Trio-Tech International: Form 10-K for the period ended Jun 30, 2026

Cautionary Statement Regarding Forward-Looking Statements

The business and activities of Trio-Tech International, a California corporation (the “Company”), discussed in this Annual Report on Form 10-K (the “Annual Report”) and in other past and future reports and announcements by the Company may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), 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’s 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 or 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 particularly in Asia, including currency fluctuations and devaluation, currency restrictions, local laws and restrictions and possible social, political and economic instability;
• credit risks in the Chinese real estate industry;
• changes in macroeconomic conditions and credit market conditions; and
• other economic, financial and regulatory factors beyond the Company’s control.

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.

Unless otherwise required by law, the Company undertakes 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.

General

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

We make available through our website, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and any amendments to those reports or statements filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (the “SEC”). The SEC also maintains an internet site at www.sec.gov (http://www.sec.gov) that contains such reports and statements that have been filed electronically with the SEC by the Company. Additional information about Trio-Tech is available on our website at www.triotech.com (http://www.triotech.com).

The Company has traditionally been a provider of reliability test equipment and services to the semiconductor and other industries. Our customers rely on us to verify that their semiconductor components meet or exceed the rigorous reliability standards demanded for automotive electronics, industrial electronics, computing and data storage, consumer electronics, and communication markets. We act as a global one-stop solution for our customers by designing and building reliability test solutions and offering comprehensive testing services. The Company also develops and manufactures an extensive range of equipment used in the manufacturing processes of semiconductors and various other industries.

During the fiscal year ended June 30, 2026 (“Fiscal 2026”), the Company operated its business in two segments: Semiconductor Back-end Solutions and Industrial Electronics. Geographically, the Company operates in the United States (“U.S.”), Singapore, Malaysia, Thailand and China. While the semiconductor industry is and will remain a major market for the Company, an important component of our strategy is to reduce our historic concentration on this industry. We organize our operating business based on the markets that we serve. Beginning in Fiscal 2025, we report our financial performance based on our new segments, Semiconductor Backend Solutions and Industrial Electronics. For information relating to revenue, profit and loss and total assets for each of the segments, see Note 19 - Business Segments contained in the consolidated financial statements included in this Annual Report.

Company History – Certain Highlights for the Five Fiscal Years Ended June 30, 2026

Overall Business Strategies

Our core business is in the semiconductor industry, encompassing the manufacturing of equipment, provision of testing services and distribution of test and other semiconductor equipment and electronic components. The “Semiconductor Back-end Solutions” (“SBS”) segment comprises of our core semiconductor back-end manufacturing and testing operations that serve the semiconductor industry. Our value-added distribution business, along with our services and equipment manufacturing operations that serve various industries comprises our “Industrial Electronics” (“IE”) segment. Revenue from the SBS and IE segments accounted for 99.9% of our total revenue for the years ended June 30, 2026 and 2025, respectively. The semiconductor industry has experienced periods of rapid growth, but has also experienced downturns, often in connection with, or in anticipation of, maturing product cycles of both semiconductor companies’ and their customers’ products and decline in general economic conditions. To reduce our risks associated with sole industry focus and customer concentration, we continue to put effort into expanding our line of businesses. Management periodically evaluates the ongoing contributions of each of its business segments to its current and future revenue and prospects.

To achieve our strategic plan, we believe that we must pursue and win new business in the following areas:

• Primary markets – Capturing additional market share within our primary markets by offering superior products and services to address the needs of our major customers.
• Growing markets – Expanding our geographic reach in areas of the world with significant growth potential.
• New markets – Developing new products and technologies that serve wholly new markets.
• Complementary strategic relationships – Through complementary acquisitions or similar arrangements, we believe we can expand our markets and strengthen our competitive position. As part of our growth strategy, the Company continues to selectively assess opportunities to develop strategic relationships, including acquisitions, investments and joint development projects with key partners and other businesses.

Business Segments

We report our financial performance based on our two segments, Semiconductor Back-end Solutions (“SBS”) and Industrial Electronics (“IE”).

Semiconductor Back-end Solutions (SBS)

The SBS segment of the Company designs and manufactures an extensive range of burn-in and reliability test equipment used in the “back-end” manufacturing processes of semiconductors. Our equipment includes burn-in systems, burn-in boards and related equipment that is used in the testing of structural integrity of integrated circuits. We also act as an extended development team of Integrated Device Manufacturers (“IDMs”) and Fabless semiconductor companies in the testing process with our expert technical skills, especially in the New Product Introduction (“NPI”) process. We provide comprehensive electrical, environmental, and burn-in testing services to semiconductor manufacturers in our testing laboratories in Asia. Our customers include both manufacturers and end users of semiconductor and electronic components who look at us when they decide to outsource their testing process. We also support the asset-light strategy of our customers by setting up test facilities and providing component level, package level and system level testing services with expert technology that improves the productivity of our customers. The independent tests are performed to industry and customer specific standards.

Industrial Electronics (IE)

The IE segment of the Company includes the design, manufacture and distribution of an extensive range of test, processes and other equipment used in the manufacturing processes of customers in various industries in the consumer and industrial market. Our equipment includes environmental chambers, leak detectors, autoclaves, centrifuges, dynamic testers, Highly Accelerated Stress Test (“HAST”) testers, temperature-controlled chucks, and more. This segment also provides preventive maintenance, calibration services, repair services and upgrading and refurbishment services for temperature, humidity and pressurization equipment. In addition to marketing our proprietary products, we distribute mechanical, electrical and electronic products made by manufacturers around the world. The products include environmental chambers, mechanical shock and vibration testers, specialized equipment for aerospace applications and more. We offer an extensive range of components, including connectors, cables, camera modules, LCD displays, and touch screen panels. Leveraging our engineering and integration expertise, we customize and optimize these solutions to meet the unique requirements of each customer, delivering enhanced performance, reliability, and value. We also support our customers with their extended research and development arm in product design, leveraging the expert skills of our component engineers and design engineers.

Others

Company has real estate investments made in ChongQing, China. When identifying reportable segments, management evaluates the contribution of each segment to our overall business strategy and whether the segment reported provides meaningful information to users about the Company’s performance and prospects. Revenue from the real-estate investment has been below 1% of total revenue in the past five fiscal years due to the negative real-estate environment in China. Effective in Fiscal 2025, management therefore concluded that the real-estate segment is not integral to the Company’s operations and does not intend to allocate any additional resources to this segment. As a result, this segment ceased to be a reportable segment and has been presented under the Others segment.

Product Research and Development

We focus our research and development activities on improving and enhancing both product design and process technology. We conduct product and system research and development activities for our products in the U.S. and Singapore. Research and development expense was $397 and $384 for the years ended June 30, 2026 and 2025, respectively.

Marketing, Distribution and Services

We market our products and services worldwide, directly and through independent sales representatives and our own marketing team. We have approximately five independent sales representatives operating in the U.S. and another twenty-two in foreign countries. All sales representatives represented the SBS and IE segments for products and services produced and provided by our facilities in different locations.

Customer Concentration

During the years ended June 30, 2026 and 2025, combined sales of equipment and services to our three largest customers accounted for approximately 57.6% and 41.0%, respectively, of our total net revenue. Of those sales, one major U.S.-based customer, served through our SBS segment, accounted for $24,222 (38.7%) and $1,285 (3.5%) for the years ended June 30, 2026 and 2025, respectively. The increase was primarily attributable to new service business associated with the customer's geographic sourcing realignment, which expanded demand for the Company's services. In addition, one customer of our IE segment accounted for approximately $6,494 (10.4%) and $6,139 (16.8%) of the Company's consolidated revenue for the year ended June 30, 2026 and 2025, respectively.

As of June 30, 2026 and 2025, trade account receivables from our three largest customers accounted for approximately 38.6% and 48.9%, respectively, of our total trade account receivables. Within these balance, $3,012 (22.2%) and $485 (4.5%) of our total trade account receivables were from one major customer for the years ended June 30, 2026 and 2025, respectively. We regularly assess the creditworthiness of our customers and evaluate the adequacy of the allowance for expected credit losses.

Backlog

The following table sets forth the Company’s backlog as of June 30, 2026 and 2025:

Based on our past experience, we do not anticipate any significant cancellations or renegotiation of sales. The purchase orders for the SBS and IE businesses generally require delivery within 12 months from the date of the purchase order and certain costs are incurred before delivery. In the event of the cancellation of a confirmed purchase order, we require our customers to reimburse us for all costs incurred. We do not anticipate any difficulties in meeting delivery schedules.

For testing services in the SBS segment, purchase orders are generally received during the course of delivery. Accordingly, testing services backlog of approximately $9,054 represents a soft backlog based on management's estimate of customer demand for the next three months, using customer forecasts and other demand indications rather than firm purchase orders. As such, the backlog is not a binding commitment and may not be indicative of future revenue ultimately recognized.

Materials and Supplies

Our products are designed by our engineers and are assembled and tested at our facilities in the U.S., China and Singapore. We purchase all parts and certain components from outside vendors for assembly purposes. We have no written contracts with any of our key suppliers. As these parts and components are available from a variety of sources, we believe that the loss of any one of our suppliers would not have a material adverse effect on our results of operations taken as a whole.

Competition

Our ability to compete is dependent on our ability to develop, introduce and sell new products, or enhanced versions of existing products, on a timely basis and at competitive prices, while reducing our costs.

Semiconductor Back-end Solutions (SBS)

Our SBS testing services operate in a competitive landscape, with numerous laboratories in our regions offering similar capabilities. The intense competition has accelerated industry consolidation, particularly in Asia, thinning the field of competitors. While the presence of semiconductor manufacturers' competitors poses risks to our revenue, we believe that our established reputation, decades of expertise, and deep customer relationships will continue to secure our market position.

The principal competitive factors in the SBS manufacturing processes of burn-in and reliability test equipment include product performance, reliability, service and technical support, product improvements, price, established relationships with customers and product familiarity. We have been in business for more than 60 years which has helped us to establish and nurture long-term relationships with customers.

Industrial Electronics (IE)

Our IE segment includes the design, manufacture and distribution of an extensive range of test, process and other equipment used in the manufacturing processes of customers in various industries in the consumer and industrial market. We offer an extensive range of components, including connectors, cables, camera modules, LCD displays, and touch screen panels. Leveraging our engineering and integration expertise, we customize and optimize these solutions to meet the unique requirements of each customer, delivering enhanced performance, reliability, and value. We also support our customers as their extended research and development arm in product design, leveraging the expert skills of our component engineers and design engineers.

While the equipment and component market remains highly competitive, our integrated approach combines standard product offerings with value-added services such as customization and technical support. This combination allows us to meet specialized customer needs more comprehensively, creating modest but sustainable differentiation in our target markets, supporting consistent revenue generation while strengthening our position in key customer segments.

Patents

During the years ended June 30, 2026 and 2025, we did not register any patents within the U.S.

It is typical in the semiconductor industry to receive notices from time to time, alleging infringement of patents or other intellectual property rights of others. We do not believe that we infringe on the intellectual property rights of any others. However, should any claims be brought against us, the cost of litigating such claims and any damage could materially and adversely affect our business, financial condition, and results of operations.

Employees

As of June 30, 2026, we had approximately 943 full-time employees and 3 part-time employees. Geographically, approximately 5 full-time employees were located in the U.S. and approximately 938 full-time employees in Asia. None of our employees are represented by a labor union.

There were approximately 894 employees in the SBS segment, 30 employees in the IE segment and 19 employees in general administration, logistics, real estate and others as of June 30, 2026.

As of June 30, 2025, we had approximately 614 full-time employees and 4 part-time employees. Geographically, approximately 5 full-time employees were located in the U.S. and approximately 609 full-time employees in Asia. None of our employees are represented by a labor union.

There were approximately 559 employees in the SBS segment, 31 employees in the IE segment, and 24 employees in general administration, logistics, real estate and others as of June 30, 2025.

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, we are not required to provide the information required by this item.

Risk Management and Strategy

We recognize the critical importance of developing, implementing, and maintaining cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity and availability of our data. We have a comprehensive cybersecurity policy hosted on our intranet for all employees, established to govern, guide and mitigate in the event of a cyber-attack. As a result, cybersecurity and data protection are key components of our long-term strategy.

Risks from Cybersecurity Threats

In Fiscal 2026, on March 11, 2026, we identified a cybersecurity incident affecting one of our subsidiaries in Singapore (the “Subsidiary”). The incident involved a ransomware attack that resulted in the encryption of certain files within the Subsidiary’s network. On March 18, 2026, the incident had escalated and resulted in the unauthorized disclosure of certain Company data.

Upon discovery of the cybersecurity incident, the Subsidiary promptly activated its incident response protocols and implemented containment measures, including proactively taking its network offline, engaged third-party cybersecurity experts to assist with the investigation and remediation efforts, as well as notified relevant law enforcement authorities in Singapore. The Company has since rebuilt affected systems, enhanced monitoring and security controls across its network environment. To date, we believe that the containment actions have been effective, and since the initiation of these efforts, we have not observed any evidence of new unauthorized activity. Relevant law enforcement authorities have completed their review of the incident and concluded no further action will be taken against the company.

The Company has maintained cybersecurity insurance coverage that could mitigate possible costs and losses associated with the incident, including those related to impacted data, litigation, regulatory actions, and related matters.

As of the date of this report, the incident has not resulted in any material disruption to the Company's operations, nor has it had a material impact on the Company’s financial condition or results of operations for the year ended June 30, 2026.

In Fiscal 2026, we have not encountered any other cybersecurity challenges that have materially impaired our operations or financial standing.

Governance

Our Board of Directors oversees our risk management, including our information technology and cybersecurity policies, procedures, and risk assessments. Management reports to our Board of Directors on information security matters as necessary, regarding any significant cybersecurity incidents, as well as any incidents with less impact potential.

As of the date of filing of this Form 10-K, we believe that our existing facilities are adequate and suitable to cover any sudden increase in our needs in the foreseeable future.

The following table presents the relevant information regarding the location and general character of our principal manufacturing and testing facilities:

7

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 our consolidated financial statements.

There are no material proceedings to which any director, officer or affiliate of the Company, any beneficial owner of more than five percent of the Company’s common stock, or any associate of such person, is a party that is averse to the Company or its properties.

The following discussion and analysis should be read in conjunction with our disclaimer on “Forward-Looking Statements,” “Item 1. Business,” and our Consolidated Financial Statements, the notes to those statements and other financial information contained elsewhere in this Annual Report. For purposes of this Management’s Discussion and Analysis within this Annual Report, all monetary amounts are stated in thousands except for par values and per share amounts, unless otherwise stated.

Overview

Our core business is and historically has been in the semiconductor industry, including manufacturing test equipment, testing services, and distribution of test and other semiconductor equipment and electronic components. TTI develops and manufactures an extensive range of test equipment used in the “front-end” and the “back-end” manufacturing processes of semiconductors. Our equipment includes leak detectors, autoclaves, centrifuges, burn-in systems and boards, HAST testers, temperature-controlled chucks, and more. TTI provides comprehensive electrical, environmental, and burn-in testing services to semiconductor manufacturers in our testing laboratories.

In addition to marketing our proprietary products, we distribute complementary products made by manufacturers around the world. Leveraging our engineering and integration expertise, we customize and optimize these solutions to meet the unique requirements of each customer, delivering enhanced performance, reliability, and value. We also support our customers as their extended research and development arm in product design, leveraging the expert skills of our component engineers and design engineers.

During the years ended June 30, 2026 (“Fiscal 2026”) and June 30, 2025 (“Fiscal 2025”), Trio-Tech International revenue from Semiconductor Back-end Solutions and Industrial Electronics represented 78.3% and 21.6% of our revenue, respectively, as compared to 67.7% and 32.2% respectively, during Fiscal 2025. Revenue from our Semiconductor Back-end Solutions and Industrial Electronics segments accounted for more than 99.9% of our total revenue for the years ended June 30, 2026 and 2025, respectively.

Fiscal 2026 Highlights

• Total revenue increased by $26,132, or 72%, to $62,605 in Fiscal 2026, as compared to $36,473 in Fiscal 2025.
• SBS segment revenue increased by $24,336, or 99%, to $49,018 in Fiscal 2026, as compared to $24,682 in Fiscal 2025.
• IE segment revenue increased by $1,798 or 15% to $13,554 in Fiscal 2026, as compared to $11,756 in Fiscal 2025.
• Other segment revenue decreased by $2 or 6% to $33 in Fiscal 2026, as compared to $35 in Fiscal 2025.
• Overall gross profit margin decreased by 8.5% to 16.6% in Fiscal 2026, as compared to 25.1% in Fiscal 2025.
• Overall gross profit increased by $1,273 or 14% to $10,417 in Fiscal 2026, as compared to $9,144 in Fiscal 2025.
• General and administrative expense increased by $1,487 or 19% to $9,377 in Fiscal 2026 as compared to $7,890 in Fiscal 2025.
• Selling expense increased by $129, or 18%, to $847 in Fiscal 2026, as compared to $718 in Fiscal 2025.
• Loss from operations was $204 in Fiscal 2026, reflecting a decline of $458, as compared to income from operations of $254 in Fiscal 2025.
• Net other income was $593 in Fiscal 2026, a shift of $674 as compared to net other expense of $81 in Fiscal 2025.
• Income from continuing operations before income taxes was $389 in Fiscal 2026, reflecting an increase of $216 as compared to $173 in Fiscal 2025.
• Net loss attributable to TTI common shareholders for Fiscal 2026 was $34, as compared to net loss of $41 in Fiscal 2025.
• Net income attributable to non-controlling interest for Fiscal 2026 was $253, as compared to net income of $41 in Fiscal 2025.
• Working capital increased by $6,858, or 27.1%, to $32,155 as of June 30, 2026, as compared to $25,297 as of June 30, 2025.

The highlights above are intended to identify certain of the Company’s significant events and transactions during Fiscal 2026. These highlights are not intended to be a full discussion of our results for the year and should be read in conjunction with the discussion of these items in Item 7 and with our consolidated financial statements and footnotes accompanying this Annual Report.

General Financial Information

Total assets as of June 30, 2026 were $60,687, an increase of $19,619, or 47.8%, compared to $41,068 as of June 30, 2025. The increase was primarily due to an increase in cash and cash equivalents, trade accounts and other receivables, inventories, prepaid expense, property, plant and equipment (“PPE”) and operating lease right-of-use assets.

Cash and cash equivalents totaled $21,428 as of June 30, 2026, an increase of $10,538, or 96.8%, compared to $10,890 as of June 30, 2025. The increase was primarily attributable to proceeds from the issuance of shares and higher operating cash flows driven by improved revenue. The increase was partially offset by capital expenditures for PPE and cash used to acquire a non-controlling interest in the Malaysia subsidiary. Short-term deposits and restricted term deposits decreased by $1,507 from $8,568 to $7,061. The decrease in short-term deposits reflects management's strategy to preserve liquidity and enhance financial flexibility, positioning the Company to respond to expected customer orders and evolving business requirements.

Trade accounts receivable as of June 30, 2026 were $13,546, an increase of $2,742 or 25.4%, compared to $10,804 as of June 30, 2025. The increase was primarily attributable to higher revenue across both business segments, driven mainly by the Company’s operations in Malaysia and Singapore. The number of days' sales outstanding improved to 70 days for the year ended June 30, 2026, from 106 days for the year ended June 30, 2025.

Other receivables as of June 30, 2026 were $1,056, an increase of $448, or 73.7%, compared to $608 as of June 30, 2025. The increase was mainly attributable to higher other receivables arising from the Company's expanded operation in Malaysia, as well as higher advance payments made to suppliers for goods and services in the Company’s Singapore operations.

Inventories as of June 30, 2026 were $3,406, an increase of $1,144, or 50.6%, compared to $2,262 as of June 30, 2025. The increase was primarily attributable to higher backlog levels in the Company’s Singapore operations, which required the Company to maintain higher inventory levels to support ongoing order fulfillment. As inventory levels increased relative to sales, days inventory held increased to 112 days at the end of Fiscal 2026, compared to 88 days at the end of Fiscal 2025.

Prepaid expense and other current assets as of June 30, 2026 were $395, an increase of $11 or 2.9%, compared to $384 as of June 30, 2025. Prepaid expenses primarily comprise prepaid software licensing fees and information technology maintenance contracts.

Investment properties as of June 30, 2026 were $293, a decrease of $52 or 15.1% from $345 as of June 30, 2025. The decrease was attributable to the depreciation charged for the year.

PPE as of June 30, 2026 was $6,598, an increase of $577 or 9.6% compared to $6,021 as of June 30, 2025. The increase was primarily attributable to the acquisition of machinery and equipment at the Company's Malaysia, Singapore and China operations to expand capacity to support new burn-in testing services, partially offset by depreciation expense and foreign currency translation movements during Fiscal 2026.

Other assets as of June 30, 2026 were $774, an increase of $543, or 235.1%, compared to $231 as of June 30, 2025. This was primarily due to security and utility deposit paid in connection with new lease of plant in Malaysia and foreign currency exchange movement between June 30, 2025 and June 30, 2026.

Total liabilities as of June 30, 2026 were $17,672, an increase of $10,595, or 149.7%, compared to $7,077 as of June 30, 2025. The increase in liabilities was primarily due to an increase in accounts payable, accrued expense, income tax payable and operating lease.

Lines of credit as of June 30, 2026 were $nil, a decrease of $141, compared to $141 as of June 30, 2025. Company has sufficient cash resources to fund its ongoing operations, reducing the need for borrowings under its lines of credit.

Accounts payable as of June 30, 2026 were $7,577, an increase of $5,681, or 299.6% from $1,896 as of June 30, 2025. The increase was consistent with revenue growth in the Company's Malaysia and Singapore operations and reflected higher procurement activity to support expanding business operations.

Accrued expense as of June 30, 2026 were $2,812, a decrease of $224, or 7.4% from $3,036 as of June 30, 2025. The decrease was primarily attributable to the renewal of existing leases for a term longer than twelve months, resulting in the reclassification of the related provision for reinstatement costs from current to non-current liabilities, partially offset by higher employee-related costs reflecting performance-based compensation driven by improved operational performance in the Company's Singapore, Malaysia and Thailand operations.

Income tax payable as of June 30, 2026 was $213, an increase of $91, or 74.6% from $122 as of June 30, 2025. The increase was mainly due to higher taxable profit in Singapore and Thailand operations in Fiscal 2026.

Bank loans payable as of June 30, 2026 were $445, a decrease of $239 or 34.9% from $684 as of June 30, 2025. The decrease was primarily attributable to loan repayments, with no new borrowings during Fiscal 2026.

Finance leases as of June 30, 2026 were $nil, a decrease of $43 or 100.0% as compared to $43 as of June 30, 2025. The decrease primarily reflected the full repayment of finance lease obligations for the Company’s Singapore and Malaysia operations, with no new finance lease additions during fiscal 2026.

Other non-current liabilities as of June 30, 2026 were $938, an increase of $907 or 2925.8% as compared to $31 as of June 30, 2025. The increase was primarily attributable to the provision for reinstatement costs recognized in connection with a new plant lease in Malaysia, as well as provisions associated with existing leases renewed for terms exceeding twelve months.

Operating lease right-of-use assets as of June 30, 2026 were $5,481, an increase of $4,617 or 534% as compared to $864 as of June 30, 2025. The corresponding lease liabilities as of June 30, 2026 were $5,465, an increase of $4,601 or 532.5% as compared to $864 as of June 30, 2025. The increase was primarily attributable to the commencement of new leases in Malaysia operation, as well as renewal of existing lease by other subsidiaries during Fiscal 2026.

Uncertainties and Remedies

There are several influencing factors which create uncertainties when forecasting performance, such as the changing nature of technology, specific customer requirements, decline in demand for certain types of burn-in devices or equipment, decline in demand for testing services and fabrication services, and other factors. 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. This will normally result in a lower margin for these products as it is often more expensive to purchase materials in a short time frame. However, the Company has taken certain actions and formulated certain plans to deal with and to help mitigate these unpredictable factors. For example, to meet manufacturing customers’ demands upon short notice, the Company maintains higher inventories but continues to work closely with its customers to avoid stockpiling. We believe that we have improved customer service through our efforts to keep our staff up to date on the newest technology and stressing the importance of understanding and meeting the stringent requirements of our customers. Finally, the Company is exploring new markets and products, looking for new customers, and upgrading and improving burn-in technology while at the same time searching for improved testing methods for higher technology chips.

The Company’s primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar-denominated sales and operating expense in its subsidiaries. Strengthening of the United States dollar (“U.S. Dollar”) relative to foreign currencies adversely affects the U.S. Dollar value of the Company’s foreign currency-denominated sales and earnings, and generally leads the Company to raise international pricing, potentially reducing demand for the Company’s products. Margins on sales of the Company’s products in foreign countries and on sales of products that include components obtained from foreign suppliers could be materially adversely affected by foreign currency exchange rate fluctuations. In some circumstances, for competitive or other reasons, the Company may decide not to raise local prices to fully offset the U.S. Dollar’s strengthening, or at all, which would adversely affect the U.S. Dollar value of the Company’s foreign currency-denominated sales and earnings. Conversely, a strengthening of foreign currencies relative to the U.S. Dollar, which has generally resulted as a result of current U.S. economic and trade policies, 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.

The Company maintains monetary assets and liabilities denominated in currencies other than its functional currency. At each reporting date, these items are remeasured into the functional currency at the period-end spot rate. Resulting unrealized foreign currency gains or losses are included in net income and reported as reconciling items in the statement of cash flows under the indirect method. Our operations in Singapore and Malaysia hold certain monetary assets, including U.S. Dollar-denominated accounts receivable and cash balances. The weakening of the U.S. Dollar against the Singapore Dollar and Malaysian Ringgit could result in an unrealized foreign currency loss upon remeasurement of these U.S. Dollar balances into the functional currency of respective subsidiaries. While such impacts affect reported earnings in the period, they are unrealized in nature and may reverse in future periods depending on exchange rate movements and the timing of settlement of these balances.

The U.S. tariff regime announced in April 2025 could potentially influence downstream demand variability among our customers. Trade and tariff policy affecting the semiconductor industry has continued to evolve. In January 2026, the U.S. government imposed a Section 232 tariff on certain advanced semiconductor articles, and additional tariffs or trade restrictions affecting semiconductors, semiconductor manufacturing equipment, and related products remain under active consideration by U.S. trade authorities. While we do not have significant direct exposure to these tariffs, secondary effects may arise if our customers adjust their procurement, manufacturing, or sourcing strategies in response to trade policy developments. Based on our observations, certain customers have continued to shift testing activities away from China to alternative geographies, as discussed above in connection with our SBS segment results. The ultimate scope, duration, and impact of these trade measures on macroeconomic and industry-specific demand remain uncertain, and continued trade tensions between the U.S. and China could result in further revenue volatility or declining economic conditions affecting our business. We continue to evaluate capacity adjustments in alignment with observable demand signals while maintaining operational flexibility to adapt to changing market conditions.

The semiconductor industry is currently experiencing a global shortage of memory components, driven by a structural reallocation of manufacturing capacity toward high-bandwidth memory used in artificial intelligence infrastructure. While this shortage has primarily affected semiconductor device manufacturers reliant on memory inputs, it has contributed to extended lead times and increased costs for certain electronic components used in the manufacture and servicing of our testing equipment. At the same time, sustained demand for testing services related to AI-related semiconductor devices has continued to support revenue growth in our SBS segment, as discussed above. The extent and duration of the memory shortage, and its effect on our supply chain, equipment costs, and customer demand, remain uncertain, and we continue to monitor developments in the memory and broader semiconductor markets and to adjust our procurement and inventory practices accordingly.

During Fiscal 2026, an armed conflict in the Middle East involving Israel, Iran, and other parties resulted in significant disruption to global oil and natural gas markets, including a period of substantial disruption to shipping through the Strait of Hormuz and damage to regional energy infrastructure. These events led to significant volatility in global energy prices and contributed to broader inflationary pressures across global supply chains during the period. A ceasefire was subsequently reached, though tensions in the region have continued to evolve, including a breakdown of the ceasefire and renewed price volatility after our fiscal year-end. Based on our assessment, the Company has experienced minimal direct impact on its supply chain to date, due to its indirect exposure to the affected region and the geographic diversification of its suppliers and customers. The Company's approach has been to absorb incremental costs where necessary to remain competitive, while passing through a portion of such cost increases to customers, mitigating the impact on our operating results. However, continued or renewed disruption in the region could result in further volatility in energy prices and broader inflationary pressures that may adversely affect our operating costs and those of our customers and suppliers.

Risks and uncertainties related to supply chain challenges, uncertainty regarding tariffs, and inflationary pressures may continue to negatively impact our gross margin and operating results. We continue to closely monitor these developments and their broader impacts, as well as evaluate appropriate actions to mitigate potential business impacts.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates and apply judgments that affect the reported amounts. In the Notes to the Consolidated Financial Statements, we describe the significant accounting policies used in preparing the consolidated financial statements. Our management has discussed the development, selection, and disclosure of our critical accounting estimates with the Audit & Risk Committee of our Board of Directors. The following items require significant estimation or judgment:

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.

The Company accounts for allowance for credit losses under the current expected credit loss (“CECL”) impairment model for its financial assets, including accounts receivable, and presents the net amount of the financial instrument expected to be collected. The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, which considers forecasts of future economic conditions in addition to information about past events and current conditions. Estimation of expected credit losses requires significant management judgment and the use of subjective assumptions. Based on this model, the Company estimates the amount of uncollectible accounts receivable at the end of each reporting period based on the aging of the receivable balance, current and historical customer trends, communications with its customers, and macro-economic conditions. Actual credit losses may differ from these estimates if customer financial conditions deteriorate or if future macroeconomic conditions vary from our projections. Amounts are written off after considerable collection efforts have been made and the amounts are determined to be uncollectible.

Inventory Valuation

Inventories of our SBS and IE 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. Determining the net realizable value and necessary excess or obsolescence reserves requires significant management judgment and estimation. 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 management's key assumptions regarding 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 sale ability and obsolescence. Due to the estimation uncertainty inherent in forecasting future demand, actual results may differ from our estimates.

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. Evaluating the recoverability of these assets involves significant management judgment and estimation.

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. Determining recoverability requires estimating future undiscounted cash flows expected to be generated over the remaining useful life of the asset group. Key management assumptions used in these forecasts include projected production volumes and labor costs. These estimates are inherently uncertain and subject to market volatility.

If the sum of estimated undiscounted cash flows is less than the carrying value, an impairment loss is recognized for the amount by which the carrying value exceeds the estimated fair value of the asset group.

We have not identified any changes in circumstances requiring further impairment test in Fiscal 2026. Our assessments established that the estimated undiscounted cash flows for our primary asset groups continued to exceed their carrying amounts, resulting in no impairment charges for Fiscal 2026. We will continue to monitor impairment indicators, such as changes in forecasted cash flows, customer demands, or disposition activity in future periods. If future cash flow expectations decline, we may be required to record impairment of the asset groups.

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 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 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 expense or benefits in the period that covers the enactment date. Establishing deferred tax assets and associated valuation allowances involves significant management judgment and estimation. Management evaluates the realizability of deferred tax assets across individual tax jurisdictions based on key assumptions, including historical profitability, projected future taxable income and the timing of the reversal of temporary differences. Management believes it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, a valuation allowance was provided as of June 30, 2026 and 2025.

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 which, 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. Due to the inherent estimation uncertainty in forecasting future taxable income across jurisdictions and predicting audit outcomes, actual results may differ from our estimates.

Recent Accounting Pronouncements

See Notes to Consolidated Financial Statements in this Form 10-K for a discussion of new accounting pronouncements, which is incorporated herein by reference.

Comparison of Operating Results

The following table presents certain data from the consolidated statements of operations and comprehensive income as a percentage of net sales for Fiscal 2026 and 2025:

16

Revenue

Revenue comprises mainly revenue from the SBS and IE segments. The components of revenue for Fiscal 2026 and 2025 were as follows:

Revenue during Fiscal 2026 was $62,605, an increase of $26,132, or 72%, compared to $36,473 during Fiscal 2025. Revenue for both SBS and IE segment have been improved.

Semiconductor Back-end Solutions (SBS)

SBS segment accounted for 78.3% of revenue for Fiscal 2026, an increase of 10.6% compared to 67.7% during Fiscal 2025. Revenue generated by the SBS segment for Fiscal 2026 was $49,018, reflecting an increase of $24,336, or 99%, compared to $24,682 during Fiscal 2025. The SBS segment reported revenue growth across all subsidiaries except for our China operations, primarily supported by stronger demand for artificial intelligence ("AI") and automotive related semiconductor testing services and products.

The Company's Malaysia operation recorded significant revenue growth following the commencement of final test services for AI chips in the first quarter of Fiscal 2026. The Company’s Thailand operations also recorded higher testing revenue as a result of increased customer testing volumes.

The Company’s Singapore operations benefited from growth in both product sales and testing services. Product sales were particularly strong in the fourth quarter of Fiscal 2026, with burn-in board sales for the full year increasing by approximately 58.4% compared with Fiscal 2025.

The growth in Malaysia, Thailand and Singapore was partially offset by lower revenue from the Company’s China operations. During Fiscal 2026, certain customers relocated their testing activities to other geographic markets in response to cross-border tariffs and geopolitical considerations. Management continues to monitor global trade developments and changes in customers’ geographic preferences and will adjust operating capacity and costs across the Company’s locations as appropriate.

As of June 30, 2026, the backlog in the SBS segment was $19,773, reflecting an increase of $13,078 from $6,695 as of June 30, 2025.

Industrial Electronics (IE)

Revenue generated by the IE segment accounted for 21.6% of total revenue during Fiscal 2026, a decrease of 10.6% compared to 32.2% during Fiscal 2025. The decrease in the IE segment's contribution to group revenue was primarily attributable to the significant revenue growth in the SBS segment in Fiscal 2026. Despite the lower percentage contribution, the IE segment reported year-over-year revenue growth, reflecting continued improvement in customer demand and business activity. IE segment revenue for Fiscal 2026 was $13,554, reflecting an increase of $1,798, or 15%, compared to $11,756 for Fiscal 2025. This improvement was primarily driven by a nearly twofold increase of aerospace-related products sales, together with growing distribution sales, partially offset by a decrease in equipment sales.

Backlog in the IE segment as of June 30, 2026 was $4,399, an increase of $64, or 1%, compared to $4,335 as of June 30, 2025. The increase was mainly attributable to higher backlog for aviation products, partially offset by lower equipment and electronic component sales backlog. The equipment and electronic components market remained highly competitive, with commoditized products widely available. Our differentiation lies in our value-added distribution model, with enhancement of standard products through customized design, engineering, integration, and sub-assembly services tailored to customer specifications, sustaining our competitive advantage over the long term.

Gross Margin

Gross margin as a percentage of revenue was 16.6% in Fiscal 2026, a decrease of 8.5% compared to 25.1% in Fiscal 2025. Overall gross profit for Fiscal 2026 was $10,417, an increase of $1,273, or 14%, compared to $9,144 for Fiscal 2025.

Gross margin as a percentage of revenue in the SBS segment was 15.7% in Fiscal 2026, a decrease of 11.7%, compared to 27.4% in Fiscal 2025. Gross profit for the SBS segment in Fiscal 2026 was $7,704, an increase of $938 or 14%, compared to $6,766 in Fiscal 2025. Despite revenue from markets outside China trending upward, the associated margins remained relatively compressed. The incremental revenue relating to final testing services that commenced in Fiscal 2026 was attributable to new service streams that required no capital investment, resulting in lower margin profiles that reflect the reduced risk exposure. As the revenue mix increasingly shifts toward final testing services, gross profit margin is expected to trend below historical levels for the SBS segment, partially offset by continued growth in service volumes and improvements in operating efficiency.

Gross margin as a percentage of revenue in the IE segment was 20.3% in Fiscal 2026, a decrease of 0.2%, compared to 20.5% in Fiscal 2025. Gross profit in the IE segment in Fiscal 2026 was $2,752, an increase of $340, or 14%, compared to $2,412 in Fiscal 2025. While IE gross profit improved in absolute terms, gross margin declined, reflecting a less favorable sales mix, mainly attributable to a lower proportion of high-margin equipment sales in Fiscal 2026.

Operating Expense

Operating expense for the years ended June 30, 2026 and 2025 were as follows:

General and administrative expenses were $9,377 in Fiscal 2026, an increase of $1,487 or 19%, compared to $7,890 in Fiscal 2025. The increase in general and administrative expenses was driven by expenses associated with elevated corporate activities, including the stock split, investor relations and communication efforts, together with higher stock-based compensation expense attributable to the appreciation in the Company's share price. The increase also reflected higher personnel-related costs from increased headcount to support the SBS and IE segments, and higher incentive compensation associated with improved performance in Singapore, Malaysia and Thailand.

Selling expense was $847 in Fiscal 2026, an increase of $129 or 18% compared to $718 in Fiscal 2025. The increase in selling expense was primarily attributable to higher business travel expenses and increased commissionable sales across both the SBS and IE segments in Fiscal 2026 as compared to Fiscal 2025.

Loss from Operations

Loss from operations was $204 in Fiscal 2026, compared to income from operations of $254 in Fiscal 2025, a decline of $458. Despite lower gross profit margins in the SBS and IE segments, overall revenue growth during Fiscal 2026 was sufficient to absorb the higher operating expenses associated with the expansion of both segments. As a result, both operating segments continued to generate operating profit. However, increased corporate-level expenses, primarily professional fee and stock-based compensation, resulted in a consolidated loss from operations.

Interest Expense

Interest expense for the years ended June 30, 2026 and 2025 was as follows:

Interest expense was $65 in Fiscal 2026, an increase of $20 compared to $45 in Fiscal 2025 due to increased utilization of credit facilities at the Singapore operation. As of June 30, 2026, the Company had an unused line of credit of $5,646, compared to $6,074 as of June 30, 2025.

Other Income / (Expense)

Other income / (expense) for the years ended June 30, 2026 and 2025 were as follows:

During Fiscal 2026, the Company recorded other income of $641, a favorable shift of $822 compared to other expense of $181 in Fiscal 2025. The change was primarily due to lower foreign exchange losses and dividend income received by Prestal Sdn. Bhd., one of the Company’s subsidiaries, from an investment in unquoted shares.

Our net income is exposed to foreign exchange fluctuations as our subsidiaries' functional currencies differ from the U.S. dollar. For the year ended June 30, 2026, the strengthening of the Singapore dollar against the U.S. dollar resulted in foreign exchange loss, primarily from the remeasurement of U.S. dollar-denominated monetary assets and liabilities. The impact of this fluctuation was partially mitigated by the change in functional currency of Universal Far East, which reduced the overall exposure to U.S. dollar movements.

Government Grant

During Fiscal 2026, the Company received government grants amounting to $17, of which $15 was an incentive from the Singapore government for local resident recruitment and the remaining $2 was related to capital expenditure subsidy received from the government in China.

During Fiscal 2025, the Company received government grants amounting to $145, of which $82 was an incentive from the Singapore government for local resident recruitment, $48 was related to the U.S. government's Employee Retention Credit (“ERC”) and the remaining $15 related to capital expenditure subsidy received from the government in China.

Income Tax Expense

Income tax expense for Fiscal 2026 was $228, representing an increase of $60, as compared to income tax expense of $168 for Fiscal 2025. The increase was primarily due to higher taxable income in Fiscal 2026 compared to Fiscal 2025.

On June 30, 2026, the Company had $65 federal net operating loss carry-forwards, and a state net operating loss carry-forward of $2,529, which expires in 2039. These carryovers may be subject to limitations under I.R.C. Section 382. In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on these criteria, management believes it is more likely than not that the Company will not realize the benefits of the federal, state, and foreign deductible differences. Accordingly, a valuation allowance has been established against deferred tax assets recorded in the US and various foreign jurisdictions.

Income / (Loss) from Discontinued Operations

Income from discontinued operations was $31 in Fiscal 2026, compared to loss from discontinued operations of $5 in Fiscal 2025. The income recognized in Fiscal 2026 was primarily attributable to the dissolution of PT SHI Indonesia during the year, pursuant to which previously recorded amounts payable was written off and recognized as other income.

Non-controlling Interest

As of June 30, 2026, the Company held a 55% interest in SHI International Pte. Ltd. and 76% interest in Prestal Enterprise Sdn. Bhd. The share of non-controlling interest for Fiscal 2026, in the net income of subsidiaries, was $253, an increase of $212 compared to a non-controlling interest in the net income of $41 for Fiscal 2025.

The Company consummated the acquisition of all the shares held by non-controlling shareholders in Trio-Tech Malaysia ("TTM") on December 3, 2025. The purchase price for the acquisition was RM14,200, paid in cash, or approximately $3,503. Upon consummation of the transaction, the Company, through Trio-Tech Singapore, owns 100% of the issued and outstanding share capital of TTM. Accordingly, the Company recognized the non-controlling interest’s share of profits through the acquisition date, and no non-controlling interest will be recognized in subsequent periods.

During the second quarter of fiscal 2026, it was identified that PT SHI Indonesia, a dormant entity that was 95% owned by SHI International Pte Ltd has been dissolved, and this dissolution did not have a material impact on the Company's consolidated financial statements.

Net Loss Attributable to Trio-Tech International Common Shareholders

Net loss attributable to Trio-Tech International common shareholders was $34 for Fiscal 2026, compared to a net loss of $41 for Fiscal 2025.

Loss per Share

Basic loss per share from continuing operations were $0.00 for Fiscal 2026 and Fiscal 2025. Basic earnings per share from discontinued operations were $nil for Fiscal 2026 and Fiscal 2025.

Diluted loss per share from continuing operations was $0.00 for Fiscal 2026 and Fiscal 2025. Diluted earnings per share from discontinued operations were $nil for Fiscal 2026 and Fiscal 2025.

Segment Information

The revenue, gross margin and income/ (loss) from each segment for the years ended June 30, 2026 and 2025 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.

Semiconductor Back-end Solutions (SBS)

The revenue, gross margin and income from operations for the SBS segment for the years ended June 30, 2026 and 2025 were as follows:

Income from operations in the SBS segment was $403 in Fiscal 2026, a decrease of $8 or 2%, compared to income from operations of $411 in Fiscal 2025, remaining relatively consistent year over year despite significant revenue growth. Revenue growth was driven primarily by the revenue increase in Malaysia, Thailand, and Singapore operations as discussed earlier. However, operating income did not increase proportionately because final test services for AI chips generally generate lower gross margins than the segment’s other testing services. Operating expenses were $7,301 and $6,355 for Fiscal 2026 and 2025, respectively, reflecting an increase of $946. This is primarily attributable to higher personnel-related costs resulting from increased headcount to support business growth and higher performance-based compensation associated with improved operating performance in Singapore, Malaysia and Thailand. In addition, the Company's China operations experienced a decline in revenue and a corresponding compression in gross margin, driven by slow customer demand, which further weighed on the segment's overall profitability. These factors limited the earnings contribution from the segment's overall revenue growth.

Industrial Electronics (IE)

The revenue, gross margin and income from operations for the IE segment for the years ended June 30, 2026 and 2025 were as follows:

Income from operations in the IE segment was $176 in Fiscal 2026, compared to income from operations of $236 in Fiscal 2025. The decrease in income from operations was primarily attributable to higher operating expenses during the year. Operating expense were $2,576 and $2,176 for Fiscal 2026 and 2025, respectively. The increase of $400 in operating expense included an increase of $350 in general and administrative expenses. The increase was primarily attributable to costs associated with the Company’s expansion into the aerospace market and related business development activities. The increase also reflected a $47 increase in selling and distribution expenses, primarily due to higher agency commissions resulting from a greater proportion of commissionable revenue in the IE segment, as well as $194 of expected credit loss expense.

Corporate

The loss from operations for corporate for the years ended June 30, 2026 and 2025, respectively:

In Fiscal 2026, corporate operating loss was $783, as compared to $393 in Fiscal 2025. The increase in corporate expenses was primarily attributable to higher stock-based compensation expense and increased professional fees associated with the Company’s stock split and other corporate activities.

Liquidity

Net cash provided by operating activities was $3,427 for the year ended June 30, 2026, an increase of $3,056 as compared to $371 provided by operating activities for the prior year. The increase was primarily attributable to favorable changes in working capital of approximately $2,856, as well as improved operating performance. The Company generated net income during the year, compared to a break-even result in the prior year. The favorable working capital changes were driven by an increase of approximately $8,508 in accounts payable, accrued liabilities, contract liabilities and other non-current liabilities, partially offset by an increase in trade account receivables of $2,794 and inventories of $2,035. The increase in trade account receivable reflected higher revenue levels and the timing of customer collections, while the increase in inventories was related to higher backlog level to support ongoing order fulfillment.

Net cash used in investing activities was $1,022 for the year ended June 30, 2026, a decrease of $1,189 as compared to $167 of net cash provided by investing activities for the prior year. The changes reflected higher capital expenditures for property, plant and equipment, which increased by $774 to $1,741 in Fiscal 2026, primarily related to the Company's Malaysia operations. This was partially offset by a net withdrawal of $1,793 from unrestricted term deposits upon maturity during the year. The proceeds were held in cash to fund the upcoming operational expansion and capital requirements.

Net cash provided by financing activities was $7,378 for the year ended June 30, 2026, compared to net cash used in financing activities of $40 for the prior year, representing an increase of $7,418. The increase was driven by approximately $9,494 in proceeds from the issuance of Common Stock and an increase of $1,729 in proceeds from the exercise of stock options, compared with the prior year. These inflows were partially offset by $3,503 of cash consideration paid to acquire the non-controlling interest in the Company's Malaysia operation and an increase of $1,573 in repayments under lines of credit, compared with Fiscal 2025.

Capital Resources

Our working capital (defined as current assets minus current liabilities) has historically been funded primarily from the following sources: operating cash flow, availability under our revolving line of credit, and short-term loans. Working capital was $32,155 as of June 30, 2026, representing an increase of $6,858, or 27.1%, compared to working capital of $25,297 as of June 30, 2025. The increase in working capital was mainly driven by higher cash and cash equivalent, trade accounts receivable, other receivables, inventories and prepaid expenses. The increase in current assets was partially offset by increase in current liabilities, including accounts payable, accrued expense, income tax payable and operation leases.

The majority of our capital expenditures are based on demand from our customers, as we are operating in a capital-intensive industry. Our capital expenditures were $1,741 and $967 for the years ended June 30, 2026 and 2025, respectively. The capital expenditures in Fiscal 2026 were primarily for machinery & equipment in Malaysia, Singapore, China operations and building improvement in Malaysia and Singapore operations. We financed our capital expenditure and other operating expense through operating cash flows.

The Company filed a shelf registration statement with the Securities and Exchange Commission (“SEC”), pursuant to which we may raise capital of up to $50 million in any combination of securities including Common Stock, warrants and units, for certain capital expenditures, to finance possible acquisitions, to increase ownership or purchase the remaining equity in subsidiaries partially owned by the Company, and/or for general corporate purposes, including working capital.

On April 24, 2026, the Company entered into a securities purchase agreement with certain purchasers, pursuant to which the Company agreed to sell an aggregate of 1,052,632 shares of its Common Stock in a registered direct offering at a purchase price of $9.50 per share, utilizing the shelf registration statement filed with the SEC (the “Offering”). The Offering closed on April 27, 2026, resulting in aggregate gross proceeds of approximately $10.0 million, before deducting placement agent commissions and other Offering-related expenses. The Company intends to use the net proceeds for working capital and general corporate purposes. Following the offering, approximately $40.0 million remained available for future offerings under the shelf registration statement.

Our credit rating provides us with ready and adequate access to funds in the global market.

As of June 30, 2026, the Company had certain lines of credit that are collateralized by restricted deposits.

As of June 30, 2025, the Company had certain lines of credit that are collateralized by restricted deposits.

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.

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, we are not required to provide the information required by this item.

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, 2026, the end of the period covered by this Form 10-K. 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, 2026.

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, 2026. Management used the framework set forth in the report entitled “Internal Control – Integrated Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 to evaluate the effectiveness of the Company’s internal control over financial reporting.

Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles, and includes those policies and procedures that:

1. Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and

3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition and use or disposition of the Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, the risk.

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, 2026.

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 2026, which were identified in connection with management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, which have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.