MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Overview

The following should be read in conjunction with the condensed consolidated financial statements and notes in Item I above and with the audited consolidated financial statements and notes, the information under the headings "Management's discussion and analysis of financial condition and results of operations" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 ("Fiscal 2025").

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

The Company 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.

The types of products and services provided by each segment are summarized below:

Semiconductor Back-end Solutions

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.

The Company also provides 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 to us when they decide to outsource their testing process. We also support the asset-light strategy of our customers by setting up test facilities and providing component level, package level and system level testing services with expert technology that improves the productivity of our customers. The independent tests are performed to industry and customer specific standards.

Industrial Electronics

The IE segment of the Company 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. Our equipment includes environmental chambers, leak detectors, autoclaves, centrifuges, dynamic testers, 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 also distribute a wide range of components such as connectors, sockets, cables, LCD displays and touch screen panels. We act as value-added resellers by enhancing the value of the distributed products by customizing each to the needs of our customers through our expert engineering and integration services. 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.

Critical Accounting Estimates & Policies

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

There have been no material changes in our critical accounting estimates and policies since our Annual Report on Form 10-K for Fiscal 2025. Refer to Note 1 "Basis of Presentation and Summary of Significant Accounting Policies" to our Condensed Consolidated Financial Statements for additional details. In addition, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2025 for a complete description of our critical accounting policies and estimates.

First Quarter Fiscal Year 2026 Highlights

●	Total revenue increased by $5,715, or 58.3%, to $15,514 in the first quarter of Fiscal 2026, compared to $9,799 for the same period in Fiscal 2025.
●	SBS segment revenue increased by $4,573, or 66.5% to $11,452 for the first quarter of Fiscal 2026, compared to $6,879 for the same period in Fiscal 2025.
●	IE segment revenue increased by $1,138, or 39.1%, to $4,052 for the first quarter of Fiscal 2026, compared to $2,914 for the same period in Fiscal 2025.
●	The overall gross profit margin decreased by 7.0% to 16.7% for the first quarter of Fiscal 2026, from 23.7% for the same period in Fiscal 2025.

●	General and administrative expense increased by $210, or 10.7%, to $2,174 for the first quarter of Fiscal 2026, from $1,964 for the same period in Fiscal 2025.
●	Selling expense increased by $121, or 80.7%, to $271 for the first quarter of Fiscal 2026, from $150 for the same period in Fiscal 2025.
●	Income from operations was $46 for the first quarter of Fiscal 2026, reflecting a decline of $87 as compared to income from operations of $133 for the same period in Fiscal 2025.
●	Other income was $181 for the first quarter of Fiscal 2026, representing an favorable variance of $493 as compared to other expense of $312 for the same period in Fiscal 2025.
●	Income tax expense was $64 in the first quarter of Fiscal 2026, an increase of $13 as compared to $51 for the same period in Fiscal 2025.
●	During the first quarter of Fiscal 2026, income from continuing operations before non-controlling interest, net of tax was $163, as compared to loss from continuing operations before non-controlling interest of $230 for the same period in Fiscal 2025.
●	Net income attributable to non-controlling interest for the first quarter of Fiscal 2026 was $88, an increase of $75 as compared to net income of $13 for the same period in Fiscal 2025.
●	Basic earnings per share for the first quarter of Fiscal 2026 was $0.02, as compared to loss per share of $0.06 for the same period in Fiscal 2025.
●	Diluted earnings per share for the first quarter of Fiscal 2026 was $0.02, as compared to loss per share of $0.06 for the same period in Fiscal 2025.
●	Total assets increased by $6,310 to $47,378 as of September 30, 2025, compared to $41,068 as of June 30, 2025.
●	Total liabilities increased by $6,157 to $13,234 as of September 30, 2025, compared to $7,077 as of June 30, 2025.

Results of Operations and Business Outlook

The following table sets forth our revenue components for both three months ended September 30, 2025 and 2024.

Revenue Components		Three Months Ended
		September 30,				September 30,
		2025				2024
		(Unaudited)				(Unaudited)
Semiconductor Back-end Solutions (SBS)			73.8	%			70.2	%
Industrial Electronics (IE)			26.1	%			29.7	%
Others			0.1	%			0.1	%
Total			100	%			100	%

Revenue for the three months ended September 30, 2025 was $15,514, representing an increase of $5,715 when compared to revenue of $9,799 for the same period of Fiscal 2025. As a percentage, revenue increased by 58.3% for the three months ended September 30, 2025, when compared to revenue for the same period of Fiscal 2025.

Revenue within our two current segments for the three months ended September 30, 2025, is discussed below.

Semiconductor Back-end Solutions (SBS)

Revenue in the SBS segment as a percentage of total revenue was 73.8% for the three months ended September 30, 2025, an increase of 3.6% of total revenue when compared to 70.2% in the same period of Fiscal 2025. Total SBS revenue increased by $4,573 to $11,452 from $6,879 for the three months ended September 30, 2025.

SBS segment demonstrated strong revenue growth for three month period ended September 30, 2025, primarily driven by the launch of final test services for AI chips which commenced in the final month of the first quarter of Fiscal 2026, as one of our customers shifted toward alternative geographies for testing solutions. Testing services demand in markets outside China are showing signs of recovery and this has further supported the segment's revenue momentum.

However, revenue from equipment sales within the SBS segment continues to be impacted by broader market headwinds, as customers remain cautious with capital expenditures amid ongoing economic uncertainty.

The SBS segment reported overall revenue growth, supported by stronger results in key markets. However, the market remains highly sensitive to global economic shifts and changes in consumer demand, leading to fluctuations in performance. While these developments suggest a gradual recovery from the industry's cyclical downturn, we continue to adopt a prudent and balanced approach toward growth and risk management.

Industrial Electronics (IE)

Revenue in the IE segment as a percentage of total revenue was 26.1% for the three months ended September 30, 2025, representing a decrease of 3.6% when compared to 29.7% in the same period of Fiscal 2025. Total IE revenue increased by $1,138 from $2,914 to $4,052 for the three months ended September 30, 2025 as compared to the same period of Fiscal 2025.

The increase in IE revenue was primarily driven by higher sales of aerospace related products coupled with an increase in equipment sales. Since Fiscal 2025, the Company mitigated revenue volatility through service portfolio diversification and expanded into aerospace business, offsetting softer demand in existing markets. Our ability to deliver customized, value-added solutions has enabled us to capitalize on new partnership opportunities while strengthening market penetration for our proprietary product lines, including Highly Accelerated Stress Test (HAST) systems, bubble testers, centrifuges, and Artic systems. These strategic initiatives underscore our commitment to long-term growth and adaptability amid evolving market conditions.

The equipment and electronic components market is 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, securing a competitive advantage for the long term.

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 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, recently observed 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.

We may experience supply shortages as well as inflationary cost pressures in at least the near term. 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 U.S. The CHIPS Act will provide financial incentives to the semiconductor industry which are primarily directed at manufacturing activities within the U.S. We continue to evaluate the business impact and potential opportunities related to the CHIPS Act. To date, we do not see any direct effect of the CHIPS Act on the Company in the foreseeable future. Meanwhile, the One Big Beautiful Bill Act enacted on July 2025 extended key business provisions of the Tax Cuts and Jobs Act, which are expected to benefit the Company by allowing immediate expensing of qualified capital investments, thereby reducing taxable income, tax expenses and improving operating cash flow to support ongoing growth.

The recent U.S. tariff regime announced in April 2025 could potentially influence downstream demand variability among our customers. While we have no direct significant exposure to these tariffs, secondary effects may arise if customers adjust their procurement strategies in response to trade policy changes. However, the tariff environment remains fluid, with ongoing policy adjustments continuing to reshape regional trade dynamics. Based on our preliminary observations, demand appears to shift from China to other countries in the region. However, potential effects on macro demand in the future are far from clear, although we recognize the risk of revenue volatility should global demand continue to weaken due to the continued trade tensions between China and the U.S. and the potential that such continued trade tensions result in declining economic conditions. We continue to evaluate capacity adjustments in alignment with observable demand signals while maintaining operational flexibility to adapt to changing market conditions.

As of September 30, 2025, although we have seen improvements in both our operations and those of our suppliers, we may continue to experience supply shortages as well as inflationary cost pressures in at least the near term. Risks and uncertainties related to supply chain challenges, uncertainty regarding tariffs, 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.

Comparison of the Three Months Ended September 30, 2025, and September 30, 2024

The following table sets forth certain consolidated statements of income data as a percentage of revenue for the three months ended September 30, 2025 and 2024 respectively:

		Three Months Ended
		September 30,
		2025				2024
		(Unaudited)				(Unaudited)
Revenue			100.0	%			100.0	%
Cost of sales			83.3	%			76.3	%
Gross Margin			16.7	%			23.7	%
Operating expense
General and administrative			14.0	%			20.0	%
Selling			1.7	%			1.5	%
Research and development			0.6	%			0.9	%
Gain on disposal of property, plant and equipment			0.0	%			(0.1	)%
Total operating expense			16.4	%			22.3	%
Income from Operations			0.3	%			1.4	%

Overall Gross Margin

Overall gross margin as a percentage of revenue decreased by 7.0% to 16.7% for the three months ended September 30, 2025, from 23.7% for the same period of Fiscal 2025. Gross profits increased by $263 to $2,585 for the three months ended September 30, 2025, from $2,322 for the same period in Fiscal 2025.

Gross profit margin as a percentage of revenue in the SBS segment decreased by 11.2% to 14.9% for the three months ended September 30, 2025, as compared to 26.1% for the same period in Fiscal 2025. In absolute dollar amounts, gross profit in the SBS segment for the three months ended September 30, 2025, was $1,710, a decrease of $84, compared to $1,794 in the same period in Fiscal 2025.

During the three-month period ended September 30, 2025, the SBS segment experienced a notable decline in gross profit margins attributable to its China operations, primarily due to reduced revenue contributions compared to the same period in Fiscal 2025. While revenue from markets outside China showed an upward trend, the associated margins remained relatively compressed. The incremental revenue relating to final testing services that commenced in the final moth of the first quarter was derived from 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 margins are expected to trend below historical levels for the SBS segment. Nevertheless, the additional revenue is anticipated to enhance overall profitability in absolute dollar terms.

Gross profit margin as a percentage of revenue in the IE segment increased by 3.3% to 21.8% for the three months ended September 30, 2025, from 18.5% for the same period in Fiscal 2025. In absolute dollar amounts, gross profit in the IE segment for the three months ended September 30, 2025, was $882, indicating an increase of $343, compared to $539 in the same period in Fiscal 2025. The gross profit margin improvement in the IE segment reflects a more favorable product mix of equipment sales this quarter, with higher-margin products accounting for a significantly larger proportion of total sales compared to previous periods. This shift in mix dynamics where higher-value products drive more revenue has lifted overall profitability. This is in contrast with same quarter in last Fiscal 2024 when margins were diluted by greater volume of lower-margin sales.

Operating Expense

Operating expense for the three months ended September 30, 2025 and 2024 was as follows:

		Three Months Ended
		September 30,
		2025				2024
		(Unaudited)				(Unaudited)
General and administrative		$	2,174			$	1,964
Selling			271				150
Research and development			94				88
Gain on disposal of property, plant and equipment			-				(13	)
Total		$	2,539			$	2,189

General and administrative expense increased by $210, or 10.7%, from $1,964 to $2,174 for the three months ended September 30, 2025, compared to the same period in Fiscal 2025. The increase in general and administrative expense was mainly due to higher personnel-related costs and headcount growth in the Singapore operations across both the SBS and IE segments. For the IE segment, the increase was largely attributable to expansion into new markets and related business development activities. In the SBS segment, remuneration expense rose to enhance operational efficiency and support future business growth.

Selling expense increased by $121, or 80.7%, from $150 to $271 for the three months ended September 30, 2025, compared to the same period in Fiscal 2025. The increase in selling expense was primarily attributable to an increase in commissionable sales in both the SBS and IE segments.

Income from Operations

Income from operations was $46 for the three months ended September 30, 2025, a decrease of $87, as compared to income of $133 from operations for the same period in Fiscal 2025. Despite an overall increase in revenue, compressed gross margins in the SBS segment, and an increase in operating expense limited the positive impact of revenue growth, resulting in a decline in operating profitability.

Interest Expense

Interest expense for the three months ended September 30, 2025 and 2024 was as follows:

		Three Months Ended
		September 30,
		2025				2024
		(Unaudited)				(Unaudited)
Interest expense		$	8			$	13

Interest expense was $8 for the three months ended September 30, 2025, a decrease of $5, or 38.5%, compared to $13 for the same period of Fiscal 2025 due to lower utilization of credit facilities and a reduction in outstanding loans. As of September 30, 2025, the Company had an unused line of credit of $5,974 as compared to$6,134 as at September 30, 2024.

Other Income / (Expense)

Other Income / (Expense) for the three months ended September 30, 2025 and 2024 was as follows:

		Three Months Ended
		September 30,
		2025				2024
		(Unaudited)				(Unaudited)
Interest income		$	61			$	101
Other rental income			30				38
Exchange gain / (loss)			76				(506	)
Other miscellaneous income			18				2
Total		$	185			$	(365	)

There was a favorableshift by $550 in other expense to $185 for the three months ended September 30, 2025 as compared to other expense of $365 for the same period in Fiscal 2025. The shift was primarily driven by a favorableforeign currency movement, for the three months ended September 30, 2025, in contrast with an unrealized exchange loss of $460 recorded during the same period in Fiscal 2025.

Our net income is exposed to foreign exchange fluctuations as our subsidiaries' functional currencies differ from the U.S. dollar. For the three months ended September 30, 2025, the weakening of the Singapore dollar against the U.S. dollar resulted in an unrealized foreign exchange gain, primarily from the remeasurement of U.S. dollar denominated monetary assets and liabilities. The impact of such fluctuations 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

		Three Months Ended
		September 30,
		2025				2024
		(Unaudited)				(Unaudited)
Government Grant		$	4			$	66

In the three months ended September 30, 2025, the Company received government grants amounting to $4, $2 of which was an incentive from the Singapore government for local resident recruitment, and $2 related to a capital expenditure subsidy received from the government in China.

During the same period in Fiscal 2025, the Company received government grants amounting to $66, $62 of which was an incentive from the Singapore government for local resident recruitment, and $4 related to capital expenditure subsidy received from the government in China.

Income Tax Expense

The Company's income tax expense was $64 and $51 for the three months ended September 30, 2025, and 2024, respectively. Income tax expense increased in line with higher taxable income.

Non-controlling Interest

As of September 30, 2025, we held a 55% interest in Trio-Tech (Malaysia) Sdn. Bhd., SHI International Pte. Ltd., and 52% interest in PT. SHI Indonesia. We also held a 76% interest in Prestal Enterprise Sdn. Bhd. The share of non-controlling interest in the net income from the subsidiaries for the three months ended September 30, 2025 was $88 compared to the share of income from the non-controlling interest of $13 for the same period in Fiscal 2025. The increase in net income shared by non-controlling interest in the subsidiaries was attributable to the increase in net income generated by the Company.

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

Net income attributable to Company's common shareholders was $77 for the three months ended September 30, 2025, compared to a net loss of $236 for the same period in Fiscal 2025.

Earning / Loss per Share

Basic earnings per share from continuing operations were $0.02 for three months ended September 30, 2025 as compared to basic loss per share of $0.06 for the same period in Fiscal 2025. Basic earnings per share from discontinued operations were $nil for three months ended September 30, 2025 and September 30, 2024 respectively.

Diluted earnings per share from continuing operations were $0.02 for three months ended September 30, 2025 as compared to diluted loss per share of $0.06 for the same period in Fiscal 2025. Diluted earnings per share from discontinued operations were $nil for three months ended September 30, 2025 and September 30, 2024.

Segment Information

The revenue, gross margin, and (loss) / income from operations for each segment during the first quarter of Fiscal 2026 and Fiscal 2025 are presented below. As the revenue and gross margin for each segment were discussed in the previous section, only the comparison of (loss) / income from operations is discussed below.

Semiconductor Back-end Solutions (SBS)

The revenue, gross margin and income fromoperations for the SBS segment for the three months ended September 30, 2025 and 2024 were as follows:

		Three Months Ended
		September 30,
		2025				2024
		(Unaudited)				(Unaudited)
Revenue		$	11,452			$	6,879
Gross margin			14.9	%			26.1	%
(Loss) / Income from operations		$	(80	)		$	177

Loss from operations from the SBS segment was $80 compared to income from operations of $177 in the same period in Fiscal 2025. The decline primarily reflects the notable reduction in gross profit from China operations, coupled with higher operating expenses across other operations. As previously discussed, despite strong revenue growth during the quarter, the significant increase in revenue only began in the final month of the quarter ended September 30, 2025, and compressed margins limited its impact on operating income. Operating expense increased from $1,617 for the three months ended September 30, 2024 to $1,790 for the three months ended September 30, 2025. This increase of $173 in operating expenses was primarily driven by additional operational, logistics, and personnel-related costs associated with supporting the incremental revenue growth.

Industrial Electronics (IE)

The revenue, gross margin, and (loss) / income from operations for the IE segment for the three months ended September 30, 2025 and 2024 were as follows:

		Three Months Ended
		September 30,
		2025				2024
		(Unaudited)				(Unaudited)
Revenue		$	4,052			$	2,914
Gross margin			21.8	%			18.5	%
Income from operations		$	198			$	(7	)

Income for operations from IE segment for the three months ended September 30, 2025 was $198, an increase of $205 from loss from operations of $7 in the same period in Fiscal 2025. The increase was mainly attributable to an increase in revenue and gross profit in absolute dollar amounts. Operating expense increased from $546 for the three months ended September 30, 2024 to $684 for the three months ended September 30, 2025. The enhancement in gross profitability more than offset the impact of operating expenses, resulting in a higher operating income compared to the three months ended September 30, 2024.

Financial Condition

During the three months ended September 30, 2025, total assets increase by $6,310 to $47,378 compared to $41,068 as of June 30, 2025. The increase was primarily due to an increase in cash and cash equivalents. trade accounts receivable, inventories, other receivables and prepaid expenses, which was partially offset by a decrease in property, plant and equipment and operating right-of-use assets

Cash and cash equivalents were $12,262 at September 30, 2025, reflecting an increase of $1,372 from $10,890 at June 30, 2025. The net increase in cash and cash equivalents was primarily attributable to higher customer collections from the China, Singapore, and Thailand operations, as well as favorable changes in working capital during the current quarter. In addition, a portion of short-term deposits was held as cash to enhance liquidity for working capital and investment activities

The trade accounts receivable balance as of September 30, 2025 increased by $5,056 to $15,860, from $10,804 at June 30, 2025, primarily reflecting higher overall revenue across both segment between June 30, 2025 and September 30, 2025. The number of days' sales outstanding in accounts receivables for the group was 77days and 106days for the first quarter of Fiscal 2026 and the end of Fiscal 2025, respectively.

Other receivables at September 30, 2025, were $705, an increase of $97, compared to $608 at June 30, 2025. The increase was mainly due to the recognition of deferred costs and advance payments made to our suppliers for goods and services in our Singapore operations.

Inventories at September 30, 2025, were $2,404, an increase of $142, compared to $2,262 at June 30, 2025. The increase in inventories was primarily attributable to higher inventory levels in the IE segment to support anticipated order fulfillment in the upcoming fiscal quarters.

Prepaid expense was $494 at September 30, 2025 compared to $384 at June 30, 2025. Prepaid expense mainly consists of insurance, rental and software license fees. The increase in prepayments primarily reflected upfront payments for annual insurance premiums and software licenses entered into during the current quarter.

Investment properties' net in China was $330 at September 30, 2025 and $345 at June 30, 2025. The decrease was primarily due to the depreciation charged and foreign currency exchange movement between June 30, 2025 and September 30, 2025.

Property, plant and equipment decreased by $268 from $6,021 at June 30, 2025, to $5,753 at September 30, 2025, mainly due to depreciation charged for the period and asset disposals.

Other assets increased by $5 to $236 at September 30, 2025 compared to $231 at June 30, 2025. Other assets mainly consists of rental and utilities deposits.

Accounts payable increased by $5,925 to $7,821 at September 30, 2025, compared to $1,896 at June 30, 2025. The increase in trade payables was primarily attributable to higher procurement activity in line with increased sales.

Accrued expense decreased by $67 to $2,969 at September 30, 2025, as compared to $3,036 at June 30, 2025. The decrease in accrued expense was mainly due to payments made out of provisions and a decrease in accrued purchases.

Contract liabilities increased by $5 to $255 at September 30, 2025 as compared to $250 at June 30, 2025. The increase in contract liabilities mainly reflects higher customer deposits from our Singapore operations, as additional service contracts were secured during the period for delivery in subsequent quarters.

Bank loans payable decreased by $62 to $622 as of September 30, 2025, as compared to $684 as of June 30, 2025. The decrease was mainly due to scheduled debt repayments, absence of new loan arrangements coupled with foreign currency exchange movement between June 30, 2025and September 30, 2025.

Finance leases decreased by $11 to $32 at September 30, 2025, as compared to $43 at June 30, 2025. This was due to the repayments of leases in our Singapore and Malaysia operations, with no new lease additions during the period between June 30, 2025and September 30, 2025.

Operating lease right-of-use assets and the corresponding lease liability increased by $537 to $1,401 at September 30, 2025, as compared to $864at June 30, 2025. The increase was due to the renewal of several lease agreements during quarter ended September 30, 2025.

Other non-current liabilities increased to $32 as at September 30, 2025, as compared to $31 at June 30, 2025.

Liquidity Comparison

Net cash provided by operating activities increased by $2,790 to an inflow of $933 for the three months ended September 30, 2025, from an outflow of $1,857 for the same period in Fiscal 2025. The increase was primarily attributable to higher trade payables of $5,862, as certain payments were not yet due at quarter end, and lower depreciation expenses of$179. These factors were partially offset by higher trade receivables of $5,080, reflecting increased sales with collections not yet due, and higher inventory levels of $131 maintained to support anticipated order fulfillment in upcoming fiscal quarters, resulting in higher cash outflows during the period.

Net cash provided by investing activities was $652 for the three months ended September 30, 2025 an increase of $571 compared to net cash provided by investing activities of $81 for the same period in Fiscal 2025. This was primarily due to a higher net withdrawal from unrestricted term deposits upon maturity for the three months ended September 30, 2025, and were held in cash to enhance liquidity for working capital and investment activities.

Net cash used in financing activities for the three months ended September 30, 2025, was $219, representing an increase of $126, compared to cash outflows of $93 during the three months ended September 30, 2024. The changes in cashflow from financing activities was mainly due to the payment on lines of credit of $141 for the three months ended September 30, 2025 compared to nil in the three months ended September 30, 2024.

Subsequent to the quarter ended September 30, 2025, on November 3, 2025, the Company filed a shelf registration statement with the Securities and Exchange Commission, pursuant to which we may raise capital of up to $50,000,000 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.

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