative
  16.6%
  19.6%
Selling
  2.0 
  2.0 
Research and development
  1.4 
  0.6 
Total operating expenses
  20.0%
  22.2%
Income from Operations
  5.8%
  3.5%

  

Nine Months Ended

 
  

Mar. 31,

2022

  

Mar. 31,

2021

 
         

Revenue

  100.0%  100.0%

Cost of sales

  73.5   76.5 

Gross Margin

  26.5%  23.5%

Operating expenses:

        

General and administrative

  19.6%  22.7%

Selling

  1.4   1.5 

Research and development

  0.9   1.2 

Total operating expenses

  21.9%  25.4%

Income / (Loss) from Operations

  4.6%  (1.9)%

Overall Gross Margin

Overall gross margin as a percentage of revenue increased by 0.1%3.0% to 25.8%26.5% for the sixnine months ended DecemberMarch 31, 2017, from 25.7%2022, compared to 23.5% in the same period of last fiscal year, primarily due to an increase in the gross profit margin in the manufacturing and distribution segments, which was partially offset by a decrease in the gross profit margin in the testing and real estate segments.year. In terms of absolute dollar amounts, gross profits increased by $903$3,095 to $5,555$8,543 for the sixnine months ended DecemberMarch 31, 2017,2022, from $4,652$5,448 for the same period of the last fiscal year.

-38-

Gross profit margin as a percentage of revenue in the manufacturing segment increaseddecreased by 0.6%3.4% to 23.1% for the sixnine months ended DecemberMarch 31, 2017,2022, from 22.5%26.5% in the same period of the last fiscal year. In absolute dollar amounts, gross profit increaseddecreased by $447$120 to $2,021$2,349 for the sixnine months ended DecemberMarch 31, 2017 as2022 compared to $1,574$2,469 for the same period in the last fiscal year. The increasedecrease in absolute dollar amount of gross profit margin was primarily due to the change ina higher proportion of lower profit margin product mix in the Singapore and Suzhou, China operations, where there wassales, despite an increase in sales of products that had higher profit margins and a decrease in sales of products that had lower profit margins as compared to the same period of last fiscal year. In our U.S. operations, a delay in orders from a customer while also contributed to a decrease in the gross margin. As a result, the increase in manufacturing revenue was higher than the increase in cost for the sixnine months ended DecemberMarch 31, 2017, as compared to the same period last fiscal year.

2022.

Gross profit margin as a percentage of revenue in the testing segment decreasedincreased by 0.5%11.0% to 33.0%34.6% for the sixnine months ended DecemberMarch 31, 20172022, from 33.5%23.6% in the same period of the last fiscal year.  The decreaseincrease in gross profit margin as a percentage of revenue was mainly due to a decrease in high margin testing revenue the Bangkok, Thailand operations. Furthermore, there was an increase in compliance costs inorders across the Malaysia operations which increased inGroup, coupled with the cost of sales. This decrease in gross margin as a percentage of revenue was partially offset by the increase in the Singapore, Suzhou, China and Tianjin, China operations where significant portions of our cost of goods sold are fixed and asprice adjustments. As the demand offor services and factory utilization increase, the fixed costs are spread over the increased output, which increases the gross profit margin. In terms of absolute dollar amounts, gross profit in the testing segment increased by $396$2,476 to $3,151$4,842 for the sixnine months ended DecemberMarch 31, 2017,2022, from $2,755$2,366 for the sameperiod of the last fiscal year.

Gross profit margin as a percentage of revenue in the distribution segment increased by 1.3% to 11.6%remained comparable for the sixnine months ended DecemberMarch 31, 2017, from 10.3% in2022, as compared to the same period of the last fiscal year. The gross margin as a percentage of revenue remained comparable, despite there being an increase in the distribution revenue due to an increase in sales of low profit margin products in our Singapore operation for the nine months ended March 31, 2022, compared to the same period of last fiscal year. In terms of absolute dollar amounts, gross profit in the distribution segment for the sixnine months ended DecemberMarch 31, 20172022, was $365,$1,386, an increase of $78 as$738 compared to $287$648 in the same period of the last fiscal year. The increase in gross margin was due to the change in product mix, as this segment had fewer sales of products with a lower profit margin as compared to the same period of last fiscal year. The gross profit margin of the distribution segment was affected not only affected by the market price of our products but also by our product mix, which frequently changes frequently as a result of changesdue to fluctuations in market demand.

Gross profitloss margin as a percentage of revenue in the real estate segment decreasedincreased by 22.5%21.9% to 23.7%163.6% for the sixnine months ended DecemberMarch 31, 2017,2022, from 46.2%141.7% in the same period of the last fiscal year. In terms of absolute dollar amounts, gross profit decreased by $18 to $18 for the six months ended December 31, 2017 as compared toloss was $36 for the same period in last fiscal year. The decrease was due to the a reversal of overprovision for taxes in the sixnine months ended DecemberMarch 31, 2016 while there was none in the same period this fiscal year. an increase in rental income from both investment properties, MaoYe and FuLi, due2022, compared to an increase in space rented during the period, and a decrease in costgross loss of sales, due to a reversal of overprovision$34 for taxes, as compared to the same period in the last fiscal year. In addition, there was decrease in rental income from the MaoYe investment property in the six months ended December 31, 2017, as compared to the same period in the last fiscal year.

-46-

Operating Expenses

Operating expenses for the sixnine months ended DecemberMarch 31, 20172022 and 20162021 were as follows:

 
 
Six Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
General and administrative
 $3,566 
 $3,519 
Selling
  431 
  365 
Research and development
  302 
  105 
Loss on disposal of property, plant and equipment
  11 
  8 
Total
 $4,310 
 $3,997 

  

Nine Months Ended

 
  

Mar. 31,

2022

  

Mar. 31,

2021

 

(Unaudited)

        

General and administrative

 $6,305  $5,245 

Selling

  449   356 

Research and development

  293   277 

Gain on disposal of plant and equipment

  -   (1

)

Total

 $7,047  $5,877 

General and administrative expenses increased by $47,$1,060, or 1.3%20.3%, from $3,519$5,245 to $3,566$6,305 for the sixnine months ended DecemberMarch 31, 20172022, compared to the same period of the last fiscal year. There was an increase in general and administrative expenses in the U.S. and Tianjin, China operations, which was partially offset by the decrease in general and administrative expenses in all other operations.

-39-
The increase in general and administrative expenses was primarily due to the increase in payroll related and bonus expenses in the U.S. and Tianjin, China operations.This increase was partially offset mainly by a decrease in payroll relatedhigher payroll-related expenses in the Singapore and U.S. operations forand an increase in staff-related expenses in the six months ended December 31, 2017, as compared toChina operation, coupled with the same period of last fiscal year.
higher stock option compensation.

Selling expenses increased by $66,$93, or 18.1%26.1%, for the sixnine months ended DecemberMarch 31, 2017,2022, from $365$356 to $431 compared to the same period of the last fiscal year, The increase was mainly due to an increase in commission expenses in the U.S and Singapore operations as the commissionable revenue increased, and an increase in travel expenses in the Singapore, Malaysia and Tianjin, China in the six months ended December 31, 2017, as compared to the same period of last fiscal year.

Research and development expenses increased by $197, for the six months ended December 31, 2017, from $105 to $302, as$449 compared to the same period of the last fiscal year. The increase in selling expenses was mainly dueprimarily attributable to a changean increase in cost allocationcommission expenses in the six months ended December 31, 2017 as compared to the same periodmanufacturing and distribution segment of last fiscal year, as wellSingapore operation as a one­off projectresult of an increase in commissionable revenue. In addition, there was also an increase in payroll expenses in the Suzhou, China operations.
Thailand operation.

Income / (Loss) from Operations

Income from operations was $1,245$1,496 for the sixnine months ended DecemberMarch 31, 2017 as2022, compared to $655loss from operations of $429 for the same period of the last fiscal year. The increaseimprovement was mainly due to the increase in gross profit margin, being greater than theoffset with an increase in operating expenses, as discussed earlier.

Interest Expense

Interest expense for the sixnine months ended DecemberMarch 31, 20172022 and 20162021 were as follows:

 
 
Six Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Interest expense
 $110 
 $106 

  

Nine Months Ended

 
  

Mar. 31,

2022

  

Mar. 31,

2021

 

(Unaudited)

        

Interest expense

 $87  $96 

Interest expense increaseddecreased by $4$9 to $110$87 from $106$96 for the sixnine months ended DecemberMarch 31, 2017 as2022, compared to the same period of the last fiscal year. The decrease was mainly due to lower bank-loan principal in the Malaysia operation. Additionally, the bank loans payables decreased by $97 to $1,963 for the nine months ended March 31, 2022, compared to $2,060 as of June 30, 2021.

-47-

Other Income

Other income for the sixnine months ended DecemberMarch 31, 20172022 and 2016 were2021 was as follows:

 
 
Six Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Interest income
 $20 
 $12 
Other rental income
  53 
  50 
Exchange (loss)/ gain
  (30)
  182 
Other miscellaneous income
  157 
  69 
Total
 $200 
 $313 

  

Nine Months Ended

 
  

Mar. 31,

2022

  

Mar. 31,

2021

 

(Unaudited)

        

Interest income

 $51  $96 

Other rental income

  88   70 

Exchange loss

  (13

)

  (79

)

Bad debt recovery

  104   10 

Dividend Income

  -   32 

Government grant

  160   412 

Commission income

  200   - 

Other miscellaneous income

  79   86 

Total

 $669  $627 

Other income for the sixnine months ended DecemberMarch 31, 20172022 was $200, a decrease$669, an increase of $113 as$42 compared to $313$627 for the same period of last fiscal year.

In the nine months ended March 31, 2022, the Company received government grants aggregating $160 from the local governments in the Singapore and Malaysia operations, of which $61 reflects financial assistance to mitigate the negative impact on the businesses amid the pandemic.

In the nine months ended March 31, 2021, the Company received government grants aggregating $412 from the local governments in the Singapore and Malaysia operations, of which $263 reflects financial assistance to mitigate the negative impact on the businesses amid the pandemic.

Income Tax Expenses

Income tax expenses for the nine months ended March 31, 2022 was $503, an increase of $378 compared to tax expenses of $125 for the same period last fiscal year. This decrease was mainly attributable to foreign currency exchange difference between functional currency and U.S. dollars contributing to an exchange loss of $30 for the six months ended December 31, 2017 as compared to an exchange gain of $182 for the same period last fiscal year, which was partially offset by a non-recurring reimbursement income.

-40-
Income Tax Expenses
Income tax expense for the six months ended December 31, 2017 was $55, a decrease of $95, as compared to $150 for the same period of last fiscal year. The decreaseincrease in income tax expense was mainlyprimarily due to a change from deferred tax benefitincrease in the same period last fiscal year to deferred tax expensetaxable income across the Group for timing differences recorded by the Malaysia operation.
Non-controllingnine months ended March 31, 2022.

Noncontrolling Interest

As of DecemberMarch 31, 2016,2022, we held a 55% interest in Trio-Tech Malaysia, Trio-Tech (Kuala Lumpur) Sdn. Bhd., SHI International Pte. Ltd. and PTSHI Indonesia, and a 76% interest in Prestal Enterprise Sdn. Bhd. The net income attributable to our non-controllingthe noncontrolling interest in these subsidiaries for the sixnine months ended DecemberMarch 31, 20172022, was $27,$25, a decrease of $69, as$429, compared to $96a net loss of $454 for the same period of last fiscal year. The decreaseimprovement was attributable to the decreaseincrease in net income generated by the Malaysia testing operations due to a decrease in operating income, other income and increase in corporate overhead allocation as compared to the same period in the last fiscal year

Loss from Discontinued Operations
Loss from discontinued operations was $5operation for the sixnine months ended DecemberMarch 31, 2017,2022.

Net Income Attributable to Trio-Tech International Common Shareholders

Net income was $1,605 for the nine months ended March 31, 2022, an increase of $2 as compared to a loss of $3 for the same period of the last fiscal year. 

Net Income
Net income was $1,248 for the six months ended December 31, 2017, an increase of $635, as$1,200 compared to a net income of $613$405 for the same period in the last fiscal year. The improvementincrease was mainly due to the increase in revenue and gross margin. However, the increase was partially offset with an increase in operating income,expenses, as discussed earlier.

Earnings per Share

Basic earnings per share from continuing operations was $0.35$0.40 for the sixnine months ended DecemberMarch 31, 2017 as2022, compared to $0.18$0.11 for the same period in the last fiscal year. Basic earnings per share from discontinued operations were nil for both the sixnine months ended DecemberMarch 31, 20172022 and 2016.

2021.

Diluted earnings per share from continuing operations was $0.34$0.38 for the sixnine months ended DecemberMarch 31, 2017 as2022, compared to $0.17$0.10 for the same period in the last fiscal year. Diluted earnings per share from discontinued operations were nil for both the sixnine months ended DecemberMarch 31, 20172022 and 2016.

2021.

Segment Information

The revenue, gross profit margin, and income or loss from operations in each segment for the sixnine months ended DecemberMarch 31, 20172022 and 2016,2021, respectively, are presented below. As the segment revenue and gross margin for each segment have been discussed in the previous section, only the comparison of income / (loss) from operations is discussed below.

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Manufacturing Segment

The revenue, gross margin and income or loss from operations for the manufacturing segment for the sixnine months ended DecemberMarch 31, 20172022 and 20162021 were as follows:

 
 
Six Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Revenue
 $8,738 
 $6,991 
Gross margin
  23.1%
  22.5%
Income / (loss) from operations
 $293 
 $(322)
-41-

  

Nine Months Ended

 
  

Mar. 31,

2022

  

Mar. 31,

2021

 

(Unaudited)

        

Revenue

 $10,187  $9,324 

Gross margin

  23.1

%

  26.5

%

Income from operations

 $107  $277 

Income from operations from the manufacturing segment was $293$107 for the sixnine months ended DecemberMarch 31, 2017,2022, a decrease of $170 as compared to $277 in the same period of the last fiscal year due to a decrease in gross margin. The decrease in operating income was mainly due to a decrease in gross margin. The manufacturing segment's operating expenses were $2,242 and $2,193 for the nine months ended March 31, 2022 and 2021, respectively. The increase in operating expenses of $43 was mainly due to an increase in selling expenses by $14, and an increase in corporate overhead by $36 compared to the same period of last fiscal year. The increase was offset by a decrease in general and administrative expenses by $7.

Testing Segment

The revenue, gross margin and loss from operations for the testing segment for the nine months ended March 31, 2022 and 2021 were as follows:

  

Nine Months Ended

 
  

Mar. 31,

2022

  

Mar. 31,

2021

 

(Unaudited)

        

Revenue

 $13,983  $10,018 

Gross margin

  34.6

%

  23.6

%

Income / (Loss) from operations

 $999  $(993

)

Income from operations in the testing segment for the nine months ended March 31, 2022, was $999, an improvement of $615 as$1,992 compared to a loss of $322from operation $993 in the same period of the last fiscal year due to an increase in gross margin by $396 coupled with a decreaseand testing volume. The increase in operating expenses. Operating expenses for the manufacturing segment were $1,728 and $1,896 for the six months ended December 31, 2017 and 2016, respectively. The decrease in operating expenses of $168 was mainly due to a decrease in general and administrative expenses of $637, whichgross margin was partially offset by an increase in corporate overhead of $269 and increase in research and development expenses of $160 as discussed earlier, as compared to the same period of last fiscal year. The decrease in general and administrative expenses was primarily due to a revision in the method of allocation of payroll related expenses between segments in the Singapore operations, fixed assets being fully depreciated and absence of provision for doubtful debt expenses in the Singapore operations. The increase in corporate overhead expenses is due to increase in allocation in corporate expenses which is charged on a predetermined fixed basis, which is higher as compared to the same period last fiscal year.

Testing Segment
The revenue, gross margin and income from operations for the testing segment for the six months ended December 31, 2017 and 2016 were as follows:
 
 
Six Months Ended 
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Revenue
 $9,541 
 $8,227 
Gross margin
  33.0%
  33.5%
Income from operations
 $853 
 $790 
Income from operations in the testing segment for the six months ended December 31, 2017 was $853, an increase of $63 compared to $790 in the same period of the last fiscal year. The increase in operating income was attributable to an increase in gross profit of $396, which was partially offset bywith an increase in operating expenses of $333.by $483.  Operating expenses were $2,298$3,843 and $1,965$3,360 for the sixnine months ended DecemberMarch 31, 20172022 and 2016,2021, respectively. The increase inhigher operating expenses waswere mainly attributableattributed to an increase in general and administrative expenses and selling expenses by $521, which was partially$493 and $37, respectively. The increase offset bywith a decrease in corporate overheads by $250. $56.

The increase in general and administrative expenses was mainly due to a revision in the method of allocation of payroll related expenses between segments in the Singapore operations, and an increase inhigher payroll related expenses in the Tianjin,Singapore operation and higher staff benefit expenses in China operations. The decrease in corporate overhead expenses was due to a change in the corporate overhead allocation as compared to the same period last fiscal year. Corporate charges are allocated on a pre-determinedpredetermined fixed charge basis.

Distribution Segment

The revenue, gross margin and income from operations for the distribution segment for the sixnine months ended DecemberMarch 31, 20172022 and 20162021 were as follows: 

 
 
Six Months Ended 
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Revenue
 $3,142 
 $2,779 
Gross margin
  11.6%
  10.3%
Income from operations
 $220 
 $134 

  

Nine Months Ended

 
  

Mar. 31,

2022

  

Mar. 31,

2021

 

(Unaudited)

        

Revenue

 $8,038  $3,790 

Gross margin

  17.2

%

  17.1

%

Income from operations

 $1,108  $407 

Income from operations in the distribution segment for the sixnine months ended DecemberMarch 31, 20172022, was $220,$1,108, an increase of $86 as$701 compared to $134$407 in the same period of the last fiscal year. The increase in operating income was primarily due to an increase in gross margin as discussed earlier, togetherby $739, which was partially offset with a decrease in operating expenses of $8.$38. Operating expenses were $145$279 and $153$241 for the sixnine months ended DecemberMarch 31, 20172022 and 2016,2021, respectively.

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Real Estate Segment

The revenue, gross loss or margin and loss from operations for the real estate segment for the sixnine months ended DecemberMarch 31, 20172022 and 20162021 were as follows: 

 
 
Six Months Ended 
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
Revenue
 $76 
 $78 
Gross margin / (loss)
  23.7%
  46.2%
Loss from operations
 $(19)
 $(6)

  

Nine Months Ended

 
  

Mar. 31,

2022

  

Mar. 31,

2021

 

(Unaudited)

        

Revenue

 $23  $22 

Gross loss margin

  163.6

%

  163.6

%

Loss from operations

 $(86

)

 $(84

)

Loss from operations in the real estate segment for the sixnine months ended DecemberMarch 31, 20172022, was $19, an increase of $13 as$86, compared to a loss of $6$84 for the same period of the last fiscal year.  The increase in operating loss was mainly due to an increase in gross loss, as discussed earlier, partially offset by a decrease in operating expenses of $5. Operating expenses were $37$51 and $42$48 for the sixnine months ended DecemberMarch 31, 20172022 and 2016,2021, respectively.

Corporate

The (loss)/ income from operations for corporate for the sixnine months ended DecemberMarch 31, 20172022 and 20162021 were as follows:   

 
 
Six Months Ended
 
 
 
Dec. 31,
2017
 
 
Dec. 31,
2016
 
(Unaudited)
 
 
 
 
 
 
(Loss) / income from operations
 $(102)
 $59 
Operating loss

  

Nine Months Ended

 
  

Mar. 31,

2022

  

Mar. 31,

2021

 

(Unaudited)

        

(Loss)/ Income from operations

 $(636

)

 $(36)

The deterioration of $600 was mainly due to higher stock option compensation expense, coupled with a change in the corporate office for the six months ended December 31, 2017 was $102, change of $161, as compared to an income of $59 for the same period of the last fiscal year.  The change from an operating income to an operating loss was mainly attributable to an increase in general and administrative expenses by $171 due to an increase in payroll related expenses and professional fees during the six months ended December 31, 2017,overhead allocation as compared to the same period last fiscal year. Corporate charges are allocated on a predetermined fixed charge basis.

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Financial Condition

During the sixnine months ended DecemberMarch 31, 20172022 total assets increased by $3,291 from $33,498$3,497 to $41,803 compared to $38,306 as atof June 30, 2017 to $36,789.2021. The increase in total assets was primarily due to an increase in cash and cash equivalents, trade accounts receivable,account receivables, other receivables, inventory,inventories, prepaid expenses property, plant and equipment, other current assets, and restricted term deposits, which wereoperating lease right-of-use. This was partially offset by a decrease in shortshort-term deposits, deferred tax assets, investment properties, other assets, property, plant and equipment, restricted term deposits.

deposits and financed sales receivable.

Cash and cash equivalents were $5,059$7,478 as at DecemberMarch 31, 2017,2022, reflecting an increase of $287$1,642 from $4,772$5,836 as at June 30, 2017, mainly2021, primarily due to improved collections in the U.S. and Suzhou, China operations and upliftwithdrawal of the short-term deposit infor the Malaysia operation. This was partially offset by the lower utilization of credit facilities in our Singapore operation.

Short termnine months ended March 31, 2022.

Short-term deposits were $642$4,953 as at DecemberMarch 31, 2017,2022, reflecting a decrease of $145$1,698 from $787$6,651 as at June 30, 2017,2021. The decrease was primarily due to upliftwithdrawal of the short-term deposit byfor the Malaysia operation.

nine months ended March 31, 2022 and reflected in the cash and cash equivalents.

As at DecemberMarch 31, 2017,2022, the trade accounts receivable balance increased by $484$2,292 to $9,493$10,585, from $9,009$8,293 as at June 30, 2017, mainly2021, primarily due to longer collection cyclesan increase in overall Group’s revenue. This increase was partially offset by the decrease in the Singapore and Tianjin, China operations and foreign currency exchange difference between the functional currency and U.S. dollars for the six months ended December 31, 2017.operations. The number of days’ sales outstanding in accounts receivables for the Group was 77 and 8379 days at the end of the secondthird quarter of fiscal year 2018 and for the fiscal year ended 2017,2022 and the end of the last fiscal year, respectively.

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As at DecemberMarch 31, 20172022, other receivables were $548,$1,329, reflecting an increase of $147$667 from $401$662 as at June 30, 2017.2021. The increase was primarily due to input tax and tax incentivesan increase in advance payments made to suppliers in the Tianjin, China operations in the second quarter of fiscal year 2018.

Singapore operation.

Inventories as at DecemberMarch 31, 20172022, were $2,972,$2,272, an increase of $1,216, as$192, compared to $1,756$2,080 as at June 30, 2017.2021. The increase in inventoryinventories was mainly due to a delay in shipment as a result of external factors and higher inventory turnover daysline with an increase in orders by customers in the distribution segment of the Singapore operations.

Prepaid expenses were $280$732 as at DecemberMarch 31, 20172022 compared to $226$418 as at June 30, 2017.2021. The increase of $54$314 was primarily due to prepaymentthe advance payment made for software related expensesthe new factory’s utilities deposit in the Singapore operationChina operation.

Investment properties’ net in China was $636 as at March 31, 2022 and insurance in$681 as at June 30, 2021. The decrease was primarily due to the Singaporeforeign currency exchange movement between June 30, 2021 and Tianjin, China operations.

March 31, 2022. The increase was partially offset by the depreciation charged for the period. 

Property, plant and equipment net increaseddecreased by $1,094$424 from $11,291$9,531 as at June 30, 2017,2021, to $12,385$9,107 as at DecemberMarch 31, 2017,2022, mainly due to higher capital expendituredepreciation charged for the period and the foreign currency exchange movement between June 30, 2021 and March 31, 2022. The decrease was partially offset by the new acquisition of property, plant and equipment in the Singapore, Malaysia, Thailand and Tianjin, China operations and foreign currency exchange difference between the functional currency and U.S. dollars for the six months ended December 31, 2017.

Other assets increased by $28 to $1,950operations.

Restricted term deposits remained consistent at $1,735 as at DecemberMarch 31, 2017,2022 as compared to $1,922$1,741 as at June 30, 2017. This was mainly due to and foreign currency exchange difference between functional currency and U.S. dollars from June 30, 2017 to December 31, 2017.

Restricted term deposits increased by $60 to $1,717 as at December 31, 2017, as compared to $1,657 as at June 30, 2017.2021. This was primarily due to the foreign currency exchange differencemovement between functional currency and U.S. dollars from June 30, 2017 to December2021 and March 31, 2017.
Utilized lines of credit2022.

Other assets decreased by $367$121 to $2,189$141 as at DecemberMarch 31, 20172022 compared to $2,556$262 as at June 30, 2017, which was mainly due to lower utilization of lines of credit by the Singapore operation in the first quarter of fiscal year 2018.

Accounts payable increased by $113 to $3,342 as at December 31, 2017, as compared to $3,229 as at June 30, 2017.2021.  This was mainly due to the foreign currency exchange difference between the functional currency and U.S. dollarsreclassification of down payments made for the six months ended Decemberpurchase of equipment in the Malaysia operation.

Lines of credit increased by $451 to $523 as at March 31, 2017.

2022 as compared to $72 as at June 30, 2021. This was due to the utilization of the bank facilities in the Singapore operation.

Accounts payable decreased by $1,482 to $2,220 as at March 31, 2022 as compared to $3,702 as at June 30, 2021. This was due to more payments having been made.

Accrued expenses increased by $942$1,680 to $3,985$5,043 as at DecemberMarch 31, 2017,2022, as compared to $3,043$3,363 as at June 30, 2017.2021. The increase in accrued expenses was mainly due to an increase in purchase accrualsthe accrued purchases and customers’ deposit received in the Singapore operations.

Bank loans payable decreased by $97 to $1,963 as at March 31, 2022, as compared to $2,060 as at June 30, 2021. This was due to the repayments made in the Malaysia operation.

Finance leases decreased by $162 to $288 as at March 31, 2022, as compared to $450 as at June 30, 2021. This was due to the repayments made in the Singapore and Tianjin, ChinaMalaysia operations.

-51-

Bank loans payable

Operating lease right-of-use assets and the corresponding lease liability increased by $161$725 to $1,973$2,601 as at Decemberof March 31, 2017,2022, as compared to $1,812$1,876 as at June 30, 2017.2021. This was due to an additional loan made by the Singapore operation,new lease agreement entered in the China operation. The increase was partially offset bywith the repayment of bank loans bymade and the Malaysia operation.

Capital leases increased by $139 to $898 as at December 31, 2017, as compared to $759 as at June 30, 2017. This was due to new leases inoperating lease expenses charged for the Malaysia operations, partially offset by repayment of capital leases by the Singapore operations.
period.

Liquidity Comparison

Net cash provided by operating activities decreased by $2,125$325 to $1,546an inflow of $579 for the sixnine months ended DecemberMarch 31, 2017, compared to $3,671 during2022, from an inflow of $900 for the same period of the last fiscal year. The decrease in net cash generatedinflow provided by operating activities was primarily due to a decrease in cash inflow of $1,749 from accounts receivables and $427 from other receivables, and an increase in cash outflow of $878 in inventories. These were$1,201 from trade account receivables, partially offset by an increase in net income of $117 and decrease in other assets of $189.

$1,629.

Net cash used inprovided by investing activities increased by $202$1,363 to $1,304an inflow of $538 for the sixnine months ended DecemberMarch 31, 2017, compared to $1,102 during2022, from an outflow of $825 for the same period of the last fiscal year. The increase in cash inflow was primarily due to $743 in capital spending and a decrease of $83 in proceeds from disposal of property, plant and equipment. This increase in net cash used in investing activities was partially offset by the $484 increase in proceeds from maturing of restricted and unrestricted deposits and a $140 decrease in investments in restricted and unrestricted deposits.

-44-
Net cash used in financing activities decreased by $1,087 to $388 for the six months ended December 31, 2017, compared to $1,475 during the same period of the last fiscal year. The decrease was mainly due to an increase in withdrawal of unrestricted deposit amounting to $2,595. These increases were partially offset by an increase in cash generated through borrowingsoutflow of $709 and $523 from bank loansinvestment in unrestricted term deposit and capital leasesexpenditure respectively.

Net cash provided by $1,529, whichfinancing activities for the nine months ended March 31, 2022, was $510, representing an increase of $231, as compared to cash inflow of $279 during the nine months ended March 31, 2021. The increase in cash inflow was mainly attributable to an increase in cash inflow by $1,276 from the lines of credit proceeds. This increase was partially offset by an increase in repaymentcash outflow of $851 from the payments on lines of credit and a decrease in cash inflow of $475.

We believe that our projected cash flows$373 from operations, borrowing availability under our revolving lines of credit, cash on hand, trade credit and the secured bank loan will provide the necessary financial resources to meet our projected cash requirements for at least the next 12 months.  
Critical Accounting Estimates & Policies
stock option exercise proceeds.

The Company has adopted ASU 2015-11 ASC Topic 330:Simplifyingfiled the MeasurementS3 registration statement on December 3, 2021. We may raise capital of Inventory(“ASC Topic 330”)US$10,000,000 of any combination of securities (common stock, warrants, debt securities or units) for the financial year beginning after December 15, 2016 and interim periods within those fiscal years, and concluded that the effectivenessexpansion of this update does not have a significant effect on the Company’s consolidated financial position or results of operations.

There have been no significant changes in the critical accounting policies, except as disclosed in “Management’s Discussiontesting capacity and Analysis of Financial Condition and Results of Operations” included in the most recent Annual Report on Form 10-K.
working capital purposes if necessary.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.CONTROLS AND PROCEDURES

An evaluation was carried out by the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of DecemberMarch 31, 2017,2022, the end of the period covered by this Form 10-Q. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective at a reasonable level.  

Except as discussed below, therelevel

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal controlcontrols over financial reporting during the fiscal quarter ended DecemberMarch 31, 20172022, that has materially affected, or areis reasonably likely to materially affect, the Company’s internal control over financial reporting.

Enterprise Resource Planning (ERP) Implementation
We are in the process of implementing an ERP System, as part of a multi-year plan to integrate and upgrade our systems and processes. The implementation of this ERP system is scheduled to occur in phases over the next few years, and began with the migration of certain of our operational and financial systems in our Singapore operations to the new ERP system during the second quarter of fiscal 2017. This implementation effort continues in fiscal 2018, when the operational and financial systems in Singapore will be substantially transitioned to the new system.
As a phased implementation of this system occurs, we are experiencing certain changes to our processes and procedures which, in turn, result in changes to our internal control over financial reporting. While we expect the new ERP system to strengthen our internal financial controls by automating certain manual processes and standardizing business processes and reporting across our organization, management will continue to evaluate and monitor our internal controls as processes and procedures in each

-52-

TRIO-TECH INTERNATIONAL

PART II. OTHER INFORMATION

Item1.Legal Proceedings

Not applicable.

Item 1A.Risk Factors

Not applicable.

applicable

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Malaysia and Singapore regulations prohibit the payment of dividends if the Company does not have sufficient retained earnings and tax credit. In addition, the payment of dividends can only be made after making deductions for income tax pursuant to the regulations. Furthermore, the cash movements from the Company’s 55% owned Malaysian subsidiary to overseas are restricted and must be authorized by the Central Bank of Malaysia. California law also prohibits the payment of dividends if the Company does not have sufficient retained earnings or cannot meet certain asset to liability ratios.

Item 3.Defaults Upon Senior Securities

Not applicable.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.          Other Information

Not applicable.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain officers; Compensatory

Arrangement of Certain officers

On March 24, 2022, Mr. Victor Ting informed the Company that he would like to retire as Chief Financial Officer of the Company effective June 30, 2022.  Mr. Victor Ting will remain as a director of the Company.  From July 2022 through September 2022, Mr. Victor Ting will assist the new Chief Financial Officer, on a consulting basis, to help oversee the June 30, 2022 year-end filing process.  Mr. Victor Ting will be compensated for such consulting services at a rate equal to 50% of his current salary. The Board has agreed to gift to Mr. Victor Ting the company car he currently uses, valued at approximately $45k as a token of appreciation for his 45 years of service with the Company.

Ms Srinivasan Anitha will succeed Mr Victor Ting effective July 1, 2022.

Item 6.Exhibits

31.1

Rule 13a-14(a) Certification of Principal Executive Officer of Registrant

31.2

31.2

Rule 13a-14(a) Certification of Principal Financial Officer of Registrant 

32

32

Section 1350 Certification

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase

104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition Linkbase
101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE XBRL Taxonomy Extension Presentation Linkbase

-46-
-53-

SIGNATURES

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

TRIO-TECH INTERNATIONAL

 By:

By:

/s/ Victor H.M. Ting

VICTOR H.M. TING

Vice President and Chief Financial Officer

(Principal Financial Officer)

Dated: February 12, 2018

May 16, 2022


-47--54-