What changed in TRIO-TECH INTERNATIONAL's 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of TRIO-TECH INTERNATIONAL's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+319 added−331 removedSource: 10-K (2024-09-23) vs 10-K (2023-09-27)
Top changes in TRIO-TECH INTERNATIONAL's 2024 10-K
319 paragraphs added · 331 removed · 260 edited across 1 sections
- Item 1. Business+319 / −331 · 260 edited
Item 1. Business
Business — how the company describes what it does
260 edited+59 added−71 removed152 unchanged
Item 1. Business
Business — how the company describes what it does
260 edited+59 added−71 removed152 unchanged
2023 filing
2024 filing
Biggest change(Incorporated by reference to Exhibit 3.2 to the Registrant’s Annual Report on Form 10‑K for June 30, 1988) 10.1 Amendment to 2007 Employee Stock Option Plan (Incorporated by reference to Exhibit A to the Registrant’s Proxy Statement for its Annual Meeting held December 14, 2010)** 10.2 Amendment to 2007 Directors Equity Incentive Plan (Incorporated by reference to Exhibit B to the Registrant’s Proxy Statement for its Annual Meeting held December 14, 2010)** 10.3 Amendment to 2007 Directors Equity Incentive Plan (Incorporated by reference to Appendix A to the Registrant’s Proxy Statement for its Annual Meeting held December 9, 2013)** 10.4 2017 Employee Stock Option Plan (Incorporated by reference to Appendix 1 to the Registrant’s Proxy Statement for its Annual Meeting held December 4, 2017.)** 10.5 2017 Directors Equity Incentive Plan (Incorporated by reference to Appendix 2 to the Registrant’s Proxy Statement for its Annual Meeting held December 4, 2017.)** 10.6 Amendment to 2017 Directors Equity Incentive Plan (Incorporated by reference to Exhibit 10.6 to the Registrant’s Annual Report on Form 10-K filed on October 1, 2021)** 10.7 Employment Agreement by and between the Registrant and Siew Kuan Soon, dated April 17, 2021 (Incorporated by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K, filed on December 2, 2021).** 10.8 Joint Venture Agreement between Trio-Tech SIP Co., Ltd and Suzhou Anchuang Technology Management LLP dated December 1, 2021 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed February 13, 2022) 21.1 Subsidiaries * 23.1 Consent of Independent Registered Public Accounting Firm* 31.1 Rule 13a-14(a) Certification of Principal Executive Officer of Registrant* 31.2 Rule 13a-14(a) Certification of Principal Financial Officer of Registrant* 32 Section 1350 Certification. * 101.INS The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* 101.SCH Inline XBRL Taxonomy Extension Schema* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase* 101.LAB Inline XBRL Taxonomy Extension Label Linkbase* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase* 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* * Filed electronically herewith. ** Indicates management contracts or compensatory plans or arrangements required to be filed as an exhibit to this report. 22 Table of Contents INDEX TO FINANCIAL STATEMENTS Report of independent registered public accounting firm F-1 Consolidated Balance Sheets as of June 30, 2023 and 2022 F-2 Consolidated Statements of Operations and Comprehensive Income for the Years Ended June 30, 2023 and 2022 F-3 Consolidated Statements of Shareholders’ Equity for the Years Ended June 30, 2023 and 2022 F-5 Consolidated Statements of Cash Flows for the Years Ended June 30, 2023 and 2022 F-6 Notes to Consolidated Financial Statements F-7 23 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Trio‑Tech International Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Trio-Tech International and its Subsidiaries (the “Company”) as of June 30, 2023 and 2022, and the related consolidated statements of operations and comprehensive income (loss), shareholders’ equity and cash flows for each of the two years in the period ended June 30, 2023 and 2022, and the related notes (collectively referred to as the “consolidated financial statements”).
Biggest change(Incorporated by reference to Exhibit 3.1 to the Registrant’ s Annual Report on Form 10 ‑ K for June 30, 1988) 3.2 Second Amended and Restated Bylaws of Trio-Tech International (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed December 13, 2023) 4.1 Description of Registrant’s Securities 10.1 2017 Employee Stock Option Plan (Incorporated by reference to Appendix 1 to the Registrant’s Proxy Statement for its Annual Meeting held December 4, 2017 .)** 10.2 2017 Directors Equity Incentive Plan (Incorporated by reference to Appendix 2 to the Registrant’s Proxy Statement for its Annual Meeting held December 4, 2017 .)** 10.3 Amendment to 2017 Directors Equity Incentive Plan* 10.4 Joint Venture Agreement between Trio-Tech SIP Co., Ltd and Suzhou Anchuang Technology Management LLP dated December 1, 2021 (Incorporated by reference to Exhibit 10.1 to the Registrant’ s Quarterly Report on Form 10-Q, filed February 13, 2022) 21.1 Subsidiaries * 23.1 Consent of Independent Registered Public Accounting Firm* 31.1 Rule 13a-14(a) Certification of Principal Executive Officer of Registrant* 31.2 Rule 13a-14(a) Certification of Principal Financial Officer of Registrant* 32 Section 1350 Certification. * 97.1 Trio-Tech International Clawback Policy 101.INS The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* 101.SCH Inline XBRL Taxonomy Extension Schema* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase* 101.LAB Inline XBRL Taxonomy Extension Label Linkbase* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase* 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* * Filed electronically herewith. ** Indicates management contracts or compensatory plans or arrangements required to be filed as an exhibit to this report. 23 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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.
We have not identified any changes in circumstances requiring further impairment test in Fiscal 2023 except the phasing out of burn-in service contract with a customer in our Malaysia operation. In June 2023, our Malaysia operation received notification of termination of contract from a customer effective January 2024.
We have not identified any changes in circumstances requiring further impairment test in Fiscal 2024 except the phasing out of burn-in service contract with a customer in our Malaysia operation. In June 2023, our Malaysia operation received notification of termination of contract from a customer effective January 2024.
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.
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 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 control has been transferred to the customer), the price is fixed or determinable and collectability is reasonably assured.
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 control has been transferred to the customer), the price is fixed or determinable and collectability is reasonably assured.
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.
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.
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.
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.
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.
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.
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 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 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 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.
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.
Not all the 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.
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.
Distribution The Company distributes complementary products, made by manufacturers around the world. The Company recognizes revenue from product sales at a point in time when the Company has satisfied its performance obligation by transferring control of the product to the customer. The Company uses judgment to evaluate whether the control has transferred by considering several indicators discussed above.
Distribution The Company distributes complementary products, made by manufacturers around the world. The Company recognizes revenue from product sales at a point in time when the Company has satisfied its performance obligation by transferring control of the product to the customer. The Company uses judgment to evaluate whether control has transferred by considering several indicators discussed above.
The Company elected to take this non-cash impairment charge due to increased uncertainties regarding the project’s viability, given the developers weakening financial condition as well as uncertainties arising from the negative real-estate environment in China, implementation of control measures on real-estate lending in China and its relevant government policies, together with effects of the ongoing pandemic.
The Company elected to take this non-cash impairment charge due to increased uncertainties regarding the project’s viability, given the developers weakening financial condition as well as uncertainties arising from the negative real-estate environment in China, implementation of control measures on real-estate lending in China and its relevant government policies, together with effects of the ongoing pandemic. 11.
The Company filed a Shelf Registration Statement on Form S-3 on December 3, 2021, under which we may raise capital of US$10,000,000 from any combination of securities (common stock, warrants, debt securities or units) for business expansion and working capital purposes if necessary.
The Company filed a Shelf Registration Statement on Form S-3 on December 3, 2021, under which we may raise capital of $10,000,000 from any combination of securities (common stock, warrants, debt securities or units) for business expansion and working capital purposes if necessary.
Risks and uncertainties related to supply chain challenges, and inflationary pressures may continue to negatively impact our revenue and gross margin. We continue to monitor and evaluate the business impact to react proactively. On August 9, 2022, the CHIPS and Science Act of 2022 (CHIPS Act) was enacted in the United States.
Risks and uncertainties related to supply chain challenges, and inflationary pressures may continue to negatively impact our revenue and gross margin. We continue to monitor and evaluate the business impact to react proactively. On August 9, 2022, the CHIPS and Science Act of 2022 (“ CHIPS Act ”) was enacted in the United States.
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 for products manufactured by the Company is generally one year or the warranty period agreed upon with the customer.
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.
Under the 2017 Plan, the exercise price of the non-qualified options is required to be 100% of the fair value of the underlying shares on the grant date. The options have five -year contractual terms and are exercisable immediately as of the grant date.
Under the 2017 Directors Plan, the exercise price of the non-qualified options is required to be 100% of the fair value of the underlying shares on the grant date. The options have five-year contractual terms and are exercisable immediately as of the grant date.
On September 14, 2017, the Company’s Board of Directors unanimously adopted the 2017 Employee Stock Option Plan (the “ 2017 Employee Plan ”) and the 2017 Directors Equity Incentive Plan (the “ 2017 Directors Plan ”) each of which was approved by the shareholders on December 4, 2017.
STOCK OPTIONS On September 14, 2017, the Company’s Board of Directors unanimously adopted the 2017 Employee Stock Option Plan (the “ 2017 Employee Plan ”) and the 2017 Directors Equity Incentive Plan (the “ 2017 Directors Plan ”) each of which was approved by the shareholders on December 4, 2017.
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 statements depends.
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 statements depend.
ITEM 9A – CONTROLS AND PROCEDURES An evaluation was carried out by the Company’s Chief Executive Officer and Chief Financial Officer (the principal executive and principal financial officers, respectively, of the Company) of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of June 30, 2023, the end of the period covered by this Form 10-K.
ITEM 9A – CONTROLS AND PROCEDURES An evaluation was carried out by the Company’s Chief Executive Officer and Chief Financial Officer (the principal executive and principal financial officers, respectively, of the Company) of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of June 30, 2024, the end of the period covered by this Form 10-K.
Changes in Internal Control Over Financial Reporting There has been no change in the Company’s internal control over financial reporting during the fourth quarter of Fiscal 2023, which were identified in connection with management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Changes in Internal Control Over Financial Reporting There has been no change in the Company’s internal control over financial reporting during the fourth quarter of Fiscal 2024, which were identified in connection with management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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 credit-worthy financial institutions.
Account Receivables and Allowance for Credit Losses 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 credit-worthy financial institutions.
FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with ASC Topic 825 and 820, the following presents assets and liabilities measured and carried at fair value and classified by level of fair value measurement hierarchy: There were no transfers between Levels 1 and 2 during the year ended June 30, 2023, or for the same period in the prior year.
FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with ASC Topic 825 and 820, the following presents assets and liabilities measured and carried at fair value and classified by level of fair value measurement hierarchy: There were no transfers between Levels 1 and 2 during the year ended June 30, 2024, or for the same period in the prior year.
Revolving credit Cost of Funds Rate +2% $ 338 $ 338 Off-Balance Sheet Arrangements We do not consider the Company to have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expense, results of operations, liquidity, capital expenditures or capital resources.
Revolving credit Cost of Funds Rate +2% $ 319 $ 319 Off-Balance Sheet Arrangements We do not consider the Company to have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expense, results of operations, liquidity, capital expenditures or capital resources.
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2023 and 2022, and the consolidated results of its operations and its cash flows for each of the two years in the period ended June 30, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2024 and 2023, and the consolidated results of its operations and its cash flows for each of the two years in the period ended June 30, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.
The Company had no unrecognized tax benefits or related accrued penalties or interest expenses at June 30, 2023. In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company had no unrecognized tax benefits or related accrued penalties or interest expenses at June 30, 2024. In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
However, the taxing authorities may continue to adjust the Company’s net operating loss carry-forwards until the statute of limitations closes on the tax years in which the net operating losses are utilized. 22. REVENUE The Company generates revenue primarily from 3 different segments: Manufacturing, Testing and Distribution.
However, the taxing authorities may continue to adjust the Company’s net operating loss carry-forwards until the statute of limitations closes on the tax years in which the net operating losses are utilized. 22. REVENUE The Company generates revenue primarily from three different segments: manufacturing, testing and distribution.
The Company has elected to account for GILTI as a period cost, and therefore has included GILTI expense in its effective tax rate calculation for the year ended June 30, 2023. The Company accrues penalties and interest related to unrecognized tax benefits when necessary as a component of penalties and interest expenses, respectively.
The Company has elected to account for GILTI as a period cost, and therefore has included GILTI expense in its effective tax rate calculation for the year ended June 30, 2024. The Company accrues penalties and interest related to unrecognized tax benefits when necessary as a component of penalties and interest expenses, respectively.
Our future performance will depend significantly upon our ability to continue to compete in foreign markets which in turn will depend, in part, upon a continuation of current trade relations between the United States and foreign countries in which semiconductor manufactures or assemblers have operations.
Our future performance will depend significantly upon our ability to continue to compete in foreign markets which in turn will depend, in part, upon a continuation of current trade relations between the United States and foreign countries in which semiconductor manufacturers or assemblers have operations.
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 instalments on the next three succeeding anniversaries of the grant date.
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 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 cost such as taxes.
The Company classifies its lease arrangements at inception of the arrangement. The lease term is three years, contains an automatic transfer of title at the end of the lease term and a guarantee of residual value at the end of the lease term. The customer is required to pay for executory cost such as taxes.
Segment Information The revenue, gross margin and income / (loss) from each segment for the years ended June 30, 2023 and 2022 are presented below. As the segment revenue and gross margin for each segment has been discussed in previous sections, only the comparison of income / (loss) from operations is discussed below.
Segment Information The revenue, gross margin and income/(loss) from each segment for the years ended June 30, 2024 and 2023 are presented below. As the segment revenue and gross margin for each segment has been discussed in previous sections, only the comparison of income/(loss) from operations is discussed below.
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 of the required acceptance criteria, and when the installation of the system is deemed perfunctory).
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; F-24 Table of Contents ● 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).
One factor that influences uncertainty is the highly competitive nature of the semiconductor industry. Additionally, certain customers are unable to provide a forecast of the products required in the upcoming weeks, rendering it, difficult to plan adequate resources needed to meet these customers’ requirements as a result of short lead time and last-minute order confirmation.
One factor that influences uncertainty is the highly competitive nature of the semiconductor industry. Additionally, certain customers are unable to provide a forecast of the products required in the upcoming weeks, rendering it, difficult to plan adequate resources needed to meet these customers’ requirements because of short lead time and last-minute order confirmation.
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. The semiconductor industry is characterized by rapid technological change, short-term customer commitments and swiftly changing demand.
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 and net realizable value, using the first-in, first-out (“ FIFO ”) method. The semiconductor industry is characterized by rapid technological change, short-term customer commitments and swiftly changing demand.
Due to the enactment of Tax Cuts and Jobs Act, the Company is subject to a tax on global intangible low-taxed income (“GILTI”) . GILTI is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations.
Due to the enactment of Tax Cuts and Jobs Act, the Company is subject to a tax on global intangible low-taxed income ( “ GILTI ” ) . GILTI is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations.
COMPARATIVE FIGURES Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income. F-33
COMPARATIVE FIGURES Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income. F-32
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. 11 Table of Contents Determining the fair value of stock-based awards at the grant date requires significant judgment.
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 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. 2017 Employee Stock Option Plan The Company’s 2017 Employee Plan permits the grant of stock options to its employees, and initially covered up to an aggregate of 300,000 shares of Common Stock.
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. 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 records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenue or expense. Trade Account Receivables and Allowance for Doubtful Accounts — During the normal course of business, the Company extends unsecured credit to its customers in all segments.
The Company records the amounts collected as a current liability and relieves such liability upon remittance to the taxing authority without impacting revenue or expense. Trade Account Receivables and Allowance for Credit Losses – During the normal course of business, the Company extends unsecured credit to its customers in all segments.
Additionally, management has the responsibility for establishing and maintaining adequate internal control over financial reporting for the Company and thus also assessed the effectiveness of our internal controls over financial reporting as of June 30, 2023.
Additionally, management has the responsibility for establishing and maintaining adequate internal control over financial reporting for the Company and thus also assessed the effectiveness of our internal controls over financial reporting as of June 30, 2024.
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 VIE determination.
F-11 Table of Contents 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 VIE determination.
For example, in order to meet manufacturing customers’ demands upon short notice, the Company maintains higher inventories but continues to work closely with its customers to avoid stockpiling.
For example, to meet manufacturing customers’ demands upon short notice, the Company maintains higher inventories but continues to work closely with its customers to avoid stockpiling.
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. During the year ended June 30, 2023, TTI conducted business in four business segments: Manufacturing, Testing Services, Distribution and Real Estate.
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. During the year ended June 30, 2024, TTI conducted business in four business segments: Manufacturing, Testing, Distribution and Real Estate.
Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal controls over financial reporting were effective as of June 30, 2023.
Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal controls over financial reporting were effective as of June 30, 2024.
In the opinion of management, the consolidated financial statements have reflected all costs incurred by the Company and its subsidiaries in operating the business. 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.
In the opinion of management, the consolidated financial statements have reflected all costs incurred by the Company and its subsidiaries in operating the business. 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.
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 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. F-10 Table of Contents Determining the fair value of stock-based awards at the grant date requires significant judgment.
Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Leases – The Company applies the guidance in ASC Topic 842 to its individual leases of 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 – The Company applies the guidance in ASC Topic 842, Lease Accounting (“ ASC Topic 842 ”) to its individual leases of assets.
Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2023.
Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2024.
LOANS RECEIVABLE FROM PROPERTY DEVELOPMENT PROJECTS The following table presents Trio-Tech (Chongqing) Co. Ltd (“ TTCQ ”)’s loan receivable from property development projects in China as of June 30, 2023. Loan Expiry Loan Amount Loan Amount Date (RMB) (U.S.
LOANS RECEIVABLE FROM PROPERTY DEVELOPMENT PROJECTS The following table presents Trio-Tech (Chongqing) Co. Ltd (“ TTCQ ”)’s loan receivables from property development projects in China as of June 30, 2024. Loan Expiry Loan Amount Loan Amount Date (RMB) (U.S.
The Company determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluate whether the lease is an operating lease or a finance lease at the commencement date.
The Company determines if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluate whether the lease is an operating lease or a finance lease at the commencement date.
F- 25 Table of Contents Options to purchase 656,375 shares of Common Stock at exercise prices ranging from $2.53 to $7.76 per share were outstanding as of June 30, 2023. 285,500 stock options were excluded in the computation of diluted EPS for Fiscal 2023 because they were anti-dilutive.
Options to purchase 656,375 shares of Common Stock at exercise prices ranging from $2.53 to $7.76 per share were outstanding as of June 30, 2023. 285,500 stock options were excluded in the computation of diluted EPS for Fiscal 2023 because they were anti-dilutive.
Other new pronouncements issued but not yet effective until after June 30, 2023 are not expected to have a significant effect on the Company’s consolidated financial position or results of operations. 3.
Other new pronouncements issued but not yet effective until after June 30, 2024 are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.
TRIO‑TECH INTERNATIONAL By: /s/ Srinivasan Anitha Srinivasan Anitha Chief Financial Officer September 27, 2023 Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated. By: /s/ S.W.Yong S. W.
TRIO‑TECH INTERNATIONAL By: /s/ Srinivasan Anitha Srinivasan Anitha Chief Financial Officer September 23, 2024 Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated. By: /s/ S.W.Yong S. W.
BUSINESS SEGMENTS In Fiscal 2023, the Company operated in four segments; the testing service industry (which performs structural and electronic tests of semiconductor devices), the designing and manufacturing of equipment (assembly of equipment that tests the structural integrity of integrated circuits and other products), distribution of various products from other manufacturers in Singapore and Asia and the real estate segment in China.
BUSINESS SEGMENTS The Company operates in four segments: the testing service industry (which performs structural and electronic tests of semiconductor devices); the designing and manufacturing of equipment (assembly of equipment that tests the structural integrity of integrated circuits and other products); distribution of various products from other manufacturers in Singapore and Asia; and the real estate segment in China.
During the year ended June 30, 2023, the Company granted options to purchase 65,000 shares of its Common Stock to employees pursuant to the 2017 Employee Plan, with a weighted average grant-date fair value of $4.84. There were 5,000 stock options exercised under the 2017 Employee Plan during the year ended June 30, 2023.
During the year ended June 30, 2023, the Company granted options to purchase 65,000 shares of its Common Stock to employees pursuant to the 2017 Employee Plan, with a weighted average grant-date fair value of $4.84. There were 64,625 stock options exercised under the 2017 Employee Plan during the year ended June 30, 2024.
F- 7 Table of Contents Foreign Currency Translation and Transactions — The U.S. dollar is the functional currency of the U.S. parent company. The Singapore dollar ( “SGD” ), the national currency of Singapore, is the primary currency of the economic environment in which the operations in Singapore are conducted.
F-7 Table of Contents Foreign Currency Translation and Transactions – The U.S. dollar is the functional currency of the U.S. parent company. The Singapore dollar (“ SGD ”), the national currency of Singapore, is the primary currency of the economic environment in which the operations in Singapore are conducted.
Bank loans payable (Level 3 ) – The carrying value of the Company’s bank loans payable approximates its fair value as the interest rates associated with long-term debt is adjustable in accordance with market situations when the Company borrowed funds with similar terms and remaining maturities. 17.
Bank loans payable (Level 3) – The carrying value of the Company’s bank loans payable approximates its fair value as the interest rates associated with long-term debt is adjustable in accordance with market situations when the Company borrowed funds with similar terms and remaining maturities. F-20 Table of Contents 17.
The exchange rate is based on the market rate as of June 30, 2022. Investment Date / Reclassification Investment Amount Investment Amount Date (RMB) (U.S.
The exchange rate is based on the market rate as of June 30, 2023. Investment Date / Investment Investment Reclassification Date Amount (RMB) Amount (U.S.
Property purchased from JiangHuai did not generate any rental income for Fiscal 2023 and 2022. Depreciation expense for JiangHuai was $26 and $28 for Fiscal 2023 and 2022, respectively. Rental Property III – FuLi In Fiscal 2010, TTCQ entered into a Memorandum Agreement with Chongqing FuLi Real Estate Development Co. Ltd.
Property purchased from JiangHuai did not generate any rental income for Fiscal 2024 and 2023. Depreciation expense for JiangHuai was $25 and $26 for Fiscal 2024 and 2023, respectively. Rental Property III – FuLi In Fiscal 2010, TTCQ entered into a Memorandum Agreement with Chongqing FuLi Real Estate Development Co. Ltd.
Dollars Original Investment (10% of Junzhou equity) $ 10,000 $ 1,606 Less: Management Fee (5,000 ) (803 ) Net Investment 5,000 803 Less: Share of Loss on Joint Venture (137 ) (22 ) Net Investment as Down Payment (Note *a) 4,863 781 Loans Receivable 5,000 689 Interest Receivable 1,250 172 Less: Impairment of Interest (906 ) (125 ) Transferred to Down Payment (Note *b) 5,344 736 * Down Payment for Purchase of Investment Properties 10,207 1,407 Add: Effect of foreign currency exchange - 133 Less: Provision of Impairment loss on other assets (10,207 ) (1,580 ) * Down Payment for Purchase of Investment Properties $ - $ - a) In Fiscal 2011, the Company signed a Joint Venture agreement (the “ Agreement ”) with Jia Sheng Property Development Co.
Dollars Original Investment (10% of Junzhou equity) $ 10,000 $ 1,606 Less: Management Fee (5,000 ) (803 ) Net Investment 5,000 803 Less: Share of Loss on Joint Venture (137 ) (22 ) Net Investment as Down Payment (Note *a) 4,863 781 Loans Receivable 5,000 689 Interest Receivable 1,250 172 Less: Impairment of Interest (906 ) (125 ) Transferred to Down Payment (Note *b) 5,344 736 * Down Payment for Purchase of Investment Properties 10,207 1,517 Add: Effect of foreign currency exchange - 63 Less: Provision of Impairment loss on other assets (10,207 ) (1,580 ) * Down Payment for Purchase of Investment Properties $ - $ - F-17 Table of Contents a) In Fiscal 2011, the Company signed a Joint Venture agreement (the “ Agreement ”) with Jia Sheng Property Development Co.
F- 11 Table of Contents 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.
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.
Terms of contract that may indicate potential variable consideration included 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.
Terms of contract that may indicate potential variable consideration include warranty, late delivery penalty and reimbursement to solve non-conformance issues for rejected products. Based on historical and recent data trends, it is concluded that these terms of the contract do not represent potential variable consideration. The transaction price is not contingent on the occurrence of any future event.
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.
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.
F- 9 Table of Contents Comprehensive Income or Loss — ASC 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 – ASC 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.
The highlights above are intended to identify certain of the Company’s significant events and transactions during Fiscal 2023.
The highlights above are intended to identify certain of the Company’s significant events and transactions during Fiscal 2024.
Bhd.) Prestal Enterprise Sdn. Bhd. 76% Selangor, Malaysia (76% owned by Trio-Tech International Pte. Ltd.) Trio-Tech (SIP) Co., Ltd. * 100% Suzhou, China Trio-Tech (Chongqing) Co. Ltd. * 100% Chongqing, China SHI International Pte. Ltd. (Dormant) (55% owned by Trio-Tech International Pte. Ltd) 55% Singapore PT SHI Indonesia (Dormant) (95% owned by SHI International Pte.
Bhd. 76% Selangor, Malaysia (76% owned by Trio-Tech International Pte. Ltd.) Trio-Tech (SIP) Co., Ltd. * 100% Suzhou, China Trio-Tech (Chongqing) Co. Ltd. * 100% Chongqing, China SHI International Pte. Ltd. (Dormant) (55% owned by Trio-Tech International Pte. Ltd) 55% Singapore PT SHI Indonesia (Dormant) (95% owned by SHI International Pte.
Use of Estimates — The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period.
Use of Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expense during the reporting period.
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.
Accrued straight-line rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements. F-8 Table of Contents GST / Indirect Taxes – The Company’s policy is to present taxes collected from customers and remitted to governmental authorities on a net basis.
As of June 30, 2023, the Company had certain lines of credit that are collateralized by restricted deposits. Entity with Type of Interest Credit Unused Facility Facility Rate Limitation Credit Trio-Tech International Pte. Ltd., Singapore Lines of Credit Cost of Funds Rate +1.25% to +1.3% $ 3,907 $ 3,701 Universal (Far East) Pte. Ltd.
As of June 30, 2024, the Company had certain lines of credit that are collateralized by restricted deposits. Entity with Type of Interest Credit Unused Facility Facility Rate Limitation Credit Trio-Tech International Pte. Ltd., Singapore Lines of Credit Cost of Funds Rate +1.25% $ 3,907 $ 3,626 Universal (Far East) Pte. Ltd.
Additionally, strengthening of foreign currencies may also increase the Company’s cost of product components denominated in those currencies, thus adversely affecting gross margins. As of June 2023, although we have seen improvements in both our operations and those of our suppliers, we may continue to experience supply shortages as well as inflationary cost pressures in at least the near term.
Additionally, strengthening of foreign currencies may also increase the Company’s cost of product components denominated in those currencies, thus adversely affecting gross margins. 9 Table of Contents As of June 30, 2024, although we have seen improvements in both our operations and those of our suppliers, we may continue to experience supply shortages as well as inflationary cost pressures in at least the near term.
Total intersegment sales were $517 in the year ended June 30, 2023 and $439 in the year ended June 30, 2022. Corporate assets consisted primarily of cash and prepaid expense. Corporate expense consisted primarily of stock option expense, salaries, insurance, professional expenses and directors' fees.
Total intersegment sales were $366 in the year ended June 30, 2024 and $517 in the year ended June 30, 2023. Corporate assets consisted primarily of cash and prepaid expense. Corporate expense consisted primarily of stock option expense, salaries, insurance, professional expenses and directors' fees.
F- 23 Table of Contents 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.
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.
In June 2016, FASB issued ASU 2016-13 ASC Topic 326: Financial Instruments — Credit Losses (“ ASC Topic 326 ”) 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.
NEW ACCOUNTING PRONOUNCEMENTS In June 2016, the Financial Accounting Standards Board (“ FASB ”) issued ASU 2016-13 ASC Topic 326: Financial Instruments – Credit Losses (“ ASC Topic 326 ”) 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.
As all stock options granted under the 2017 Directors Plan vest immediately on the date of grant, there were no unvested stock options granted under the 2017 Directors Plan as of June 30, 2023. There were 20,000 stock options exercised under the 2017 Directors Plan during the year ended June 30, 2023.
As all stock options granted under the 2017 Directors Plan vest immediately on the date of grant, there were no unvested stock options granted under the 2017 Directors Plan as of June 30, 2024 and June 30, 2023. There were 89,000 stock options exercised under the 2017 Directors Plan during the year ended June 30, 2024.
NEW ACCOUNTING PRONOUNCEMENTS In March 2022, FASB issued ASU 2022 - 02 ASC Topic 326: Financial Instruments — Credit Losses (Topic 326 ): Troubled Debt Restructurings ( “ TDR") and Vintage Disclosures , which require that an entity disclose current-period gross write offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326 - 20.
F-12 Table of Contents In March 2022, FASB issued ASU 2022-02 ASC Topic 326: Financial Instruments – Credit Losses ( “ ASC Topic 326 ” ): Troubled Debt Restructurings ( “ TDR") and Vintage Disclosures , which require that an entity disclose current-period gross write offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20.
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 stand-alone selling price basis (“SSP”) .
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 ”).
Inventories — Inventories in the Company’s 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. The semiconductor industry is characterized by rapid technological change, short-term customer commitments and rapid fluctuations in demand.
Inventories – Inventories in the Company’s Manufacturing and Distribution segments, consisting principally of raw materials, works in progress, and finished goods, are stated at the lower of cost and net realizable value, using the first-in, first-out (“ FIFO ”) method. The semiconductor industry is characterized by rapid technological change, short-term customer commitments and rapid fluctuations in demand.
The Company also has 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 also has 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 balance of unamortized stock-based compensation of $130 based on fair value on the grant date related to options granted under the 2017 Employee Plan is to be recognized over a period of three years. The weighted average remaining contractual term for non-vested options outstanding under the 2017 Employee Plan was 1.94 years.
The balance of unamortized stock-based compensation of $144 based on fair value on the grant date related to options granted under the 2017 Employee Plan is to be recognized over a period of 3 years. The weighted average remaining contractual term for non-vested options outstanding under the 2017 Employee Plan was 1.99 years.
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