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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




FORM 10-Q

|  |  |                                                                                        
|- |  | ---------------------------------------------------------------------------------------
|þ |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended December 31, 2002

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission File Number 0-13914

TRIO-TECH INTERNATIONAL

(Exact name of Registrant as specified in its Charter)


|                                                                                  |  |                                                   
|--------------------------------------------------------------------------------- |  | --------------------------------------------------
|California
(State or other jurisdiction of
incorporation or organization)         |  | 95-2086631
(I.R.S. Employer
Identification Number)
|                                                                                  |  |                                                   
|14731 Califa Street
Van Nuys, California
(Address of principle executive offices) |  | 91411
(Zip Code)                                  

Registrants Telephone Number: 818-787-7000

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes o No þ

Number of shares of common stock outstanding as of February 1, 2003 is 2,927,605



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TABLE OF CONTENTS



|                              |                                                                                               |                                                                                 |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                                          
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                           
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                              | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION   
|                              | Item 1.  Legal Proceedings                                                                   
|                              | Item 2.  Changes in Securities and Use of Proceeds                                           
|                              | Item 3.  Defaults Upon Senior Securities                                                     
|                              | Item 4.  Submission of Matters to Vote of Security Holders                                   
|                              | Item 5.  Other Information                                                                   
|                              | Item 6.  Exhibits and reports on Form 8-K                                                    
|SIGNATURES                   
|CERTIFICATIONS               
|EX-99.1                      
|EX-99.2                      



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##### Table of Contents



TRIO-TECH INTERNATIONAL
INDEX TO CONSOLIDATED FINANCIAL INFORMATION, OTHER INFORMATION AND SIGNATURE

|               |  |                                                                                                                                                                              |  |     
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|               |  |                                                                                                                                                                              |  | Page
|               |  |                                                                                                                                                                              |  |     
|Part I         |  | Financial Information                                                                                                                                                        |  |     
|Item 1.        |  | Financial Statements                                                                                                                                                         |  |     
|               |  | Condensed Consolidated Balance Sheets as of Dec.
31, 2002 (Unaudited) and June 30, 2002                                                                                      |  | 3   
|               |  | Condensed Consolidated Statements of Operations
and Comprehensive (loss) income for the Three and
  Six Months Ended Dec. 31, 2002 (Unaudited) and Dec. 31, 2001
(Unaudited) |  | 4   
|               |  | Condensed Consolidated Statements of Cash Flows
for the Six Months Ended Dec. 31, 2002
(Unaudited) and
  Dec. 31, 2001 (Unaudited)                                           |  | 5   
|               |  | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                                                                             |  | 6   
|Item 2.        |  | Managements Discussion and Analysis of Financial
Condition and Results of
Operations                                                                                        |  | 10  
|Item 3.        |  | Quantitative and Qualitative Disclosures about
Market
Risk                                                                                                                   |  | 18  
|Item 4.        |  | Controls and
Procedures                                                                                                                                                      |  | 18  
|Part II        |  | Other Information                                                                                                                                                            |  | 19  
|Item 1.        |  | Legal Proceedings                                                                                                                                                            |  | 19  
|Item 2.        |  | Changes in Securities and Use of
Proceeds                                                                                                                                    |  | 19  
|Item 3.        |  | Defaults upon Senior Securities                                                                                                                                              |  | 19  
|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                                                                                                          |  | 19  
|Item 5.        |  | Other Information                                                                                                                                                            |  | 19  
|Item 6.        |  | Exhibits and Reports on Form 8-K                                                                                                                                             |  | 19  
|Signatures     |  |                                                                                                                                                                              |  | 19  
|Certifications |  |                                                                                                                                                                              |  | 20  

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

|                                           |                                                                                                                         |                            |        |             |        |          |        |       |        | 
|------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------ | ----------- | ------ | -------- | ------ | ----- | ------ | 
|                                           |                                                                                                                         |                            |        | Dec 31,     |        | June 30,
|                                           |                                                                                                                         |                            |        | 2002        |        | 2002    
|                                           |                                                                                                                         |                            |        |             |        |         
|                                           |                                                                                                                         |                            |        | (UNAUDITED) |        |          |        |      
|ASSETS                                     |                                                                                                                         |                            |        |             |        |          |        |      
|CURRENT ASSETS:                            |                                                                                                                         |                            |        |             |        |          |        |      
|                                           | Cash                                                                                                                    |                            | $      | 971         |        |          | $      | 1,128 |       
|                                           | Short term deposits                                                                                                     |                            |        | 6,111       |        |          |        | 5,906 |       
|                                           | Investments in marketable securities                                                                                    |                            |        | 424         |        |          |        | 554   |       
|                                           | Trade accounts receivable, less allowance for doubtful accounts
of $190 and $174, respectively                          |                            |        | 4,092       |        |          |        | 4,148 |       
|                                           | Other receivables                                                                                                       |                            |        | 355         |        |          |        | 527   |       
|                                           | Inventories, less provision for obselete stock of $694
and $716, respectively                                           |                            |        | 744         |        |          |        | 1,014 |       
|                                           | Prepaid expenses and other current assets                                                                               |                            |        | 163         |        |          |        | 128   |       
|                                           |                                                                                                                         |                            |        |             |        |          |        |      
|                                           |                                                                                                                         | Total current assets       |        |             | 12,860 |          |        |       | 13,405 | 
|PROPERTY, PLANT AND EQUIPMENT, Net         |                                                                                                                         |                            | 6,011  |             |        |          | 5,593  |      
|OTHER ASSETS                               |                                                                                                                         |                            | 51     |             |        |          | 77     |      
|                                           |                                                                                                                         |                            |        |             |        |          |        |      
|TOTAL ASSETS                               |                                                                                                                         | $                          | 18,922 |             |        | $        | 19,075 |      
|                                           |                                                                                                                         |                            |        |             |        |          |        |      
|LIABILITIES AND SHAREHOLDERS EQUITY       |                                                                                                                         |                            |        |             |        |          |        |      
|CURRENT LIABILITIES:                       |                                                                                                                         |                            |        |             |        |          |        |      
|                                           | Lines of credit                                                                                                         |                            | $      | 619         |        |          | $      | 1,227 |       
|                                           | Accounts payable                                                                                                        |                            |        | 1,536       |        |          |        | 1,717 |       
|                                           | Accrued expenses                                                                                                        |                            |        | 2,623       |        |          |        | 2,315 |       
|                                           | Income taxes payable                                                                                                    |                            |        | 94          |        |          |        | 106   |       
|                                           | Current portion of notes payable                                                                                        |                            |        | 903         |        |          |        | 785   |       
|                                           | Current portion of capitalized leases                                                                                   |                            |        | 380         |        |          |        | 336   |       
|                                           |                                                                                                                         |                            |        |             |        |          |        |      
|                                           |                                                                                                                         | Total current liabilities  |        |             | 6,155  |          |        |       | 6,486  | 
|                                           |                                                                                                                         |                            |        |             |        |          |        |      
|NOTES PAYABLE, net of current portion      |                                                                                                                         |                            | 691    |             |        |          | 641    |      
|CAPITALIZED LEASES, net of current portion |                                                                                                                         |                            | 417    |             |        |          | 345    |      
|DEFERRED INCOME TAXES                      |                                                                                                                         |                            | 680    |             |        |          | 669    |      
|                                           |                                                                                                                         |                            |        |             |        |          |        |       |       
|TOTAL LIABILITIES                          |                                                                                                                         |                            | 7,943  |             |        |          | 8,141  |      
|                                           |                                                                                                                         |                            |        |             |        |          |        |      
|MINORITY INTEREST                          |                                                                                                                         |                            | 2,232  |             |        |          | 2,316  |      
|SHAREHOLDERS EQUITY:                      |                                                                                                                         |                            |        |             |        |          |        |      
|                                           | Common stock, no par value; authorized, 15,000,000 shares; issued
and outstanding 2,927,605 and 2,927,605, respectively |                            |        | 9,423       |        |          |        | 9,423 |       
|                                           | Additional paid-in capital                                                                                              |                            |        | 284         |        |          |        | 270   |       
|                                           | Accumulated deficit                                                                                                     |                            |        | (511        | )      |          |        | (658  | )     
|                                           | Accumulated other comprehensive income-marketable securities                                                            |                            |        | 0           |        |          |        | 24    |       
|                                           | Accumulated other comprehensive loss-foreign currency                                                                   |                            |        | (449        | )      |          |        | (441  | )     
|                                           |                                                                                                                         |                            |        |             |        |          |        |       |       
|                                           |                                                                                                                         | Total shareholders equity |        |             | 8,747  |          |        |       | 8,618  | 
|                                           |                                                                                                                         |                            |        |             |        |          |        |      
|TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |                                                                                                                         | $                          | 18,922 |             |        | $        | 19,075 |      
|                                           |                                                                                                                         |                            |        |             |        |          |        |      

See notes to condensed consolidated financial statements.

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |       |       | 
|------------------------------------------------------------------------- | ------------------------------------------------- | ------- | ------ | ---------------- | ----- | ------------------ | ------ | -------- | ----- | -------- | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                                                                          |                                                   |         |        | Six Months Ended |       | Three Months Ended
|                                                                          |                                                   |         |        |                  |       |                   
|                                                                          |                                                   |         |        | Dec. 31,         |       | Dec. 31,           |        | Dec. 31, |       | Dec. 31,
|                                                                          |                                                   |         |        | 2002             |       | 2001               |        | 2002     |       | 2001    
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |         
|NET SALES                                                                 |                                                   | $       | 10,966 |                  |       | $                  | 9,948  |          |       | $        | 5,051 |       |       | $ | 4,812 |      
|COST OF SALES                                                             |                                                   |         | 7,843  |                  |       |                    | 7,759  |          |       |          | 3,672 |       |       |   | 3,717 |      
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|GROSS PROFIT                                                              |                                                   |         | 3,123  |                  |       |                    | 2,189  |          |       |          | 1,379 |       |       |   | 1,095 |      
|OPERATING EXPENSES:                                                       |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|                                                                          | General and administrative                        |         |        | 2,370            |       |                    |        | 2,242    |       |          |       | 1,087 |       |   |       | 1,059 |      
|                                                                          | Selling                                           |         |        | 502              |       |                    |        | 598      |       |          |       | 221   |       |   |       | 314   |      
|                                                                          | Research and development                          |         |        | 55               |       |                    |        | 166      |       |          |       | 28    |       |   |       | 119   |      
|                                                                          | Impairment loss                                   |         |        |                 |       |                    |        | 542      |       |          |       |      |       |   |       | 542   |      
|                                                                          | Loss on disposal of property, plant and equipment |         |        | 112              |       |                    |        | 3        |       |          |       |      |       |   |       | 3     |      
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|                                                                          |                                                   | Total   |        |                  | 3,039 |                    |        |          | 3,551 |          |       |       | 1,336 |   |       |       | 2,037 | 
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|INCOME (LOSS) FROM OPERATIONS                                             |                                                   |         | 84     |                  |       |                    | (1,362 | )        |       |          | 43    |       |       |   | (942  | )    
|OTHER INCOME (EXPENSE)                                                    |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|                                                                          | Interest expense                                  |         |        | (97              | )     |                    |        | (104     | )     |          |       | (46   | )     |   |       | (53   | )    
|                                                                          | Other income                                      |         |        | 194              |       |                    |        | 288      |       |          |       | 58    |       |   |       | 191   |      
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|                                                                          |                                                   | Total   |        |                  | 97    |                    |        |          | 184   |          |       |       | 12    |   |       |       | 138   | 
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|INCOME (LOSS) BEFORE
INCOME TAXES AND MINORITY INTEREST                   |                                                   |         | 181    |                  |       |                    | (1,178 | )        |       |          | 55    |       |       |   | (804  | )    
|INCOME TAXES                                                              |                                                   |         | 50     |                  |       |                    | 68     |          |       |          | (18   | )     |       |   | 26    |      
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|INCOME (LOSS) BEFORE MINORITY INTEREST                                    |                                                   |         | 131    |                  |       |                    | (1,246 | )        |       |          | 73    |       |       |   | (830  | )    
|MINORITY INTEREST                                                         |                                                   |         | 16     |                  |       |                    | 53     |          |       |          | 18    |       |       |   | 38    |      
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
SHARES                           |                                                   |         | 147    |                  |       |                    | (1,193 | )        |       |          | 91    |       |       |   | (792  | )    
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|OTHER COMPREHENSIVE INCOME (LOSS):                                        |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|                                                                          | Unrealised loss on investment                     |         |        | (24              | )     |                    |        |         |       |          |       | (13   | )     |   |       |      |      
|                                                                          | Foreign currency translation adjustment           |         |        | (8               | )     |                    |        | (20      | )     |          |       | 106   |       |   |       | (149  | )    
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|COMPREHENSIVE INCOME (LOSS)                                               |                                                   | $       | 115    |                  |       | $                  | (1,213 | )        |       | $        | 184   |       |       | $ | (941  | )    
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|EARNINGS (LOSS) PER SHARE:                                                |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|                                                                          | Basic                                             |         | $      | 0.05             |       |                    | $      | (0.41    | )     |          | $     | 0.03  |       |   | $     | (0.27 | )    
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|                                                                          | Diluted                                           |         | $      | 0.05             |       |                    | $      | (0.41    | )     |          | $     | 0.03  |       |   | $     | (0.27 | )    
|                                                                          |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|WEIGHTED AVERAGE NUMBER OF COMMON AND
POTENTIAL COMMON SHARES OUTSTANDING |                                                   |         |        |                  |       |                    |        |          |       |          |       |       |       |   |       |      
|                                                                          |                                                   | Basic   |        |                  | 2,928 |                    |        |          | 2,928 |          |       |       | 2,928 |   |       |       | 2,928 | 
|                                                                          |                                                   | Diluted |        |                  | 2,928 |                    |        |          | 2,928 |          |       |       | 2,928 |   |       |       | 2,928 | 

See notes to condensed consolidated financial statements.

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |          |        |        |       |  
|------------------------------------------------ | -------------------------------------------------------------------------------------------------- | ----------------------------------------- | --------------------------------------------------- | ------ | ---------------- | ------ | -------- | ------ | ------ | ----- | -
|                                                 |                                                                                                    |                                           |                                                     |        | Six Months Ended
|                                                 |                                                                                                    |                                           |                                                     |        |                 
|                                                 |                                                                                                    |                                           |                                                     |        | Dec. 31,         |        | Dec. 31,
|                                                 |                                                                                                    |                                           |                                                     |        | 2002             |        | 2001    
|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |         
|CASH FLOWS FROM OPERATING ACTIVITIES:            |                                                                                                    |                                           |                                                     |        |                  |        |          |       
|                                                 | Net income (loss)                                                                                  |                                           | $                                                   | 147    |                  |        | $        | (1,193 | )     
|                                                 | Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities: |                                           |                                                     |        |                  |        |          |        |       
|                                                 | Depreciation and amortization                                                                      |                                           |                                                     | 643    |                  |        |          | 871    |       
|                                                 | Bad debt expense                                                                                   |                                           |                                                     | 19     |                  |        |          | (29    | )     
|                                                 | Inventory provision                                                                                |                                           |                                                     |        |                  |        |          | 69     |       
|                                                 | Impairment loss                                                                                    |                                           |                                                     |       |                  |        |          | 542    |       
|                                                 | Stock Compensation                                                                                 |                                           |                                                     | 14     |                  |        |          |       |       
|                                                 | Realized gain on investment in securities                                                          |                                           |                                                     | (24    | )                |        |          |        |       
|                                                 | (Gain)/loss on disposal of property and equipment                                                  |                                           |                                                     | 112    |                  |        |          | 3      |       
|                                                 | Deferred income taxes                                                                              |                                           |                                                     | 11     |                  |        |          | (9     | )     
|                                                 | Minority interest, net                                                                             |                                           |                                                     | (16    | )                |        |          | (59    | )     
|                                                 | Changes in operating assets and liabilities:                                                       |                                           |                                                     |        |                  |        |          |        |       
|                                                 |                                                                                                    | Accounts receivable, net                  |                                                     |        | 40               |        |          |        | 586    |      
|                                                 |                                                                                                    | Other receivables                         |                                                     |        | 172              |        |          |        | 16     |      
|                                                 |                                                                                                    | Inventories                               |                                                     |        | 265              |        |          |        | 41     |      
|                                                 |                                                                                                    | Prepaid expenses and other current assets |                                                     |        | (35              | )      |          |        | (78    | )    
|                                                 |                                                                                                    | Accounts payable and accrued expenses     |                                                     |        | 127              |        |          |        | (1,356 | )    
|                                                 |                                                                                                    | Income taxes payable                      |                                                     |        | (12              | )      |          |        | (57    | )    
|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |          |        |       
|                                                 |                                                                                                    |                                           | Net cash provided by (used in) operating activities |        |                  | 1,463  |          |        |        | (653  | )
|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |          |       
|CASH FLOWS FROM INVESTING ACTIVITIES:            |                                                                                                    |                                           |                                                     |        |                  |        |          |       
|                                                 | Short term deposits                                                                                |                                           |                                                     | (205   | )                |        |          | 1,221  |       
|                                                 | Marketable securities                                                                              |                                           |                                                     | 130    |                  |        |          | (117   | )     
|                                                 | Capital expenditures                                                                               |                                           |                                                     | (1,112 | )                |        |          | (22    | )     
|                                                 | Other assets                                                                                       |                                           |                                                     | 26     |                  |        |          | 14     |       
|                                                 | Proceeds from sale of property and equipment                                                       |                                           |                                                     |       |                  |        |          | 22     |       
|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |          |        |       
|                                                 |                                                                                                    |                                           | Net cash (used in) provided by investing activities |        |                  | (1,161 | )        |        |        | 1,118 |  
|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |          |       
|CASH FLOWS FROM FINANCING ACTIVITIES:            |                                                                                                    |                                           |                                                     |        |                  |        |          |       
|                                                 | Payments on lines of credit                                                                        |                                           |                                                     | (754   | )                |        |          | (174   | )     
|                                                 | Borrowings under lines of credit                                                                   |                                           |                                                     | 137    |                  |        |          | 550    |       
|                                                 | Principal payments of debt and capitalized leases                                                  |                                           |                                                     | (589   | )                |        |          | (579   | )     
|                                                 | Dividend paid to minority interest                                                                 |                                           |                                                     | (71    | )                |        |          |        |       
|                                                 | Proceeds from long-term debt                                                                       |                                           |                                                     | 821    |                  |        |          |       |       
|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |          |        |       
|                                                 |                                                                                                    |                                           | Net cash used in financing activities               |        |                  | (456   | )        |        |        | (203  | )
|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |          |       
|EFFECT OF EXCHANGE RATE CHANGES ON CASH          |                                                                                                    |                                           | (3                                                  | )      |                  |        | (24      | )     
|NET INCREASE/(DECREASE) IN CASH                  |                                                                                                    |                                           | (157                                                | )      |                  |        | 238      |       
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR     |                                                                                                    |                                           | 1,128                                               |        |                  |        | 1,149    |       
|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |          |        |       
|CASH AND CASH EQUIVALENTS, END OF YEAR           |                                                                                                    | $                                         | 971                                                 |        |                  | $      | 1,387    |       
|                                                 |                                                                                                    |                                           |                                                     |        |                  |        |          |       
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |                                                                                                    |                                           |                                                     |        |                  |        |          |       
|                                                 | Cash paid during the year for:                                                                     |                                           |                                                     |        |                  |        |          |        |       
|                                                 |                                                                                                    | Interest                                  |                                                     | $      | 97               |        |          | $      | 94     |      
|                                                 |                                                                                                    | Income taxes                              |                                                     | $      | 111              |        |          | $      | 125    |      

See notes to condensed consolidated financial statements.

5



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##### Table of Contents






TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS AND PERCENTAGES)



|1. |  | ORGANIZATION AND BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Trio-Tech International (the Company or TTI thereafter) was
incorporated in 1958 under the laws of the State of California. TTI
provides third-party semiconductor testing and burn-in services primarily
through its laboratories in Southeast Asia. In addition, TTI operates test
facilities in the United States and Europe. The Company also designs,
develops, manufactures and markets a broad range of equipment and systems
used in the manufacture and testing of semiconductor devices and
electronic components. TTI conducts business in three industry
segments: Testing Services, Manufacturing and Distribution. TTI has
subsidiaries in the U.S., Singapore, Malaysia, Thailand, and Ireland as
follows:

|                                                          |  |           |     |          |  |                     
|--------------------------------------------------------- |  | --------- | --- | -------- |  | --------------------
|                                                          |  | Ownership |     | Location
|                                                          |  |           |     |         
|Express Test Corporation                                  |  |           | 100 | %        |  | Van Nuys, California
|Trio-Tech Reliability Services                            |  |           | 100 | %        |  | Van Nuys, California
|KTS Incorporated, dba Universal Systems                   |  |           | 100 | %        |  | San Jose, California
|European Electronic Test Centre. Ltd.                     |  |           | 100 | %        |  | Dublin, Ireland     
|Trio-Tech International Pte. Ltd.                         |  |           | 100 | %        |  | Singapore           
|Trio-Tech Test Services Pte. Ltd.                         |  |           | 100 | %        |  | Singapore           
|Trio-Tech Thailand                                        |  |           | 100 | %        |  | Bangkok, Thailand   
|Trio-Tech Bangkok                                         |  |           | 100 | %        |  | Bangkok, Thailand   
|Trio-Tech Malaysia                                        |  |           | 55  | %        |  | Penang, Malaysia    
|Trio-Tech Kuala Lumpur  100% owned by
Trio-Tech Malaysia |  |           | 55  | %        |  | Selangor, Malaysia  
|Prestal Enterprise Sdn. Bhd.                              |  |           | 76  | %        |  | Selangor, Malaysia  



|   |  | The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. All significant inter-company accounts and
transactions have been eliminated in consolidation. The unaudited
consolidated financial statements are presented in U.S. dollars.
Accordingly, the accompanying financial statements do not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair statement of the
results for the interim period presented have been included. Operating
results for the six months ended December 31, 2002 are not necessarily
indicative of the results that may be expected for the fiscal year ending
June 30, 2003. The accompanying consolidated financial statements should
be read in conjunction with the audited financial statements of the
Company included in the Companys Form 10-K for the fiscal year ended June
30, 2002.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | INVENTORIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The composition of inventories is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                       |  |         |      |          |  |   |       |  
|-------------------------------------- |  | ------- | ---- | -------- |  | - | ----- | -
|                                       |  | Dec 31, |      | June 30,
|                                       |  | 2002    |      | 2002    
|                                       |  |         |      |         
|Raw materials                          |  | $       | 932  |          |  | $ | 938   |  
|Work in progress                       |  |         | 182  |          |  |   | 287   |  
|Finished goods                         |  |         | 324  |          |  |   | 505   |  
|Less: provision for obsolete inventory |  |         | (694 | )        |  |   | (716  | )
|                                       |  |         |      |          |  |   |       |  
|                                       |  | $       | 744  |          |  | $ | 1,014 |  
|                                       |  |         |      |          |  |   |       |  

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|3. |  | STOCK OPTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In September 2002, the Board of Directors amended the Directors Stock
Option Plan to require that the exercise price of options granted
thereunder be equal to 100% of the fair market value of the Companys
Common Stock as of the date of grant.                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting
for its Plans. Accordingly, stock compensation based on the intrinsic
value of these options granted has been recorded. Had compensation cost
for the Companys Plans been determined based upon the fair value at the
grant date for awards under these Plans consistent with the methodology
prescribed under SFAS No. 123, the Companys net income and earnings per
share would have been reduced to the pro forma amounts indicated below:
|  
|   |  | The following calculation uses the Black Scholes option-pricing model with
the assumptions listed below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

|                                   |             |  |                  |      |          |  |   |        |  
|---------------------------------- | ----------- |  | ---------------- | ---- | -------- |  | - | ------ | -
|                                   |             |  | Six Months Ended
|                                   |             |  |                 
|                                   |             |  | Dec. 31,         |      | Dec. 31,
|                                   |             |  | 2002             |      | 2001    
|                                   |             |  |                  |      |         
|Net Income (Loss):                 |             |  |                  |      |          |  |   |       
|                                   | As Reported |  | $                | 147  |          |  | $ | (1,193 | )
|                                   | Pro forma   |  | $                | 129  |          |  | $ | (1,428 | )
|Basic Earnings (Loss) per Share:   |             |  |                  |      |          |  |   |       
|                                   | As Reported |  | $                | 0.05 |          |  | $ | (0.41  | )
|                                   | Pro forma   |  | $                | 0.04 |          |  | $ | (0.49  | )
|Diluted Earnings (Loss) per Share: |             |  |                  |      |          |  |   |       
|                                   | As Reported |  | $                | 0.05 |          |  | $ | (0.41  | )
|                                   | Pro forma   |  | $                | 0.04 |          |  | $ | (0.49  | )

|                        |  |                  |       |               |  |  |       |  
|----------------------- |  | ---------------- | ----- | ------------- |  |  | ----- | -
|                        |  | Six Months Ended
|                        |  |                 
|                        |  | Dec. 31, 2002    |       | Dec. 31, 2001
|                        |  |                  |       |              
|Volatility              |  |                  | 45.99 | %             |  |  | 63.11 | %
|Risk free interest rate |  |                  | 2.79  | %             |  |  | 4.38  | %
|Expected life (years)   |  |                  | 1     |               |  |  | 2.84  |  



|4. |  | EARNINGS PER SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company adopted SFAS No. 128, Earnings per Share(EPS). Basic
Earnings per Share is computed by dividing net income available to common
shareholders (numerator) by the weighted average number of common shares
outstanding (denominator) during the period. Diluted EPS gives effect to
all dilutive potential common shares outstanding during a period. In
computing diluted EPS, the average price for the period is used in
determining the number of shares assumed to be purchased from exercise of
stock options and warrants.
|  
|   |  | Stock options to purchase 437,500 shares at prices ranging from $2.72 to
$6.00 per share were outstanding during the six months ended December 31,
2002 and were excluded in the computation of diluted EPS because they are
out of the money so are unlikely to be exercised.                                                                                                                                                                                                                                                              
|  
|   |  | Stock options and warrants to purchase 521,785 shares at prices ranging
from $3.67 to $8.00 per share were outstanding during the six months ended
December 31, 2001 and were excluded in the computation of diluted EPS
because their effect would have been antidilutive.                                                                                                                                                                                                                                                                 

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

|                                                                              |  |                  |           |                    |  |          |           |          |  |   |           |  |  |   |           |  
|----------------------------------------------------------------------------- |  | ---------------- | --------- | ------------------ |  | -------- | --------- | -------- |  | - | --------- |  |  | - | --------- | -
|                                                                              |  | Six Months Ended |           | Three Months Ended
|                                                                              |  |                  |           |                   
|                                                                              |  | Dec. 31,         |           | Dec. 31,           |  | Dec. 31, |           | Dec. 31,
|                                                                              |  | 2002             |           | 2001               |  | 2002     |           | 2001    
|                                                                              |  |                  |           |                    |  |          |           |         
|Net income (loss) used to compute basic
and diluted earnings (loss) per share |  | $                | 147       |                    |  | $        | (1,193    | )        |  | $ | 91        |  |  | $ | (792      | )
|                                                                              |  |                  |           |                    |  |          |           |          |  |   |           |  |  |   |           |  
|Weighted average number of common
shares outstanding  basic                  |  |                  | 2,928,000 |                    |  |          | 2,928,000 |          |  |   | 2,928,000 |  |  |   | 2,928,000 |  
|Dilutive effect of stock options and warrants                                 |  |                  |          |                    |  |          |          |          |  |   |          |  |  |   |          |  
|                                                                              |  |                  |           |                    |  |          |           |          |  |   |           |  |  |   |           |  
|Number of shares used to compute
earnings per share  diluted                 |  |                  | 2,928,000 |                    |  |          | 2,928,000 |          |  |   | 2,928,000 |  |  |   | 2,928,000 |  
|                                                                              |  |                  |           |                    |  |          |           |          |  |   |           |  |  |   |           |  



|5. |  | BUSINESS SEGMENTS                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company operates principally in three industry segments: the designing
and manufacturing of equipment (that tests the structural integrity of
integrated circuits and other products which measure the rate of turn),
the testing service industry (that performs structural and electronic
tests of semiconductor devices) and the distribution of various products
from other manufacturers in Singapore and Southeast Asia.
|  
|   |  | There was no intersegment transactions during the six months ended
December 31, 2002. Segment presentation is based on a customers location,
not a subsidiarys location.                                                                                                                                                                                                                                                        

Business Segment Information:

|                 |  |            |      |       |  |        |       |           |  |        |        |              |  |         |        |  |  |   |     |  |  |   |     | 
|---------------- |  | ---------- | ---- | ----- |  | ------ | ----- | --------- |  | ------ | ------ | ------------ |  | ------- | ------ |  |  | - | --- |  |  | - | --- | 
|                 |  | Six Months |      |       |  |        |       | Operating |  |        |        |              |  | Depr.   |        |  |  |  
|                 |  | Ended      |      | Net   |  | Income |       |           |  |        |        | and          |  | Capital
|                 |  | Dec. 31,   |      | Sales |  | (loss) |       | Assets    |  | Amort. |        | Expenditures
|                 |  |            |      |       |  |        |       |           |  |        |        |             
|Manufacturing    |  |            | 2002 |       |  | $      | 1,390 |           |  | $      | (132   | )            |  | $       | 3,061  |  |  | $ | 21  |  |  | $ | 4   | 
|                 |  |            | 2001 |       |  |        | 1,310 |           |  |        | (1,008 | )            |  |         | 5,242  |  |  |   | 118 |  |  |   | 10  | 
|Testing Services |  |            | 2002 |       |  |        | 2,347 |           |  |        | 322    |              |  |         | 15,019 |  |  |   | 263 |  |  |   | 130 | 
|                 |  |            | 2001 |       |  |        | 2,214 |           |  |        | 159    |              |  |         | 15,806 |  |  |   | 301 |  |  |   | 9   | 
|Distribution     |  |            | 2002 |       |  |        | 1,314 |           |  |        | (111   | )            |  |         | 484    |  |  |   | 27  |  |  |   | 3   | 
|                 |  |            | 2001 |       |  |        | 1,288 |           |  |        | (34    | )            |  |         | 374    |  |  |   | 26  |  |  |   | 1   | 
|Corporate and    |  |            | 2002 |       |  |        | 0     |           |  |        | (36    | )            |  |         | 358    |  |  |   | 1   |  |  |   | 0   | 
|unallocated      |  |            | 2001 |       |  |        | 0     |           |  |        | (59    | )            |  |         | 127    |  |  |   | 1   |  |  |   | 0   | 
|Total Company    |  |            | 2002 |       |  | $      | 5,051 |           |  | $      | 43     |              |  | $       | 18,922 |  |  | $ | 312 |  |  | $ | 137 | 
|                 |  |            | 2001 |       |  | $      | 4,812 |           |  | $      | (942   | )            |  | $       | 21,549 |  |  | $ | 446 |  |  | $ | 20  | 

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Business Segment Information:

|                 |  |            |      |       |  |        |        |           |  |        |        |              |  |         |        |  |  |   |     |  |  |   |       | 
|---------------- |  | ---------- | ---- | ----- |  | ------ | ------ | --------- |  | ------ | ------ | ------------ |  | ------- | ------ |  |  | - | --- |  |  | - | ----- | 
|                 |  | Six Months |      |       |  |        |        | Operating |  |        |        |              |  | Depr.   |        |  |  |  
|                 |  | Ended      |      | Net   |  | Income |        |           |  |        |        | and          |  | Capital
|                 |  | Dec. 31,   |      | Sales |  | (loss) |        | Assets    |  | Amort. |        | Expenditures
|                 |  |            |      |       |  |        |        |           |  |        |        |             
|Manufacturing    |  |            | 2002 |       |  | $      | 3,135  |           |  | $      | (262   | )            |  | $       | 3,061  |  |  | $ | 42  |  |  | $ | 5     | 
|                 |  |            | 2001 |       |  |        | 2,778  |           |  |        | (1,653 | )            |  |         | 5,242  |  |  |   | 213 |  |  |   | 10    | 
|Testing Services |  |            | 2002 |       |  |        | 4,911  |           |  |        | 609    |              |  |         | 15,019 |  |  |   | 543 |  |  |   | 1,074 | 
|                 |  |            | 2001 |       |  |        | 4,503  |           |  |        | 384    |              |  |         | 15,806 |  |  |   | 602 |  |  |   | 11    | 
|Distribution     |  |            | 2002 |       |  |        | 2,920  |           |  |        | (149   | )            |  |         | 484    |  |  |   | 56  |  |  |   | 33    | 
|                 |  |            | 2001 |       |  |        | 2,667  |           |  |        | (6     | )            |  |         | 374    |  |  |   | 54  |  |  |   | 1     | 
|Corporate and    |  |            | 2002 |       |  |        | 0      |           |  |        | (114   | )            |  |         | 358    |  |  |   | 2   |  |  |   | 0     | 
|unallocated      |  |            | 2001 |       |  |        | 0      |           |  |        | (87    | )            |  |         | 127    |  |  |   | 2   |  |  |   | 0     | 
|Total Company    |  |            | 2002 |       |  | $      | 10,966 |           |  | $      | 84     |              |  | $       | 18,922 |  |  | $ | 643 |  |  | $ | 1,112 | 
|                 |  |            | 2001 |       |  | $      | 9,948  |           |  | $      | (1,362 | )            |  | $       | 21,549 |  |  | $ | 871 |  |  | $ | 22    | 

Geographic Area Information:

|                    |  |              |      |        |  |        |       |      |  |           |       |         |  |       |       |        |  |         |     |   |  |   |       |  
|------------------- |  | ------------ | ---- | ------ |  | ------ | ----- | ---- |  | --------- | ----- | ------- |  | ----- | ----- | ------ |  | ------- | --- | - |  | - | ----- | -
|                    |  |              |      |        |  |        |       |      |  |           |       |         |  |       |       |        |  | Elimin- |     |   |  |  
|                    |  | Three Months |      |        |  |        |       |      |  |           |       |         |  |       |       | ations |  |         |     |  
|                    |  | Ended        |      | United |  |        |       |      |  | Southeast |       | and     |  | Total
|                    |  | Dec. 31,     |      | States |  | Europe |       | Asia |  | Other     |       | Company
|                    |  |              |      |        |  |        |       |      |  |           |       |        
|Net sales to        |  |              | 2002 |        |  | $      | 2,063 |      |  |           | 249   |         |  |       | 2,757 |        |  |         | (18 | ) |  | $ | 5,051 |  
|customers           |  |              | 2001 |        |  | $      | 1,909 |      |  |           | 389   |         |  |       | 2,540 |        |  |         | (26 | ) |  | $ | 4,812 |  
|Operating           |  |              | 2002 |        |  | $      | 54    |      |  |           | (17   | )       |  |       | 42    |        |  |         | (36 | ) |  | $ | 43    |  
|Income (loss)       |  |              | 2001 |        |  | $      | (803  | )    |  |           | (104  | )       |  |       | 24    |        |  |         | (59 | ) |  | $ | (942  | )
|Property, plant     |  |              | 2002 |        |  | $      | 135   |      |  |           | 447   |         |  |       | 5,469 |        |  |         | (40 | ) |  | $ | 6,011 |  
|and equipment  net |  |              | 2001 |        |  | $      | 733   |      |  |           | 5,797 |         |  |       | 410   |        |  |         | (40 | ) |  | $ | 6,900 |  

Geographic Area Information:

|                    |  |            |      |        |  |        |        |      |  |           |       |         |  |       |       |        |  |         |      |   |  |   |        |  
|------------------- |  | ---------- | ---- | ------ |  | ------ | ------ | ---- |  | --------- | ----- | ------- |  | ----- | ----- | ------ |  | ------- | ---- | - |  | - | ------ | -
|                    |  |            |      |        |  |        |        |      |  |           |       |         |  |       |       |        |  | Elimin- |      |   |  |  
|                    |  | Six Months |      |        |  |        |        |      |  |           |       |         |  |       |       | ations |  |         |      |  
|                    |  | Ended      |      | United |  |        |        |      |  | Southeast |       | and     |  | Total
|                    |  | Dec. 31,   |      | States |  | Europe |        | Asia |  | Other     |       | Company
|                    |  |            |      |        |  |        |        |      |  |           |       |        
|Net sales to        |  |            | 2002 |        |  | $      | 3,989  |      |  |           | 494   |         |  |       | 6,514 |        |  |         | (31  | ) |  |   | 10,966 |  
|customers           |  |            | 2001 |        |  | $      | 3,860  |      |  |           | 962   |         |  |       | 5,158 |        |  |         | (32  | ) |  |   | 9,948  |  
|Operating           |  |            | 2002 |        |  | $      | 78     |      |  |           | (67   | )       |  |       | 187   |        |  |         | (114 | ) |  | $ | 84     |  
|Income (loss)       |  |            | 2001 |        |  | $      | (1,222 | )    |  |           | (206  | )       |  |       | 153   |        |  |         | (87  | ) |  | $ | (1,362 | )
|Property, plant     |  |            | 2002 |        |  | $      | 135    |      |  |           | 447   |         |  |       | 5,469 |        |  |         | (40  | ) |  | $ | 6,011  |  
|and equipment  net |  |            | 2001 |        |  | $      | 733    |      |  |           | 5,797 |         |  |       | 410   |        |  |         | (40  | ) |  | $ | 6,900  |  

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|                                         |  |                                                                                                                               
|---------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------
|TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
|ITEM 2.                                  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The discussions of Trio-Tech Internationals (the Company) business and
activities set forth in this Form 10-Q and in other past and future reports and
announcements by the Company may contain forward-looking statements within
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and assumptions
regarding future activities and results of operations of the Company. In light
of the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995, the following factors, among others, could cause actual results to
differ materially from those reflected in any forward-looking statement made by
or on behalf of the Company: market acceptance of Company products and
services; changing business conditions or technologies and volatility in the
semiconductor industry, which could affect demand for the Companys products
and services; the impact of competition; problems with technology; product
development schedules; delivery schedules; changes in military or commercial
testing specifications which could affect the market for the Companys products
and services; difficulties in profitably integrating acquired businesses, if
any, into the Company; risks associated with conducting business
internationally and especially in Southeast Asia, including currency
fluctuations and devaluation, currency restrictions, local laws and
restrictions and possible social, political and economic instability; and other
economic, financial and regulatory factors beyond the Companys control. See
the discussions elsewhere in this Form 10-Q for more information. 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.

We undertake no obligation to update forward-looking statements to reflect
subsequent events, changed circumstances, or the occurrence of unanticipated
events.

Overview

Founded in 1958, Trio-Tech International provides third-party semiconductor
testing and burn-in services primarily through its laboratories in Southeast
Asia. At or from its facilities in California and Southeast Asia, the Company
also designs, manufactures and markets equipment and systems used in the
testing and production of semiconductors and distributes semiconductor
processing and testing equipment manufactured by others.

During the quarter ending December 31, 2002, total assets decreased by $153
from $19,075 at June 30, 2002 to $18,922 at December 31, 2002. The accounts
receivable turnover index (defined as quarterly net sales divided by ending
accounts receivable plus bad debt allowance, multiplied by 4) totaled 4.64 at
December 31, 2002, compared with 4.83 at June 30, 2002 and 4.97 at December 31,
2001 reflecting, in the Companys estimation, a greater emphasis on the
collection of receivables. Although receivables decreased by $56 compared to
the balance at June 30, 2002, and increased by $217, or 5.6%, versus the
comparable period last year. Sales for the three months ended December 31, 2002
also increased 5% compared to the same period last year, resulting in the
improvement in accounts receivable turns. The inventory turnover index (defined
as quarterly factory cost excluding non-recurring costs divided by ending
inventory, multiplied by 4) was 19.74 at December 31, 2002, up from 18.00 at
June 30, 2002, and up from 8.22 at December 31, 2001. Inventories declined $270
versus June 30, 2002, and declined by $1,064 compared with December 30, 2001.
In addition cash short-term deposits and investments in marketable securities
decreased by $82 which was offset by the net additions to property, plant and
equipment.

Total liabilities at December 31, 2002 was $7,943, reflecting a $198 decrease
from June 30, 2002 mainly due to payments on lines of credit. As of December
31, 2002, total debt (excluding minority interest) was 90.8 percent of total
capital, compared with 94.5 percent at June 30, 2002. The Company believes its
strong cash position provides ready and ample access to funds in the global
capital markets. The Companys available short-term lines of credit have not
materially changed since June 30, 2002.

10



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##### Table of Contents



The following table sets forth our revenue components for the six and three
months ended December 31, 2002 and 2001 respectively.

Revenue Components

|           |               |  |                   |        |                     |  |          |        |          |  |  |        |   |  |  |        |  
|---------- | ------------- |  | ----------------- | ------ | ------------------- |  | -------- | ------ | -------- |  |  | ------ | - |  |  | ------ | -
|           |               |  | Six Months Ending |        | Three Months Ending
|           |               |  |                   |        |                    
|           |               |  | Dec. 31,          |        | Dec. 31,            |  | Dec. 31, |        | Dec. 31,
|           |               |  | 2002              |        | 2001                |  | 2002     |        | 2001    
|           |               |  |                   |        |                     |  |          |        |         
|Net Sales: |               |  |                   |        |                     |  |          |        |          |  |  |        |   |  |  |       
|           | Testing       |  |                   | 44.78  | %                   |  |          | 45.25  | %        |  |  | 46.46  | % |  |  | 46.00  | %
|           | Manufacturing |  |                   | 28.59  |                     |  |          | 27.94  |          |  |  | 27.52  |   |  |  | 27.23  |  
|           | Distribution  |  |                   | 26.63  |                     |  |          | 26.81  |          |  |  | 26.02  |   |  |  | 26.77  |  
|           |               |  |                   |        |                     |  |          |        |          |  |  |        |   |  |  |       
|           | Total         |  |                   | 100.00 | %                   |  |          | 100.00 | %        |  |  | 100.00 | % |  |  | 100.00 | %
|           |               |  |                   |        |                     |  |          |        |          |  |  |        |   |  |  |       

Geographically, we operate in the United States, Singapore, Malaysia, Thailand,
and Ireland. Our customers are mainly concentrated in Southeast Asia and they
are either semiconductor chip manufacturers or testing facilities (that
purchase our testing equipment).

Our cost of sales is made up of the cost of materials used, obsolescence costs,
labor, depreciation, utilities (which is our major consumption for testing
services), and overhead relating to manufacturing, testing and distribution.

Our expenses can be classified into three general categories: selling expense,
general and administrative expense, and research and development expense.
Selling expenses include expenses for payroll and payroll taxes for employees
working in the selling department, advertising, insurance, utilities and other
expenses directly related to selling activities. General and administrative
expenses include management payroll, property taxes, rental expense,
depreciation of fixed assets used by the management function, utilities,
employee fringe benefits, office supplies, travel and entertainment,
professional expense, outside services and other expenses related to management
and administration processes. Research and development expense includes
payroll and payroll tax, travel, and any other expenses that are directly
related to the research activities.

Critical Accounting Policies

In response to the SECs Release No. 33-8040, Cautionary Advice Regarding
Disclosure About Critical Accounting Policy, the Company identified the most
critical accounting principles upon which its financial status depends. The
Company determined the critical accounting principles to be related to the use
of estimates, inventory valuation, revenue recognition, income tax and
impairment of intangibles and other long-lived assets. The Company states these
accounting policies in the relevant sections in this managements discussion
and analysis, including the Recent Accounting Pronouncements discussed below.

Use of Estimates

The Companys financial statements have been prepared in accordance with
accounting principles generally accepted in the United States, which require us
to make estimates and judgments that significantly affect the reported amounts
of assets, liabilities, revenues and expenses and related disclosure of
contingent assets and liabilities. The Company regularly evaluates these
estimates, including those related to inventory valuation, revenue
recognition and income taxes. These estimates are based on historical
experience and on assumptions that are believed by management to be reasonable
under the circumstances. The most important estimates included in the interim
financial statements are the allowance for doubtful accounts, provision for
inventory obsolescence, the estimated useful life of long-lived assets, and
valuation allowance for deferred tax assets. Actual results may differ
materially from these estimates, which may impact the carrying values of assets
and liabilities.

Inventory Valuation

We value our inventories at the lower of cost or market. We write down
inventories for unsalable, excess or obsolete raw materials, work-in-process
and finished goods by charging such write-downs to cost of sales. In addition
to write downs based on newly introduced parts, statistical and judgmental
assessments are calculated for the remaining inventory based on salability and
obsolescence.

Revenue Recognition

Revenue from product sales made to customers is recognized when the risk of
loss for the product sold passes to the customer and any right of return can be
quantified, which is generally when goods are shipped or upon the completion of
services. The Company estimates an allowance for sales returns based on
historical experience with product returns. Testing revenue is recognized when
the services are provided.

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Income Tax

We account for income taxes in accordance with Statement of Financial
Accounting Standards No 109, Accounting for Income Taxes (SFAS No. 109).
SFAS No. 109 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. Deferred
tax assets and liabilities are measured using the enacted tax rate expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
included the enactment date.

Our foreign subsidiaries are subject to income taxes in the regions where they
operate. Because of the different income tax jurisdictions, the taxable income
generated in foreign countries will not offset the net loss generated in the
U.S. Therefore, we always incur certain income tax expenses in any fiscal
year.

For US income tax purposes, no provision has been made for US taxes on
undistributed earnings of overseas subsidiaries, with which the Company intends
to continue to reinvest. It is not practicable to estimate the amount of
additional tax that might be payable on the foreign earnings if they were
remitted as dividends, were lent to the Company, or if the Company should sell
its stock in the subsidiary. However, the Company believes that US foreign tax
credits and net operating losses available would substantially eliminate any
additional tax effects.

Impairment of Long-Lived Assets

Effective July 1, 2002, we adopted the provisions of Statement of Financial
Accounting Standard No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS No. 144). SFAS No. 144 requires that long-lived
assets be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable through
the estimated undiscounted cash flows expected to result from the use and
eventual disposition of the assets. Whenever any such impairment exists, an
impairment loss will be recognized for the amount by which the carrying value
exceeds the fair value.

Comparison of Three Months Ended December 31, 2002 (2003) and December 31,
2001 (2002)

Sales

Net sales increased by $239 or 5% from $4,812 in 2002 to $5,051 in 2003, and
indicates improved consumers spending from a year ago. However, due to the
slow recovery of the semiconductor industry, we anticipate that the third
quarter sales will be lower than second quarter sales due to lower bookings as
indicated by our quarterly backlog graph.

(QUARTERLY BACKLOG GRAPH)

Geographically, net sales into and within the United States increased $154 or
8.07% from $1,909 in 2002 to $2,063 in 2003. The increase was mainly
attributable to the increased demand for wet process benches. Net sales within
Southeast Asia increased $217 or 8.5% from $2,540 in 2002 to $2,757 in 2003
mainly due to increased burn-in sales. Net sales for Europe decreased $140 or
36% from $389 in 2002 to $249 in 2003. This decrease was due primarily to a
decline in demand for testing services, which occurred when several large
customers moved from Europe to Southeast Asia. We have managed to recapture
some of this business in Southeast Asia due to the fact that our testing
services were already established in regions to where the customers relocated.

The Manufacturing Segment sales increased $80 or 6.1% from $1,310 in 2002 to
$1,390 in 2003 despite conservative capital spending by OEMs for the Artic
Temperature Controlled Chunks, wet process benches and the COBIS-II Burn-in
Board Systems. The Testing Services Segment sales, Company-wide, increased $133
or 6% from $2,214 in 2002 to $2,347 in 2003. Although the downturn in global
economic conditions has created a tough and competitive environment our
Testing Segment continues to secure contracts for its newly developed Burn-in
technology in its new facilities in Singapore. There is however, no assurance
that this will continue in the

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future. The Distribution Segment increased slightly by $26 or 2% from $1,288
in 2002 to $1,314 in 2003. This segment is dependent on the capital expenditure
plans of our customers, which we believe remains weak.

Cost of Sales

The Companys cost of sales varies depending on the mix of sector and
geographic sales and decreased $45 or 1.2% from $3,717 in 2002 to $3,672 in
2003. As a percentage of sales, the cost of sales decreased 4.6% from 77.3% in
2002 to 72.7% in 2003. This decrease in cost of sales, as a percentage of
sales, was mainly due to an increase in sales, a change in the sales and
product mix and the reduction of depreciation due to the impairment of assets
recorded in fiscal year 2002.

Operating Expenses

Operating expenses decreased by $701 or 34.4% from $2,037 in 2002 to $1,336 in
2003. As a percentage of total revenue, our operating expenses in 2003
decreased from 42.3% in 2002 to 26.5% in 2003, due mainly to the increase in
our total revenue in 2003 and the impairment of assets recorded in fiscal year
2002 not repeating in 2003.

General and Administrative

General and Administrative (G&A) expenses increased by $28 or 2.6% from
$1,059 in 2002 to $1,087 in 2003 as some operations are resuming their normal
work week and bonuses are being accrued for operations that continue to achieve
results above budgets. As a percentage of sales, G&A decreased by 0.5% from
22% in 2002 to 21.5% in 2003 due to cost-cutting measures which consisted of
(1) reducing headcount and related expenses such as payroll and payroll-related
costs such as bonuses which has been accomplished through layoffs, reduction in
management, salary reductions and periodic closures in fiscal year ended June
30, 2002, (2) reducing plant capacity by moving to smaller facilities in Van
Nuys, California and (3) reducing insurance, travel and other miscellaneous
expenses.

Selling Expenses

Selling expenses decreased by $93 or 29.8% from $314 in 2002 to $221 in 2003
due to a change in compensation for volume-related expenses such as
commissions. As a percentage of sales, selling expenses decreased 2.1% from
6.5% in 2002 to 4.4% in 2003 due to certain fixed cost elements included in
selling expenses.

Research and Development

Research and Development decreased by $91 or 76.5% from $119 in 2002 to $28 in
2003. This decrease is primarily due to managements decision to limit research
and development on its Automated Wet Benches and Artic Thermal Chucks.

Impairment loss

The Company did not record an impairment loss for 2003 based on its examination
of estimated undiscounted future cash flows that are generated by the
subsidiaries in which certain long-lived assets (certain fixed assets) were
used. In 2002, the Company recorded an impairment loss of approximately $542,
consisting of (1) $393 in goodwill, related to the Companys acquisition of
manufacturing product lines in the United States; (2) $80 in intangibles, used
in its manufacturing segment (within the United States); and (3) $69 of fixed
assets, consisting of machinery and equipment, furniture and fixtures,
leasehold improvements, and demonstration.

Loss on Sale of Property, Plant and Equipment

The Company did not have a loss on sale of property, plant and equipment in
2003, whereas the Company reported $3 in 2002 due to a loss on disposal of
assets

Income (Loss) from Operations

For segment reporting purposes, the loss from operations in our manufacturing
segment was reduced by $878 or 86.9% from a loss of $1,008 in 2002 to a loss of
$132 in 2003, due to the increase in sales and cost-cutting measures, during
the fourth quarter of 2002, which consisted of (1) reducing headcount and
related expenses such as payroll and payroll-related costs such as bonuses
which has been accomplished through layoffs, reduction in management, shortened
work weeks, salary reductions and periodical closures, (2) reducing plant
capacity by moving to smaller facilities (3) the reduction of depreciation due
to the impairment of assets recorded in fiscal year 2002, and (4) reducing
insurance, travel and other miscellaneous expenses.

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Income from operations in our Testing Services Segment increased by $164 or
103.8% from $159 in 2002 to $322 in 2003 due to the rapid implementation of
cost saving measures in Southeast Asia during a decline in demand.

Loss from operations in our distribution segment increased by $77 from a loss
of $34 in 2002 to a loss of $111 in 2003 due to the tough and competitive
environment, which changed our product mix from higher margin sales to lower
margin sales.

Corporate operating loss was reduced from an operating loss of $56 in 2002 to
an operating loss of $36 in 2003 due to an increase in the allocation
percentage being charged on a greater sales volume.

Interest Expenses

Interest expense decreased in 2003 by $7 or 13.2%, from $53 in 2002 to $46 in
2003, as a result of lower interest rates even though borrowings under the line
of credit, long-term debt and capitalized leases increased by $959.

Other Income

Other income decreased by $133 or 69.6% from $191 in 2002 to $58 in 2003. Other
income during 2003 was made up mainly of (1) interest income of $28, (2) rental
income of $17 and (3) royalty income of $21 and (4) a miscellaneous loss of $8.

Income Tax

Current income tax benefit for 2003 was approximately $18, an increase of $44,
or 169.2%, compared to total income tax expense of $26 for 2002.

Because the net loss incurred in the U.S did not offset the tax benefit in
Singapore and Malaysia, we still incurred a total income tax benefit of $18 for
2003 compared to a total income tax expense of $26 for 2002.

Net Income (Loss)

As a result of all of the factors analyzed above, the net income attributable
to common shares for the quarter ended December 31, 2002 was approximately $91,
which represented an increase of $883 from a net loss of approximately $792
attributed to common shares for the quarter ended December 31, 2001, a 111.5%
change. Consequently, basic income per share for the quarter ended December
31, 2002 increased to earnings of $0.03 per share, from a basic loss per share
of $0.27 in 2002, which represented a change of $0.30 from net loss to net
income, a 111.5% change. Diluted income per share for 2003 was $0.03 per share,
an increase of $0.30 per share from diluted losses per share of $0.27 for 2002.

Comparison of Six Months Ended December 31, 2002 (2003) and December 31, 2001
(2002)

Sales

Net Sales increased by $1,018 or 10.2% from $9,948 in 2002 to $10,966 in 2003,
due to a slight recovery in the semiconductor industry.

Geographically, net sales into the United States increased by $129 or 3.3% from
$3,860 in 2002 to $3,989 in 2003. The increase was mainly attributed to
increased demand for wet process benches. Net sales into Southeast Asia
increased $1,356 or 26.3% from $5,158 in 2002 to $6,514 in 2003 due mainly to
higher manufacturing and testing volumes. Net sales into Europe decreased by
$468 or 48.6% from $962 in 2002 to $494 in 2003. This decrease was primarily
due to a decline in demand for testing services, which occurred when several
large customers moved from Europe to Southeast Asia. We managed to recapture
some of this business in Southeast Asia due to the fact that our testing
services were already established in regions to where the customers relocated.

The Manufacturing Segment sales increased $357 or 12.9% from $2,778 in 2002 to
$3,135 in 2003 despite conservative capital spending by OEMs for the Artic
Temperature Controlled Chunks, Wet Process Benches and the COBIS-II Burn-in
Board Systems. The Testing Services Segment sales, Company-wide, increased by
$408 or 9.1% from $4,503 in 2002 to $4,911 in 2003. Although the downturn in
global economic conditions has created a tough and competitive environment our
Testing Segment continues to secure contracts for its newly developed Burn-in
technology in its new facilities in Singapore. There is however, no assurance
that this will continue in the future. The Distribution Segment increased $253
or 9.5% from $2,667 in 2002 to $2,920 in 2003. This segment is dependent on the
capital expenditure plans of our customers, which we believe remains weak.

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Cost of Sales

The Companys cost of sales varies depending on the mix of sector and
geographic sales and increased by $84 or 1.1% from $7,759 in 2002 to $7,843 in
2003. As a percentage of sales, it decreased 6.5% from 78% in 2002 to 71.5% in
2003. The decrease in cost of sales, as a percentage of sales, was mainly due
to an increase in sales, a change in sales and product mix and depreciation
reduction due to the impairment of assets recorded in fiscal year 2002. In
addition, cost-cutting measures are implemented by reducing headcount and
related expenses such as payroll and payroll-related costs.

Operating Expenses

Operating expenses decreased by $512 or 14.4% from $3,551 in 2002 to $3,039 in
2003. As a percentage of total revenue, our operating expenses in 2003
decreased from 35.7% in 2002 to 27.7% in 2003, due mainly to the increase in
our total revenue in 2003 and the impairment of assets recorded in fiscal year
2002 not repeating in 2003.

General and Administrative

General and Administrative (G&A) expenses increased by $128 or 5.7% from
$2,242 in 2002 to $2,370 in 2003 as some operations are resuming to their
normal work week and bonuses are being accrued for operations that continue to
achieve results above budgets. As a percentage of sales, G&A decreased by 0.9%
from 22.5% in 2001 to 21.6% in 2003 due to cost-cutting measures which
consisted of (1) reducing headcount and related expenses such as payroll and
payroll-related costs such as bonuses which has been accomplished through
layoffs, reduction in management, salary reductions and periodical closures in
fiscal year ended June 30, 2002, (2) reducing plant capacity by moving to
smaller facilities in Van Nuys, California and (3) reducing insurance, travel
and other miscellaneous expenses.

Selling Expenses

Selling expenses decreased by $96 or 16.1% from $598 in 2002 to $502 in 2003
due to a change in compensation for volume-related expenses such as
commissions. As a percentage of sales, selling expenses decreased 1.4% from
6.0% in 2002 to 4.6% in 2003.

Research and Development

Research and Development decreased by $111 or 66.9% from $166 in 2002 to $55 in
2003. This decrease is primarily due to managements decision to limit research
and development on its Automated Wet Benches and Artic Thermal Chucks.

Impairment loss

The Company did not record an impairment loss for 2003 based on its examination
of estimated undiscounted future cash flows that are generated by the
subsidiaries in which certain long-lived assets (goodwill and certain fixed
assets) were used. In 2002, the Company recorded an impairment loss of
approximately $542, consisting of (1) $393 in goodwill, related to the
Companys acquisition of manufacturing product lines in the United States; (2)
$80 in intangibles, used in its manufacturing segment (within the United
States); and (3) $69 of fixed assets, consisting of machinery and equipment,
furniture and fixtures, leasehold improvements, and demonstration.

Loss on Sale of Property, Plant and Equipment

The loss on sale of property, plant and equipment increased by $109 from $3 in
2002 to $112 in 2003 due to a loss on disposal of assets, mainly in Singapore,
in the first quarter of 2003.

Income (Loss) from Operations

For segment reporting purposes, the loss from operations in our manufacturing
segment was reduced by $1,391 or 84.2% from a loss of $1,653 in 2002 to a loss
of $262 in 2003, due to the increase in sales and cost-cutting measures which
consisted of (1) reducing headcount and related expenses such as payroll and
payroll-related costs such as bonuses which has been accomplished through
layoffs, reduction in management, shortened work weeks, salary reductions and
periodical closures (2) reducing plant capacity by moving to smaller facilities
(3) impairment of assets recorded in fiscal year 2002, which also resulted in a
reduction of depreciation, and (4) reducing insurance, travel and other
miscellaneous expenses.

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Income from operations in our Testing Services Segment increased by $225 or
58.6% from $384 in 2002 to $609 in 2003 due to the increase in sales and rapid
implementation in Southeast Asia of cost saving measures.

Loss from operations in our distribution segment increased by $143 from $6 in
2002 to $149 in 2003, due to the tough and competitive environment, which
changed our product mix from higher margin sales to lower margin sales.

Corporate operating loss was increased from operating loss of $87 in 2002 to an
operating loss of $114 in 2003 due to an increase in the allocation percentage
being charged on a greater sales volume.

Interest Expenses

Interest expense decreased by $7 or 6.7% from $104 in 2002 to $97 in 2003, as a
result of lower interest rates even though borrowings under the line of credit,
long-term debt and capitalized leases increased by $959.

Other Income

Other Income decreased by $94 or 32.6% from $288 in 2002 to $194 in 2003 due to
lower interest rate in fixed deposits, reversal of provision for diminution in
marketable securities recorded in fiscal year 2002 and unrealized currency loss
derived from appreciation of Euro and Sing Dollars against U.S. Dollars.

Income Tax

Current income tax expense for 2003 was approximately $50, a decrease of $18,
or 26.5% compared to the current income tax expense of $68 for 2002. The
decrease in current income tax expense for 2003 was due mainly to acceleration
of capital allowances on new plants in Singapore and utilization of unabsorbed
losses.

Because the net loss incurred in the U.S and Ireland did not offset the taxable
income in Singapore and Malaysia, we still incurred a total income tax expense
of $50 for 2003 including changes in deferred income tax assets and
liabilities, comparing to a total income tax expense of $68 for 2002, an
increase of $18 or 26.5%.

Net Income (Loss)

As a result of all of the factors analyzed above, the net income attributable
to common shares for the six months ended December 31, 2002 was approximately
$147, which represented an increase of $1,340 from a net loss of approximately
$1,193 attributed to common shares for the six months ended December 31, 2001,
a 112.3% change. Consequently, basic income per share for the six months ended
December 31, 2002 increased to earnings of $0.05 per share, from a basic loss
per share of $0.41 in 2002, which represented a change of $0.46 from net loss
to net income, a 112.3% change. Diluted income per share for 2003 was $0.05 per
share, an increase of $0.46 per share from diluted losses per share of $0.41
for 2002.

Liquidity and Capital Resources

We had working capital (defined as current assets minus current liabilities) of
approximately $6,705 for the period ended December 31, 2002, which represented
a decrease of approximately $214 compared with working capital of $6,919 as of
June 30, 2002, a 3.09% decrease. Historically, the Company had positive
working capital for the eight fiscal years prior to the fiscal year ended June
30, 2002. We believe that the Company has the ability to maintain positive
working capital in the near future.

The Companys credit rating provides ready and ample access to funds in global
capital markets. At December 31, 2002, the Company had available short-term
lines of credit totaling $7,587 of which $6,968 was unused.

|                        |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|----------------------- |  | -------------- |  | -------- | ---- | ------ |  | ------ | ----- | - | ----- | - | ----- | - | ----- | 
|Entity with Facility    |  | Type           |  | Interest |      | Credit |  | Unused
|                        |  |                |  |          |      |        |  |       
|Trio-Tech Malaysia      |  | Line of Credit |  |          | 8.90 | %      |  | $      | 38    |   |       | $ | 38    |  
|Trio-Tech Bangkok       |  | Line of Credit |  |          | 9.50 | %      |  |        | 46    |   |       |   | 46    |  
|Trio-Tech Singapore     |  | Line of Credit |  |          | 7.00 | %      |  |        | 2,593 |   |       |   | 2,421 |  
|Trio-Tech Singapore     |  | Line of Credit |  |          | 6.38 | %      |  |        | 4,610 |   |       |   | 4,263 |  
|Trio-Tech International |  | Line of Credit |  |          | 5.75 | %      |  |        | 300   |   |       |   | 200   |  
|                        |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|                        |  |                |  |          |      |        |  |        |       | $ | 7,587 |   |       | $ | 6,968 | 
|                        |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 

Even though the Company had suffered a net loss in the fiscal year ended June
30, 2002, management of the Company believes that the Company has the economic
wherewithal to satisfy its cash needs for the next twelve months plus one day
as a going concern business.

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Managements belief is based, in part, on the following: (1) we have a fixed
cash deposit of approximately $6.1 million (of which approximately $5.1 million
is available immediately); (2) we had backlog of $3,623 as of December 31, 2002
(3) our accounts receivable turnover ratio is approximately 4.64 times per year
(74 days of sales in accounts receivable) in 2003; (4) our financing facilities
available as of December 31, 2002 were approximately $6.8 million upon which we
are able to draw at any time; and (5) our efforts during the fiscal year ended
June 30, 2002, to cut costs and expenses, were effective. These cost cutting
measures consisted of (1) reducing headcount and related expenses such as
payroll and payroll-related costs such as bonuses which has been accomplished
through layoffs, reduction in management, shortened work weeks, salary
reductions and periodical closures (2) reducing plant capacity by moving to
smaller facilities and (3) reducing insurance, travel and other miscellaneous
expenses. We anticipate that the costs and expenses in fiscal year 2003 will be
lower than those during fiscal year 2002 and, accordingly, cash disbursement
needs should be lower also. However, we cannot provide any assurance that
costs and expenses in fiscal year 2003 or thereafter will not be higher than
those in fiscal year 2002.

Net cash provided by operating activities during the quarter ended December 31,
2002 was $1,463 compared to net cash of $653 used in operating activities
during the quarter ended December 31, 2001. The change of approximately $2,116
or 324% reflects our efforts in cost reduction, our response to the economic
downturn and decrease in capital investment demand from the semiconductor
industry. The $1,463 of net cash provided by operating activities in 2003 was
primarily attributable to net income of $147 and an increase of $127 in
accounts payable and accrued liabilities. The cash flow from our inventory was
$265 compared $41 provided in 2002 reflecting the fact that our inventory
turnover is increasing. Cash provided by other receivables in the amount of
$172 pertains to down payments for construction-in-progress. We had a $112 loss
on the sale of property plant and equipment from the disposal of obsolete
equipment. The cash provided from our accounts receivable in 2003 was $40
compared to $586 provided in 2002, a change of 93.2%, reflecting the fact that
our accounts receivable turnover in 2003 increased along with total revenue.

Net cash used in investing activities during 2003 was $1,161 compared to $1,118
provided by investing activities in 2002. The change was a swing of $2,279, or
203.8%. The net cash used in investing activities was due mainly to the
increase of $205 in short-term deposits, compared to the decrease in short-term
deposits of $1,221 in 2002, reflecting a change of $1,426 or 116.8%. In 2003,
our capital expenditures were $1,112 which related to the investment in the
Southeast Asia testing segment. Compared to the capital expenditure of $22 in
2002, we increased our investment by $1,090 as a result of expenditures needed
to maintain technology required to keep the current customer base in the ever
changing test market. We decreased our investment in marketable securities by
$130 in 2003 compared to an increase of $117 in 2002.

Net cash used in financing activities during 2003 was $456, reflecting an
increase of $253 or 124.6%, compared to $203 used in financing activities
during 2002. The cash outflow in financing activities included $1,343 of
payments on lines of credit, long-term debts and capital lease obligations
which were offset by a cash inflow of (1) $958 from additional borrowing under
lines of credit and long term debt, and (2) $71 in dividends paid to minority
interest.

Approximately $763 of cash deposits are held in the Companys 55% owned
Malaysian subsidiary. $239 of this cash is denominated in the currency of
Malaysia. Out of the $239, $239 is currently available for movement, as
authorized by the Central Bank of Malaysia. There are additional amounts
available as dividends (after making deductions for income tax) pursuant to
Malaysian regulations in force from July 1, 2000.

Recently Issued Accounting Pronouncements

Effective July 1, 2002, we adopted Statement of Financial Accounting Standards
(SFAS), No. 141, Business Combinations, and SFAS No. 142, Goodwill and
Other Intangible Assets. SFAS No. 141 replaces Accounting Principles Board
Opinion No. 16 (APB No. 16), Business Combination, and eliminates
pooling-of-interests accounting prospectively. It also provides guidance on
purchase accounting related to the recognition of intangible assets and
accounting for negative goodwill. SFAS No. 142 changes the accounting for
goodwill from an amortization method to an impairment-only approach. The
adoption of SFAS No. 141 and No. 142 did not have significant impact on our
financial statements. During the year ended June 30, 2002, the Company wrote
off all of the outstanding balance of approximately $393 of goodwill. During
the six months ended December 31, 2002 and 2001, goodwill amortization totaled
approximately $0.

Effective July 1, 2002 we adopted Financial Accounting Standard Board issued
Statement of Financial Accounting Standards, No. 143, Accounting for Asset
Retirement Obligations, (SFAS No. 143). SFAS No. 143 requires that any
legal obligation related to the retirement of long-lived assets be quantified
and recorded as a liability with the associated asset retirement cost
capitalized on the balance sheet in the period it is incurred when a reasonable
estimate of the fair value of the liability can be made. The adoption of SFAS
No 143 did not have significant impact on our consolidated financial
statements.

Effective July 1, 2002 we adopted Statement of Financial Accounting Standards
No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections (SFAS No. 145). SFAS No 145
eliminates the current requirement that gains and losses on debt extinguishment
must be classified as extraordinary items in the income

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statement. Instead, such gains and losses will be classified as extraordinary
items only if they are deemed to be unusual and infrequent, in accordance with
the current GAAP criteria for extraordinary classification. In addition, SFAS
145 eliminates an inconsistency in lease accounting by requiring that
modifications of capital leases that result in reclassification as operating
leases be accounted for consistent with sale-leaseback accounting rules. The
statement also contains other nonsubstantive corrections to authoritative
accounting literature. The adoption of SFAS No 145 did not have significant
impact on our consolidated financial statements.

In June 2002, Financial Accounting Standard Board issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities, which
addresses accounting for restructuring and similar costs. SFAS No. 146
supersedes previous accounting guidance, principally Emerging Issues Task Force
(EITF) Issue No. 94-3. SFAS No. 146 requires that the liability for costs
associated with an exit or disposal activity be recognized when the liability
is incurred. Under EITF No. 94-3, a liability for an exit cost was recognized
at the date of a companys commitment to an exit plan. SFAS No. 146 also
establishes that the liability should initially be measured and recorded at
fair value. Accordingly, SFAS No. 146 may affect the timing of recognizing
future restructuring costs as well as the amount recognized. The provisions of
SFAS 146 are to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. The Company does not expect that the
adoption of this standard will have any immediate effect on its consolidated
financial statements.

In December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148, Accounting for Stock-Based CompensationTransition and Disclosurean
amendment of FAS 123 (SFAS 148). This statement amends Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123), to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation and amends the disclosure requirements to SFAS 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The transition and annual
disclosure provisions of SFAS 148 are effective for interim periods beginning
after December 15, 2002. The Company will adopt the disclosure requirements of
SFAS 148 on January 1, 2003.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. We do not use derivative financial instruments in our
investment portfolio. Our investment portfolio is generally comprised of cash
deposits. Our policy is to place these investments in instruments that meet
high credit quality standards. These securities are subject to interest rate
risk, and could decline in value if interest rates fluctuate and thus subject
us to market risk due to those fluctuations. Due to the short duration and
conservative nature of our investment portfolio, we do not expect any material
loss with respect to our investment portfolio.

The interest on loans to us and on our lines of credit range from 5.50% to
9.50% per annum. As of December 31, 2002, the outstanding principal balance on
these loans was approximately $2,213. These interest rates are subject to
change and we cannot predict any increase or decrease in rates, if any.

Foreign Currency Exchange Rate Risk. Although the majority of our sales, cost
of manufacturing and marketing are transacted in U.S. dollars, significant
portions of our revenues are denominated in Singapore, Malaysian and other
currencies. Consequently, a portion of our costs, revenues and operating
margins may be affected by fluctuations in exchange rates, primarily between
the U.S. Dollar and such foreign currencies. We are also affected by
fluctuations in exchange rates if there is a mismatch between our foreign
currency denominated assets and liabilities. Foreign currency adjustments
resulted in a decrease of $8 and a decrease of $20 to shareholders equity for
six months ended December 31, 2002 and 2001, respectively.

We try to reduce our risk of foreign currency fluctuations by purchasing
certain equipment and supplies in U.S. Dollars and seeking payment, when
possible, in U.S. Dollars. However, we may not be successful in our attempts
to mitigate our exposure to exchange rate fluctuations. Those fluctuations
could have a material adverse effect on the Companys financial results.




ITEM 4. CONTROLS AND PROCEDURES

Within the 90-day period prior to the filling of this report, an evaluation was
carried out by the Companys Chief Executive Officer and Chief Financial
Officer as to the effectiveness of the Companys disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of
1934). Based upon that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that these disclosures controls and procedures were
adequate and effective to ensure that material information relating to the
Company and its consolidated subsidiaries would be made known to them by others
within these entities. No significant changes were made in the Companys
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, nor were any corrective
actions taken with regard to significant deficiencies and material weaknesses.

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TRIO-TECH INTERNATIONAL
PART II. OTHER INFORMATION




Item 1.  Legal Proceedings

Not applicable




Item 2.  Changes in Securities and Use of Proceeds

Not applicable




Item 3.  Defaults Upon Senior Securities

Not applicable




Item 4.  Submission of Matters to Vote of Security Holders

Not applicable




Item 5.  Other Information

Not applicable




Item 6.  Exhibits and reports on Form 8-K



| | (a) |  | Exhibits
| | --- |  | --------



| |  |  | 99.1 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002  Chief
Executive Officer
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | 99.2 Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002  Chief
Financial Officer



| | (b) |  | Reports on Form 8-K
| | --- |  | -------------------



| |  |  | The Registrant filed the following reports on Form 8-K with the Securities
and Exchange Commission during the second quarter of fiscal 2003:                                                                                                                                                                                                             
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | On December 18, 2002, the Company filed a current report on Form
8-K, with December 8, 2002 as the date of the earliest event
reported, with respect to Item 5. Other Eventsthat pertained to
the resignation from the Board of Directors by William L. Slover and
the subsequent replacement by A. Charles Wilson as the chair of the
audit committee.




SIGNATURES

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

| |  |                         |  |                                                                                                                                              
| |  | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | TRIO-TECH INTERNATIONAL
| |  |                         |  |                                                                                                                                              
| |  | By:                     |  | /s/ Victor H.M. Ting                                                                                                                         
| |  |                         |  |                                                                                                                                              
| |  |                         |  | VICTOR H.M. TING
Vice President and
Chief Financial Officer
(Duly authorized officer and
Principal Financial Officer)
Dated: February 6, 2003

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CERTIFICATIONS

I, S. W. Yong, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Trio-Tech
International;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this interim
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)     designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared.

b)     evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c)     presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a)     all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal control; and

b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control; and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

February 6, 2003

/s/ S. W. YONG
S.W. Yong
President and Chief Executive Officer
(Principal Executive Officer)

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##### Table of Contents



I, Victor H.M. Ting, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Trio-Tech
International;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this interim
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)     designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared.

b)     evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c)     presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a)     all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal control; and

b)     any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control; and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

February 6, 2003

/s/ VICTOR H.M. TING
Victor H.M. Ting
Vice President and Chief Financial Officer
(Principal Financial Officer)

21