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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, 2003

OR

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

Commission File Number 1-14523

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 Exchange Act Rule 12b-2). Yes o No þ

Number of shares of common stock outstanding as of February 5, 2004 is 2,932,542.



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TABLE OF CONTENTS



|                           |                                                                                               |                                                                       |  |  |  |  |  | 
|-------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- |  |  |  |  |  | 
|                           | ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS                                                    
|                           |                                                                                               | CONSOLIDATED BALANCE SHEETS                                          
|                           |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
|                           |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                                
|                           |                                                                                               | NOTES TO 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, Use of Proceeds and Issuer Purchases of Equity Securities     
|                           | 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                
|EXHIBIT 31.1              
|EXHIBIT 31.2              
|EXHIBIT 32                



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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.               |                                                                                                                                                                  | Consolidated Balance Sheets as of Dec. 31, 2003 (Unaudited) and June 30, 2003         |  |   | 3  |     
|           |                       | Consolidated Statements of Operations and Comprehensive Income (loss) for the Three and Six Months Ended Dec. 31, 2003 (Unaudited) and Dec. 31, 2002 (Unaudited) |                                                                                       |  | 4 |   
|           |                       | Consolidated Statements of Cash Flows for the Six Months Ended Dec. 31, 2003 (Unaudited) and Dec. 31, 2002 (Unaudited)                                           |                                                                                       |  | 5 |   
|           |                       | Notes to Consolidated Financial Statements (Unaudited)                                                                                                           |                                                                                       |  | 6 |   
|           | Item 2.               |                                                                                                                                                                  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  |   | 12 |     
|           | Item 3.               |                                                                                                                                                                  | Quantitative and Qualitative Disclosures about Market Risk                            |  |   | 22 |     
|           | Item 4.               |                                                                                                                                                                  | Controls and Procedures                                                               |  |   | 23 |     
|Part II.   | Other Information     |                                                                                                                                                                  |                                                                                       |  |  
|           | Item 1.               |                                                                                                                                                                  | Legal Proceedings                                                                     |  |   | 24 |     
|           | Item 2.               |                                                                                                                                                                  | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities      |  |   | 24 |     
|           | Item 3.               |                                                                                                                                                                  | Defaults upon Senior Securities                                                       |  |   | 24 |     
|           | Item 4.               |                                                                                                                                                                  | Submission of Matters to a Vote of Security Holders                                   |  |   | 24 |     
|           | Item 5.               |                                                                                                                                                                  | Other Information                                                                     |  |   | 24 |     
|           | Item 6.               |                                                                                                                                                                  | Exhibits and Reports
on Form 8-K                                                      |  |   | 24 |     
|Signatures |                       |                                                                                                                                                                  |                                                                                       |  |   |    | 25   | 

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

|                                           |                                                                                                                                                           |                            |        |             |        |          |        |        |        | 
|------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------ | ----------- | ------ | -------- | ------ | ------ | ------ | 
|                                           |                                                                                                                                                           |                            |        | (Unaudited) |        |          |        |       
|                                           |                                                                                                                                                           |                            |        | Dec 31,     |        | June 30,
|                                           |                                                                                                                                                           |                            |        | 2003        |        | 2003    
|                                           |                                                                                                                                                           |                            |        |             |        |         
|ASSETS                                     |                                                                                                                                                           |                            |        |             |        |          |        |       
|CURRENT ASSETS:                            |                                                                                                                                                           |                            |        |             |        |          |        |       
|                                           | Cash                                                                                                                                                      |                            | $      | 2,030       |        |          | $      | 1,495  |       
|                                           | Short term deposits                                                                                                                                       |                            |        | 4,769       |        |          |        | 4,308  |       
|                                           | Investments in marketable securities                                                                                                                      |                            |        |            |        |          |        | 485    |       
|                                           | Trade accounts receivable, less allowance for doubtful accounts
of $160 at Dec. 31, 2003 and $157 at Jun. 30, 2003, respectively                          |                            |        | 3,292       |        |          |        | 3,643  |       
|                                           | Other receivables                                                                                                                                         |                            |        | 359         |        |          |        | 373    |       
|                                           | Inventories, less provision for obsolete stock of $717 at Dec. 31, 2003
and $735 at Jun. 30, 2003, respectively                                           |                            |        | 1,075       |        |          |        | 1,049  |       
|                                           | Prepaid expenses and other current assets                                                                                                                 |                            |        | 181         |        |          |        | 140    |       
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       
|                                           |                                                                                                                                                           | Total current assets       |        |             | 11,706 |          |        |        | 11,493 | 
|PROPERTY, PLANT AND EQUIPMENT, Net         |                                                                                                                                                           |                            | 5,520  |             |        |          | 5,210  |       
|OTHER ASSETS, Net                          |                                                                                                                                                           |                            | 7      |             |        |          | 8      |       
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       
|TOTAL ASSETS                               |                                                                                                                                                           | $                          | 17,233 |             |        | $        | 16,711 |       
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       
|LIABILITIES AND SHAREHOLDERS EQUITY       |                                                                                                                                                           |                            |        |             |        |          |        |       
|CURRENT LIABILITIES:                       |                                                                                                                                                           |                            |        |             |        |          |        |       
|                                           | Lines of credit                                                                                                                                           |                            | $      | 147         |        |          | $      | 300    |       
|                                           | Accounts payable                                                                                                                                          |                            |        | 1,271       |        |          |        | 1,080  |       
|                                           | Accrued expenses                                                                                                                                          |                            |        | 2,265       |        |          |        | 2,096  |       
|                                           | Income taxes payable                                                                                                                                      |                            |        | 37          |        |          |        | 56     |       
|                                           | Current portion of notes payable                                                                                                                          |                            |        | 576         |        |          |        | 632    |       
|                                           | Current portion of capitalized leases                                                                                                                     |                            |        | 234         |        |          |        | 302    |       
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       
|                                           |                                                                                                                                                           | Total current liabilities  |        |             | 4,530  |          |        |        | 4,466  | 
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       
|NOTES PAYABLE, net of current portion      |                                                                                                                                                           |                            | 818    |             |        |          | 492    |       
|CAPITALIZED LEASES, net of current portion |                                                                                                                                                           |                            | 303    |             |        |          | 344    |       
|DEFERRED INCOME TAXES                      |                                                                                                                                                           |                            | 732    |             |        |          | 711    |       
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       
|TOTAL LIABILITIES                          |                                                                                                                                                           |                            | 6,383  |             |        |          | 6,013  |       
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       
|COMMITMENTS AND CONTINGENCIES              |                                                                                                                                                           |                            |        |             |        |          |        |       
|MINORITY INTEREST                          |                                                                                                                                                           |                            | 2,115  |             |        |          | 2,108  |       
|SHAREHOLDERS EQUITY:                      |                                                                                                                                                           |                            |        |             |        |          |        |       
|                                           | Common stock; no par value, authorized, 15,000,000 shares; issued and outstanding
2,932,542 shares at Dec. 31, 2003 and 2,927,542 shares at Jun. 30, 2003 |                            |        | 9,437       |        |          |        | 9,423  |       
|                                           | Additional paid-in capital                                                                                                                                |                            |        | 284         |        |          |        | 284    |       
|                                           | Retained earnings (accumulated deficit)                                                                                                                   |                            |        | (786        | )      |          |        | (739   | )     
|                                           | Accumulated other comprehensive income-marketable securities                                                                                              |                            |        |            |        |          |        | 45     |       
|                                           | Accumulated other comprehensive loss-foreign currency                                                                                                     |                            |        | (200        | )      |          |        | (423   | )     
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       
|                                           |                                                                                                                                                           | Total shareholders equity |        |             | 8,735  |          |        |        | 8,590  | 
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       
|TOTAL LIABILITIES AND                      |                                                                                                                                                           |                            |        |             |        |          |        |       
|                                           | SHAREHOLDERS EQUITY                                                                                                                                      |                            | $      | 17,233      |        |          | $      | 16,711 |       
|                                           |                                                                                                                                                           |                            |        |             |        |          |        |       

See notes to condensed consolidated financial statements.

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

|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |       |       | 
|------------------------------------- | ------------------------------------------------- | ------- | ----- | ---------------- | ----- | ------------------ | ------ | -------- | ----- | -------- | ----- | ---- | ----- | - | ----- | ----- | ----- | 
|                                      |                                                   |         |       | Six Months Ended |       | Three Months Ended
|                                      |                                                   |         |       |                  |       |                   
|                                      |                                                   |         |       | Dec. 31,         |       | Dec. 31,           |        | Dec. 31, |       | Dec. 31,
|                                      |                                                   |         |       | 2003             |       | 2002               |        | 2003     |       | 2002    
|                                      |                                                   |         |       |                  |       |                    |        |          |       |         
|NET SALES                             |                                                   | $       | 8,906 |                  |       | $                  | 10,966 |          |       | $        | 5,056 |      |       | $ | 5,051 |      
|COST OF SALES                         |                                                   |         | 6,559 |                  |       |                    | 7,843  |          |       |          | 3,634 |      |       |   | 3,672 |      
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|GROSS PROFIT                          |                                                   |         | 2,347 |                  |       |                    | 3,123  |          |       |          | 1,422 |      |       |   | 1,379 |      
|OPERATING EXPENSES:                   |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      | General and administrative                        |         |       | 1,953            |       |                    |        | 2,370    |       |          |       | 970  |       |   |       | 1,087 |      
|                                      | Selling                                           |         |       | 417              |       |                    |        | 472      |       |          |       | 212  |       |   |       | 213   |      
|                                      | Research and development                          |         |       | 59               |       |                    |        | 55       |       |          |       | 27   |       |   |       | 28    |      
|                                      | Loss on disposal of property, plant and
equipment |         |       | 4                |       |                    |        | 112      |       |          |       |     |       |   |       |      |      
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      |                                                   | Total   |       |                  | 2,433 |                    |        |          | 3,009 |          |       |      | 1,209 |   |       |       | 1,328 | 
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|(LOSS) INCOME FROM OPERATIONS         |                                                   |         | (86   | )                |       |                    | 114    |          |       |          | 213   |      |       |   | 51    |      
|OTHER INCOME (EXPENSE)                |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      | Interest expense                                  |         |       | (66              | )     |                    |        | (97      | )     |          |       | (31  | )     |   |       | (46   | )    
|                                      | Other income                                      |         |       | 196              |       |                    |        | 164      |       |          |       | 58   |       |   |       | 50    |      
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      |                                                   | Total   |       |                  | 130   |                    |        |          | 67    |          |       |      | 27    |   |       |       | 4     | 
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|INCOME BEFORE INCOME TAXES AND        |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      | MINORITY INTEREST                                 |         |       | 44               |       |                    |        | 181      |       |          |       | 240  |       |   |       | 55    |      
|INCOME TAXES                          |                                                   |         | 33    |                  |       |                    | 50     |          |       |          | 18    |      |       |   | (18   | )    
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|INCOME BEFORE MINORITY INTEREST       |                                                   |         | 11    |                  |       |                    | 131    |          |       |          | 222   |      |       |   | 73    |      
|MINORITY INTEREST                     |                                                   |         | (58   | )                |       |                    | 16     |          |       |          | (4    | )    |       |   | 18    |      
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|NET (LOSS) INCOME ATTRIBUTABLE TO     |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      | COMMON SHARES                                     |         |       | (47              | )     |                    |        | 147      |       |          |       | 218  |       |   |       | 91    |      
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|OTHER COMPREHENSIVE INCOME (LOSS):    |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      | Unrealised (loss) gain on investment              |         |       | (45              | )     |                    |        | (24      | )     |          |       |     |       |   |       | (13   | )    
|                                      | Foreign currency translation adjustment           |         |       | 223              |       |                    |        | (8       | )     |          |       | 92   |       |   |       | 106   |      
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|COMPREHENSIVE INCOME                  |                                                   | $       | 131   |                  |       | $                  | 115    |          |       | $        | 310   |      |       | $ | 184   |      
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|(LOSS) EARNINGS PER SHARE:            |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      | Basic                                             |         | $     | (0.02            | )     |                    | $      | 0.05     |       |          | $     | 0.07 |       |   | $     | 0.03  |      
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      | Diluted                                           |         | $     | (0.02            | )     |                    | $      | 0.05     |       |          | $     | 0.07 |       |   | $     | 0.03  |      
|                                      |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|WEIGHTED AVERAGE NUMBER OF COMMON AND |                                                   |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |      
|                                      | POTENTIAL COMMON SHARES OUTSTANDING               |         |       |                  |       |                    |        |          |       |          |       |      |       |   |       |       |      
|                                      |                                                   | Basic   |       |                  | 2,930 |                    |        |          | 2,928 |          |       |      | 2,933 |   |       |       | 2,928 | 
|                                      |                                                   | Diluted |       |                  | 2,930 |                    |        |          | 2,928 |          |       |      | 2,985 |   |       |       | 2,928 | 

See notes to condensed consolidated financial statements.

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

|                                                                          |                                                                                   |                                           |                                           |      |                  |       |          |      |     |       |  
|------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ---- | ---------------- | ----- | -------- | ---- | --- | ----- | -
|                                                                          |                                                                                   |                                           |                                           |      | Six Months Ended
|                                                                          |                                                                                   |                                           |                                           |      |                 
|                                                                          |                                                                                   |                                           |                                           |      | Dec. 31,         |       | Dec. 31,
|                                                                          |                                                                                   |                                           |                                           |      | 2003             |       | 2002    
|                                                                          |                                                                                   |                                           |                                           |      |                  |       |         
|CASH FLOWS FROM OPERATING ACTIVITIES:                                     |                                                                                   |                                           |                                           |      |                  |       |          |     
|                                                                          | Net (loss) income                                                                 |                                           | $                                         | (47  | )                |       | $        | 147  |    
|                                                                          | Adjustments to reconcile net income to
net cash provided by operating activities: |                                           |                                           |      |                  |       |          |      |    
|                                                                          | Depreciation and amortization                                                     |                                           |                                           | 582  |                  |       |          | 643  |    
|                                                                          | Bad debt expenses (recovery), net                                                 |                                           |                                           | 3    |                  |       |          | 19   |    
|                                                                          | Stock Compensation                                                                |                                           |                                           |     |                  |       |          | 14   |    
|                                                                          | Loss on sale of property and equipment                                            |                                           |                                           | 4    |                  |       |          | 112  |    
|                                                                          | Gain on disposal of marketable securities                                         |                                           |                                           | (114 | )                |       |          | (45  | )  
|                                                                          | Deferred income taxes                                                             |                                           |                                           | 21   |                  |       |          | 11   |    
|                                                                          | Minority interest                                                                 |                                           |                                           | 58   |                  |       |          | (16  | )  
|                                                                          | Changes in operating assets and liabilities:                                      |                                           |                                           |      |                  |       |          |      |    
|                                                                          |                                                                                   | Accounts receivable, net                  |                                           |      | 348              |       |          |      | 40  |      
|                                                                          |                                                                                   | Other receivables                         |                                           |      | 17               |       |          |      | 17  |      
|                                                                          |                                                                                   | Inventories                               |                                           |      | (26              | )     |          |      | 265 |      
|                                                                          |                                                                                   | Prepaid expenses and other current assets |                                           |      | (41              | )     |          |      | (35 | )    
|                                                                          |                                                                                   | Accounts payable and accrued expenses     |                                           |      | 360              |       |          |      | 127 |      
|                                                                          |                                                                                   | Income taxes payable                      |                                           |      | (19              | )     |          |      | (12 | )    
|                                                                          |                                                                                   |                                           |                                           |      |                  |       |          |     
|                                                                          |                                                                                   |                                           | Net cash provided by operating activities |      |                  | 1,146 |          |      |     | 1,287 |  
|                                                                          |                                                                                   |                                           |                                           |      |                  |       |          |     
|CASH FLOWS FROM INVESTING ACTIVITIES:                                     |                                                                                   |                                           |                                           |      |                  |       |          |     
|                                                                          | Short term deposits                                                               |                                           |                                           | (461 | )                |       |          | (205 | )  
|                                                                          | Capital expenditures                                                              |                                           |                                           | (638 | )                |       |          | (668 | )  
|                                                                          | Purchase of marketable securities                                                 |                                           |                                           | (4   | )                |       |          | (304 | )  
|                                                                          | Other assets                                                                      |                                           |                                           | 1    |                  |       |          | 26   |    
|                                                                          | Proceeds from disposal of marketable securities                                   |                                           |                                           | 555  |                  |       |          | 455  |    
|                                                                          | Proceeds from sale of property and equipment                                      |                                           |                                           | 38   |                  |       |          |     |    
|                                                                          |                                                                                   |                                           |                                           |      |                  |       |          |     
|                                                                          |                                                                                   |                                           | Net cash used in investing activities     |      |                  | (509  | )        |      |     | (696  | )
|                                                                          |                                                                                   |                                           |                                           |      |                  |       |          |     
|CASH FLOWS FROM FINANCING ACTIVITIES:                                     |                                                                                   |                                           |                                           |      |                  |       |          |     
|                                                                          | Net payments and borrowings on lines of credit                                    |                                           |                                           | (156 | )                |       |          | (617 | )  
|                                                                          | Net payments and borrowings on debt and capitalized leases                        |                                           |                                           | 67   |                  |       |          | (57  | )  
|                                                                          | Dividends paid to minority interest                                               |                                           |                                           | (62  | )                |       |          | (71  | )  
|                                                                          | Issuance of common stock, net                                                     |                                           |                                           | 14   |                  |       |          |     |    
|                                                                          |                                                                                   |                                           |                                           |      |                  |       |          |     
|                                                                          |                                                                                   |                                           | Net cash used in financing activities     |      |                  | (137  | )        |      |     | (745  | )
|                                                                          |                                                                                   |                                           |                                           |      |                  |       |          |     
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                   |                                                                                   |                                           | 35                                        |      |                  |       | (3       | )   
|NET INCREASE (DECREASE) IN CASH                                           |                                                                                   |                                           | 535                                       |      |                  |       | (157     | )   
|CASH, BEGINNING OF PERIOD                                                 |                                                                                   |                                           | 1,495                                     |      |                  |       | 1,128    |     
|                                                                          |                                                                                   |                                           |                                           |      |                  |       |          |     
|CASH, END OF PERIOD                                                       |                                                                                   | $                                         | 2,030                                     |      |                  | $     | 971      |     
|                                                                          |                                                                                   |                                           |                                           |      |                  |       |          |     
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                          |                                                                                   |                                           |                                           |      |                  |       |          |     
|                                                                          | Cash paid during the period for:                                                  |                                           |                                           |      |                  |       |          |      |    
|                                                                          |                                                                                   | Interest                                  |                                           | $    | 64               |       |          | $    | 97  |      
|                                                                          |                                                                                   | Income taxes                              |                                           | $    | 52               |       |          | $    | 111 |      
|NON-CASH INVESTING AND FINANCING ACTIVITIES                               |                                                                                   |                                           |                                           |      |                  |       |          |     
|-Acquisition of property, plant and equipment under capital finance lease |                                                                                   | $                                         | 94                                        |      |                  | $     | 289      |     
|- Capitalization of property, plant and equipment paid in advance         |                                                                                   | $                                         |                                          |      |                  | $     | 155      |     

See notes to condensed consolidated financial statements.

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



|1. |  | ORGANIZATION AND BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Trio-Tech International (the Company or TTI hereafter) 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, China 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         |  |                    | 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  
|Trio-Tech (Suzhou) Co. Ltd.             |  |                    | 100 | %         |    | Suzhou, China       



|   |  | 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 fair presentation have been included. Operating
results for the six months ended December 31, 2003 are not necessarily
indicative of the results that may be expected for the fiscal year ending
June 30, 2004. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Companys
annual report for the fiscal year ended June 30, 2003.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | INVENTORIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | Inventories consist of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                       |  |         |       |          |  |   |       |  
|-------------------------------------- |  | ------- | ----- | -------- |  | - | ----- | -
|                                       |  | Dec 31, |       | June 30,
|                                       |  | 2003    |       | 2003    
|                                       |  |         |       |         
|Raw materials                          |  | $       | 863   |          |  | $ | 873   |  
|Work in progress                       |  |         | 234   |          |  |   | 166   |  
|Finished goods                         |  |         | 695   |          |  |   | 745   |  
|Less: provision for obsolete inventory |  |         | (717  | )        |  |   | (735  | )
|                                       |  |         |       |          |  |   |       |  
|                                       |  | $       | 1,075 |          |  | $ | 1,049 |  
|                                       |  |         |       |          |  |   |       |  

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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 has adopted the intrinsic value method of accounting for
employee stock options as permitted by Statement of Financial Accounting
Standards No. 123, Accounting for Stock-based Compensation (SFAS No.
123) and discloses the pro forma effect on net loss and loss per share as
if the fair value based method had been applied. For equity instruments,
including stock options, issued to non-employees, the fair value of the
equity instruments or the fair value of the consideration received,
whichever is more readily determinable, is used to determine the value of
services or goods received and the corresponding charge to operations.
|  
|   |  | The following table illustrates the effect on net (loss) income and (loss)
income per share as if the Company had applied the fair value recognition
provision of SFAS No. 123 to stock-based employee compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                                                                                          |  |                  |       |                    |  |             |      |         |  |   |      |  |  |   |      | 
|--------------------------------------------------------------------------------------------------------- |  | ---------------- | ----- | ------------------ |  | ----------- | ---- | ------- |  | - | ---- |  |  | - | ---- | 
|                                                                                                          |  | Six Months Ended |       | Three Months Ended
|                                                                                                          |  |                  |       |                   
|                                                                                                          |  | Dec 31,          |       |                    |  |             |      | Dec 31, |  |   |      | 
|                                                                                                          |  | 2003             |       | Dec 31,            |  | 2003        |      | Dec 31,
|                                                                                                          |  | (unaudited)      |       | 2002               |  | (unaudited) |      | 2002   
|                                                                                                          |  |                  |       |                    |  |             |      |        
|Net (loss) income: as reported                                                                            |  | $                | (47   | )                  |  | $           | 147  |         |  | $ | 218  |  |  | $ | 91   | 
|Add: stock based employee compensation
included in reported income                                        |  |                  |      |                    |  |             | 14   |         |  |   |     |  |  |   |     | 
|Deduct: total stock based employee compensation
expense determined under fair value method for
all awards |  |                  | (44   | )                  |  |             | (11  | )       |  |   |     |  |  |   |     | 
|                                                                                                          |  |                  |       |                    |  |             |      |         |  |   |      |  |  |   |      | 
|Pro forma net (loss) income                                                                               |  | $                | (91   | )                  |  | $           | 150  |         |  | $ | 218  |  |  | $ | 91   | 
|                                                                                                          |  |                  |       |                    |  |             |      |         |  |   |      |  |  |   |      | 
|(Loss) income per share - basic                                                                           |  |                  |       |                    |  |             |      |         |  |   |      |  |  |   |      | 
|As reported                                                                                               |  | $                | (0.02 | )                  |  | $           | 0.05 |         |  | $ | 0.07 |  |  | $ | 0.03 | 
|Pro forma                                                                                                 |  | $                | (0.03 | )                  |  | $           | 0.05 |         |  | $ | 0.07 |  |  | $ | 0.03 | 
|(Loss) income per share - diluted                                                                         |  |                  |       |                    |  |             |      |         |  |   |      |  |  |   |      | 
|As reported                                                                                               |  | $                | (0.02 | )                  |  | $           | 0.05 |         |  | $ | 0.07 |  |  | $ | 0.03 | 
|Pro forma                                                                                                 |  | $                | (0.03 | )                  |  | $           | 0.05 |         |  | $ | 0.07 |  |  | $ | 0.03 | 



|   |  | As required by SFAS 123, the Company provides the following disclosure of
estimated values for these awards. The weighted-average grant-date fair
value of options granted during 2004 and 2003 was estimated to be $2.66
and $2.25 respectively.                                                                                                                                                                                                                                                                                           
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The fair value of each option grant was estimated on the date of grant
using a Black-Scholes option-pricing model with the following weighted
average assumptions for 2004 and 2003, respectively; risk free interest
rates from 1.91% to 2.93% and 2.79%, expected lives of 2 years for 2004
and 1 year for 2003; volatility of 41.41% and 45.99% and no assumed
dividends.                                                                                                                                                                
|  
|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 388,500 shares at prices ranging from $2.25 to
$6.00 per share were outstanding during the six months ending December 31,
2003. The following options were excluded in the computation of diluted
EPS                                                                                                                                                                                                                                                                                                             

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| |  | because the exercise price was greater than the average market price
of the common shares and therefore were anti-dilutive:
| |  | ---------------------------------------------------------------------------------------------------------------------------

|        |  |        |        |       |  |            |      |  |  |                    |  | 
|------- |  | ------ | ------ | ----- |  | ---------- | ---- |  |  | ------------------ |  | 
|Type    |  | Shares |        | Price |  | Expiration
|        |  |        |        |       |  |           
|Options |  |        | 25,000 |       |  | $          | 5.63 |  |  | September 18, 2005
|Options |  |        | 32,000 |       |  | $          | 5.37 |  |  | July 10, 2005     
|Options |  |        | 51,000 |       |  | $          | 6.00 |  |  | March 27, 2005    
|Options |  |        | 20,000 |       |  | $          | 3.69 |  |  | July 12, 2004     



| |  | Stock options and warrants to purchase 437,500 shares at prices ranging
from $2.75 to $6.00 per share were outstanding during the six months ended
December 31, 2002 and were excluded from the computation of diluted EPS
because their effect would have been anti-dilutive.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The following table is a reconciliation of the weighted-average shares
used in the computation of basic and diluted EPS for the years presented
herein:                                                                                                                       

|                                                                       |  |                  |           |                    |  |         |           |         |  |   |           |  |  |   |           | 
|---------------------------------------------------------------------- |  | ---------------- | --------- | ------------------ |  | ------- | --------- | ------- |  | - | --------- |  |  | - | --------- | 
|                                                                       |  | Six Months Ended |           | Three Months Ended
|                                                                       |  |                  |           |                   
|                                                                       |  | Dec. 31          |           | Dec. 31            |  | Dec. 31 |           | Dec. 31
|                                                                       |  | 2003             |           | 2002               |  | 2003    |           | 2002   
|                                                                       |  |                  |           |                    |  |         |           |        
|Net (loss) income used to compute basic and
diluted earnings per share |  | $                | (47       | )                  |  | $       | 147       |         |  | $ | 218       |  |  | $ | 91        | 
|                                                                       |  |                  |           |                    |  |         |           |         |  |   |           |  |  |   |           | 
|Weighted average number of common
shares outstanding - basic           |  |                  | 2,930,000 |                    |  |         | 2,928,000 |         |  |   | 2,933,000 |  |  |   | 2,928,000 | 
|Dilutive effect of stock options                                       |  |                  |          |                    |  |         |          |         |  |   | 52,000    |  |  |   |          | 
|                                                                       |  |                  |           |                    |  |         |           |         |  |   |           |  |  |   |           | 
|Number of shares used to compute
earnings per share - diluted          |  |                  | 2,930,000 |                    |  |         | 2,928,000 |         |  |   | 2,985,000 |  |  |   | 2,928,000 | 
|                                                                       |  |                  |           |                    |  |         |           |         |  |   |           |  |  |   |           | 



|5. |  | ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Accounts receivable are customer obligations due under normal trade terms.
We sell our products and services to manufacturers in the semiconductor
industry. We perform continuing credit evaluations of our customers
financial condition and although we generally do not require collateral,
letters of credit may be required from our customers in certain
circumstances.                                                                                                                                                                                           
|  
|   |  | Senior management reviews accounts receivable on a monthly basis to
determine if any receivables will potentially be uncollectible. We
include any accounts receivable balances that are determined to be
uncollectible in our allowance for doubtful accounts. After all attempts
to collect a receivable have failed, the receivable is written off against
the allowance. Based on the information available to us, we believe our
allowance for doubtful accounts as of December 31, 2003 is adequate.
However, actual write-offs might exceed the recorded allowance.

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|          |                                        |   |             |    |          |   |     |     |  
|--------- | -------------------------------------- | - | ----------- | -- | -------- | - | --- | --- | -
|          |                                        |   | Dec 31,     |    |          |   |    
|          |                                        |   | 2003        |    | June 30,
|          |                                        |   | (unaudited) |    | 2003    
|          |                                        |   |             |    |         
|Beginning |                                        | $ | 157         |    |          | $ | 174 |    
|          | Additions charged to cost and expenses |   |             | 8  |          |   |     |    |  
|          | Recovered                              |   |             | (5 | )        |   |     | (17 | )
|          | Actual write-offs                      |   |             |   |          |   |     |    |  
|          |                                        |   |             |    |          |   |     |    
|Ending    |                                        | $ | 160         |    |          | $ | 157 |    
|          |                                        |   |             |    |          |   |     |    



|6. |  | WARRANTY ACCRUAL
|-- |  | ----------------

|          |                                        |   |             |    |         |   |     |      |  
|--------- | -------------------------------------- | - | ----------- | -- | ------- | - | --- | ---- | -
|          |                                        |   | Dec 31,     |    |         |   |    
|          |                                        |   | 2003        |    | Jun 30,
|          |                                        |   | (unaudited) |    | 2003   
|          |                                        |   |             |    |        
|Beginning |                                        | $ | 165         |    |         | $ | 305 |     
|          | Additions charged to cost and expenses |   |             |   |         |   |     | 1    |  
|          | Recovered                              |   |             | (6 | )       |   |     | (126 | )
|          | Actual write-offs                      |   |             | (7 | )       |   |     | (15  | )
|          |                                        |   |             |    |         |   |     |     
|Ending    |                                        | $ | 152         |    |         | $ | 165 |     
|          |                                        |   |             |    |         |   |     |     



|7. |  | BUSINESS SEGMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company operates principally in three industry segments, the testing
service industry (which performs structural and electronic tests of
semiconductor devices), the designing and manufacturing of equipment (which
equipment tests the structural integrity of integrated circuits and other
products), and the distribution of various products from other
manufacturers in Singapore and Southeast Asia. The following net sales
were based on customer location rather than subsidiary location.
|  
|   |  | The allocation of the cost of equipment, the current year investment in new
equipment and depreciation expense have been made on the basis of the
primary purpose for which the equipment was acquired.                                                                                                                                                                                                                                                                                                  
|  
|   |  | All inter-segment sales are sales from the Manufacturing Segment to the
Testing and Distribution Segment. Total inter-segment sales were $34 and
$31 for the six months ended December 31, 2003 and 2002 respectively, and
$18 and $9 for the three months ended 2003 and 2002 respectively.
Corporate assets mainly consist of cash and prepaid expenses. Corporate
expenses mainly consist of salaries, insurance, professional expenses and
directors fees.                                          

9



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The following segment information is unaudited and is in thousands:



| |  | Business Segment Information:
| |  | -----------------------------

|                 |  |              |  |       |       |        |  |           |      |        |  |              |        |         |  |   |     |  |  |   |     |  |  | 
|---------------- |  | ------------ |  | ----- | ----- | ------ |  | --------- | ---- | ------ |  | ------------ | ------ | ------- |  | - | --- |  |  | - | --- |  |  | 
|                 |  | Three Months |  |       |       |        |  | Operating |      |        |  |              |        | Depr.   |  |   |     | 
|                 |  | Ended        |  | Net   |       | Income |  |           |      |        |  | and          |        | Capital
|                 |  | Dec. 31,     |  | Sales |       | (loss) |  | Assets    |      | Amort. |  | Expenditures
|                 |  |              |  |       |       |        |  |           |      |        |  |             
|Manufacturing    |  | FY 2004      |  | $     | 1,715 |        |  | $         | 4    |        |  | $            | 2,573  |         |  | $ | 23  |  |  | $ | 3   | 
|                 |  | FY 2003      |  | $     | 1,390 |        |  | $         | (150 | )      |  | $            | 3,061  |         |  | $ | 21  |  |  | $ | 4   | 
|Testing Services |  | FY 2004      |  | $     | 2,349 |        |  | $         | 132  |        |  | $            | 14,169 |         |  | $ | 242 |  |  | $ | 114 | 
|                 |  | FY 2003      |  | $     | 2,347 |        |  | $         | 322  |        |  | $            | 15,019 |         |  | $ | 262 |  |  | $ | 130 | 
|Distribution     |  | FY 2004      |  | $     | 992   |        |  | $         | 76   |        |  | $            | 460    |         |  | $ | 31  |  |  | $ | 70  | 
|                 |  | FY 2003      |  | $     | 1,314 |        |  | $         | (85  | )      |  | $            | 484    |         |  | $ | 27  |  |  | $ | 3   | 
|Corporate and    |  | FY 2004      |  | $     |      |        |  | $         | 1    |        |  | $            | 31     |         |  | $ | 2   |  |  | $ |    | 
|unallocated      |  | FY 2003      |  | $     |      |        |  | $         | (36  | )      |  | $            | 358    |         |  | $ | 1   |  |  | $ |    | 
|Total Company    |  | FY 2004      |  | $     | 5,056 |        |  | $         | 213  |        |  | $            | 17,233 |         |  | $ | 298 |  |  | $ | 187 | 
|                 |  | FY 2003      |  | $     | 5,051 |        |  | $         | 51   |        |  | $            | 18,922 |         |  | $ | 311 |  |  | $ | 137 | 



| |  | Business Segment Information:
| |  | -----------------------------

|                 |  |            |  |       |        |        |  |           |      |        |  |              |        |         |  |   |     |  |  |   |       |  |  | 
|---------------- |  | ---------- |  | ----- | ------ | ------ |  | --------- | ---- | ------ |  | ------------ | ------ | ------- |  | - | --- |  |  | - | ----- |  |  | 
|                 |  | Six Months |  |       |        |        |  | Operating |      |        |  |              |        | Depr.   |  |   |     | 
|                 |  | Ended      |  | Net   |        | Income |  |           |      |        |  | and          |        | Capital
|                 |  | Dec. 31,   |  | Sales |        | (loss) |  | Assets    |      | Amort. |  | Expenditures
|                 |  |            |  |       |        |        |  |           |      |        |  |             
|Manufacturing    |  | FY 2004    |  | $     | 2,621  |        |  | $         | (277 | )      |  | $            | 2,573  |         |  | $ | 45  |  |  | $ | 58    | 
|                 |  | FY 2003    |  | $     | 3,135  |        |  | $         | (279 | )      |  | $            | 3,061  |         |  | $ | 42  |  |  | $ | 5     | 
|Testing Services |  | FY 2004    |  | $     | 4,633  |        |  | $         | 214  |        |  | $            | 14,169 |         |  | $ | 474 |  |  | $ | 589   | 
|                 |  | FY 2003    |  | $     | 4,911  |        |  | $         | 609  |        |  | $            | 15,019 |         |  | $ | 543 |  |  | $ | 1,074 | 
|Distribution     |  | FY 2004    |  | $     | 1,652  |        |  | $         | 38   |        |  | $            | 460    |         |  | $ | 59  |  |  | $ | 85    | 
|                 |  | FY 2003    |  | $     | 2,920  |        |  | $         | (101 | )      |  | $            | 484    |         |  | $ | 56  |  |  | $ | 33    | 
|Corporate and    |  | FY 2004    |  | $     |       |        |  | $         | (61  | )      |  | $            | 31     |         |  | $ | 4   |  |  | $ |      | 
|unallocated      |  | FY 2003    |  | $     |       |        |  | $         | (115 | )      |  | $            | 358    |         |  | $ | 2   |  |  | $ |      | 
|Total Company    |  | FY 2004    |  | $     | 8,906  |        |  | $         | (86  | )      |  | $            | 17,233 |         |  | $ | 582 |  |  | $ | 732   | 
|                 |  | FY 2003    |  | $     | 10,966 |        |  | $         | 114  |        |  | $            | 18,922 |         |  | $ | 643 |  |  | $ | 1,112 | 

10



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| |  | Geographic Area Information:
| |  | ----------------------------

|                    |  |              |  |        |       |        |  |           |     |          |  |          |       |       |  |         |       |  |  |  |     |     |  |        |     |         |  |   |       |  |  | 
|------------------- |  | ------------ |  | ------ | ----- | ------ |  | --------- | --- | -------- |  | -------- | ----- | ----- |  | ------- | ----- |  |  |  | --- | --- |  | ------ | --- | ------- |  | - | ----- |  |  | 
|                    |  |              |  |        |       |        |  |           |     |          |  |          |       |       |  |         |       |  |  |  |     |     |  |        |     | Elimin- |  |   |       | 
|                    |  | Three Months |  |        |       |        |  |           |     |          |  |          |       |       |  |         |       |  |  |  |     |     |  | ations |     |         |  |  
|                    |  | Ended        |  | United |       |        |  |           |     |          |  |          |       |       |  |         |       |  |  |  |     | and |  | Total 
|                    |  | Dec. 31,     |  | States |       | Europe |  | Singapore |     | Thailand |  | Malaysia |       | Other |  | Company
|                    |  |              |  |        |       |        |  |           |     |          |  |          |       |       |  |        
|Net sales to        |  | FY 2004      |  | $      | 1,453 |        |  |           | 250 |          |  |          | 2,650 |       |  |         | 601   |  |  |  | 111 |     |  |        | (9  | )       |  | $ | 5,056 | 
|customers           |  | FY 2003      |  | $      | 2,063 |        |  |           | 249 |          |  |          | 2,126 |       |  |         | 545   |  |  |  | 86  |     |  |        | (18 | )       |  | $ | 5,051 | 
|Operating           |  | FY 2004      |  | $      | 69    |        |  |           | (14 | )        |  |          | 124   |       |  |         | 28    |  |  |  | 5   |     |  |        | 1   |         |  | $ | 213   | 
|Income (loss)       |  | FY 2003      |  | $      | 56    |        |  |           | (16 | )        |  |          | 36    |       |  |         | 10    |  |  |  | 1   |     |  |        | (36 | )       |  | $ | 51    | 
|Property, plant     |  | FY 2004      |  | $      | 74    |        |  |           | 437 |          |  |          | 3,683 |       |  |         | 1,029 |  |  |  | 337 |     |  |        | (40 | )       |  | $ | 5,520 | 
|and equipment - net |  | FY 2003      |  | $      | 135   |        |  |           | 447 |          |  |          | 4,027 |       |  |         | 834   |  |  |  | 608 |     |  |        | (40 | )       |  | $ | 6,011 | 



| |  | Geographic Area Information:
| |  | ----------------------------

|                    |  |            |  |        |       |        |  |           |     |          |  |          |       |       |  |         |       |  |  |  |     |     |  |        |      |         |  |   |        |   |  | 
|------------------- |  | ---------- |  | ------ | ----- | ------ |  | --------- | --- | -------- |  | -------- | ----- | ----- |  | ------- | ----- |  |  |  | --- | --- |  | ------ | ---- | ------- |  | - | ------ | - |  | 
|                    |  |            |  |        |       |        |  |           |     |          |  |          |       |       |  |         |       |  |  |  |     |     |  |        |      | Elimin- |  |   |        |  
|                    |  | Six Months |  |        |       |        |  |           |     |          |  |          |       |       |  |         |       |  |  |  |     |     |  | ations |      |         |  |  
|                    |  | Ended      |  | United |       |        |  |           |     |          |  |          |       |       |  |         |       |  |  |  |     | and |  | Total 
|                    |  | Dec. 31,   |  | States |       | Europe |  | Singapore |     | Thailand |  | Malaysia |       | Other |  | Company
|                    |  |            |  |        |       |        |  |           |     |          |  |          |       |       |  |        
|Net sales to        |  | FY 2004    |  | $      | 2,537 |        |  |           | 590 |          |  |          | 4,497 |       |  |         | 1,150 |  |  |  | 166 |     |  |        | (34  | )       |  | $ | 8,906  |  
|customers           |  | FY 2003    |  | $      | 3,958 |        |  |           | 494 |          |  |          | 4,753 |       |  |         | 1,142 |  |  |  | 650 |     |  |        | (31  | )       |  | $ | 10,966 |  
|Operating           |  | FY 2004    |  | $      | (80   | )      |  |           | (36 | )        |  |          | 70    |       |  |         | 18    |  |  |  | 3   |     |  |        | (61  | )       |  | $ | (86    | )
|Income (loss)       |  | FY 2003    |  | $      | 85    |        |  |           | (66 | )        |  |          | 152   |       |  |         | 37    |  |  |  | 21  |     |  |        | (115 | )       |  | $ | 114    |  
|Property, plant     |  | FY 2004    |  | $      | 74    |        |  |           | 437 |          |  |          | 3,683 |       |  |         | 1,029 |  |  |  | 337 |     |  |        | (40  | )       |  | $ | 5,520  |  
|and equipment - net |  | FY 2003    |  | $      | 135   |        |  |           | 447 |          |  |          | 4,027 |       |  |         | 834   |  |  |  | 608 |     |  |        | (40  | )       |  | $ | 6,011  |  

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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. The Company operates in three distinct segments: Sales, Manufacturing,
and Testing. 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.

The key performance indicators for the Company are based on market demand.
Statistics obtained from the Semiconductor Industry Association (SIA) give
reasonable inference of the growth rate of wireless and digital consumer
products, which products fuel our business. Sales activities such as booking,
queries on products and backlog also formed part of our performance indicators.

The current trend indicates that customers in the United States remain
conservative in their capital spending. Rather than purchase new equipment,
they are choosing to enhance their own products and buy refurbished equipment.
Additionally, we believe that the majority of our customers facilities and
equipment are under-utilized. Therefore, the demand for back-end equipment is
expected to increase at a later stage. However, we cannot predict the time
frame for when customers will resume spending on equipment. Also, the
semiconductor industry is highly competitive. As a result, the Company has
continued to upgrade and improve its burn-in technology to remain competitive.

During the six months ended December 31, 2003, total assets increased by $522
from $16,711 at June 30, 2003 to $17,233 at December 31, 2003. The majority of
the increase was in cash, short term deposits and property, plant and equipment
but offset with a decrease in investments in marketable securities of $485, and
$357 in trade accounts receivables.

All of the $485 of the investments in marketable securities was sold in the
second quarter of 2004 in order to take advantage of the increase in market
value, utilize the profit and exit the market. The cash proceeds from the
disposal of marketable securities were invested in a short term deposit. As a
result, the short term deposits increased by $461 from $4,308 at June 30, 2003
to $4,769 at December 31, 2003.

The decrease in trade accounts receivable was due to the lower sales achieved
in the six months ended December 31, 2003. Net sales for the six months ended
December 31, 2003 were $8,906, which was $2,060 or 18.8% lower than net sales
for the six months ended December 31, 2002. The accounts receivable turnover
index (defined as net sales divided by average ending accounts receivable less
bad debt allowance, multiplied by 2) totaled 5.14 times at December 31, 2003,
compared with 5.45 times at June 30, 2003 and 5.32 times at December 31, 2002.
The accounts receivable at December 31, 2003 decreased by $351 or 9.6%,
compared to accounts receivable at June 30, 2003.

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The inventory turnover index (defined as cost of sales divided by average
ending inventory, multiplied by 2) was 12.35 times at December 31, 2003, down
from 15.75 times at June 30, 2003, and down from 17.85 times at December 31,
2002. Inventories increased by $26 when compared with June 30, 2003 and
increased by $331 when compared with December 31, 2002. The increase in
inventories when compared with the same period last year is due to a large
order expected in the U.S operation for the next quarter.

During fiscal 2004, the additions to property, plant and equipment totaled
$732, including fixed assets under capital lease arrangements. The additions
mainly included an extension to a building in the Thailand subsidiary in
anticipation of increased capacity, and burn-in systems acquired to meet new
customers requirements.

Total liabilities at December 31, 2003 were $6,383, reflecting a $370 increase
in total liabilities from $6,013 at June 30, 2003. In accounts payable, the
increase of $191 was due mainly to a rise in materials purchased before payment
in the end of the second quarter. The increase of $169 in accrued expenses
included a 20% final payment on assets, and also to support expenses incurred
for higher sales in the second quarter. Finally, a $161 increase in borrowings
on notes payable was used to finance the building extension in Thailand and to
pay for additional burn-in systems for use by us in connection with our
business. These were all offset with a decrease of $153 in lines of credit. As
of December 31, 2003, total liabilities (excluding minority interest) were
73.1% of total capital, compared with 70% at June 30, 2003. The Company
believes its strong credit rating provides ready and ample access to funds in
the global capital market.

The following table sets forth our revenue components for the three and six
months ended December 31, 2003 and 2002, respectively.

Revenue Components

|           |               |  |                              |        |                                |  |         |        |         |  |  |        |   |  |  |        |  
|---------- | ------------- |  | ---------------------------- | ------ | ------------------------------ |  | ------- | ------ | ------- |  |  | ------ | - |  |  | ------ | -
|           |               |  | Six Months Ended (unaudited) |        | Three Months Ended (unaudited)
|           |               |  |                              |        |                               
|           |               |  | Dec 31,                      |        | Dec 31,                        |  | Dec 31, |        | Dec 31,
|           |               |  | 2003                         |        | 2002                           |  | 2003    |        | 2002   
|           |               |  |                              |        |                                |  |         |        |        
|Net Sales: |               |  |                              |        |                                |  |         |        |         |  |  |        |   |  |  |       
|           | Testing       |  |                              | 52.02  | %                              |  |         | 44.78  | %       |  |  | 46.45  | % |  |  | 46.46  | %
|           | Manufacturing |  |                              | 29.43  |                                |  |         | 28.59  |         |  |  | 33.93  |   |  |  | 27.52  |  
|           | Distribution  |  |                              | 18.55  |                                |  |         | 26.63  |         |  |  | 19.62  |   |  |  | 26.02  |  
|           |               |  |                              |        |                                |  |         |        |         |  |  |        |   |  |  |        |  
|           | Total         |  |                              | 100.00 | %                              |  |         | 100.00 | %       |  |  | 100.00 | % |  |  | 100.00 | %
|           |               |  |                              |        |                                |  |         |        |         |  |  |        |   |  |  |        |  

Geographically, we operate in the U.S., 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 inventories, labor, depreciation,
utilities (which are a major component of costs for testing services), and
overhead relating to the manufacturing, testing and distribution segments.

Our operating expenses can be classified into three general categories: selling
expense, general and administrative expense, and research and development
expense. Selling expenses include expenses such as sales commissions, payroll
and payroll taxes for employees working in the sales department, advertising,
utilities and other expenses directly related to sales 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 expenses include
payroll and payroll tax, travel, and any other expenses that are directly
related to research activities.

Critical Accounting Estimates & 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 that those critical accounting principles are 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 Recently Issued 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

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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 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 not saleable, 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

The Company has three business segments: Manufacturing, Distribution, and
Testing services.

In the Manufacturing Segment, the products manufactured are mainly back-end
products that require installation work and certain minor training work in the
field with the customers employees, depending on whether the machine or
equipment is standardized or customized. The value of this type of arrangement
varies depending on the quantity of equipment ordered by the customer and on
the complexity of the equipment set. In general, the common practice is to
recognize revenue upon shipment of the product, provided that both title and
risk of loss have passed to the customer, collection is reasonably assured and
the customer has accepted the shipment in terms of any customer acceptance
provisions. In general, the sales contracts are written such that they may list
separate installation (including training) and upgrades as a separate line
item. Not all machinery and equipment manufactured requires installation work.
In the case where installation is required we allocate a portion of the invoice
value to the machine and the remaining portion to the value of the installation
work to be performed, based on the relative fair value of the elements. The
revenue allocated to installation and training is recognized upon completion of
the installation and training services. The allocation of value between the
machinery and the installation and training work is based on our specific
historical experience of the relative fair values of the elements. Such
allocation is a critical accounting estimate for our revenue recognition
purposes.

In the Distribution Segment, the products distributed are front-end and
back-end products that may require certain installation work. In general, the
common practice is to recognize revenue upon shipment of the distributed
product, provided that both title and risk of loss have passed to the customer,
collection is reasonably assured and the customer has accepted the shipment in
terms of any customer acceptance provisions. In those cases where installation
is required, the installation work in the distribution segment is normally less
than 40 hours of our technician labor. Similar to those in the manufacturing
segment, our sales contracts are written so that they may list separate
installation (including training) and upgrades as a separate line item. In
addition, most front-end products (which account for approximately 58.5% and
80.2% of the total revenue in the Distribution Segment for the periods ended
December 31, 2003 and December 31, 2002, respectively) do not require
installation work. In the case where installation is required, we allocate a
portion of the invoice value to the distributed product and the remaining
portion to the value of the installation work to be performed, based on the
relative fair value of the elements. The revenue allocated to installation and
training is recognized upon completion of the installation and training
services. The allocation of value between the distributed products and the
installation and training work is based on our specific historical experience
of the relative fair values of the elements. Such allocation is a critical
accounting estimate for our revenue recognition purposes.

The Company estimates an allowance for sales returns based on historical
experience with product returns.

Regarding the Testing Segment, revenue is recognized when testing services have
been rendered.

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, net losses
generated in the U.S. cannot be utilized to offset the taxable income generated
in foreign countries. Therefore, we may incur certain income tax expenses in
any fiscal year.

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For U.S. income tax purposes, no provision has been made for U.S. 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 annually and 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 Second Quarter Ended December 31, 2003 (2004) and December 31,
2002 (2003)

The following table sets forth certain consolidated statements of income data
as a percentage of net sales for the periods second quarter in fiscal year
2004, and 2003:

|                           |  |         |       |         |  |  |       |  
|-------------------------- |  | ------- | ----- | ------- |  |  | ----- | -
|                           |  | Q2 2004 |       | Q2 2003
|                           |  |         |       |        
|Net Sales                  |  |         | 100.0 | %       |  |  | 100.0 | %
|Cost of Sales              |  |         | 71.9  | %       |  |  | 72.7  | %
|                           |  |         |       |         |  |  |       |  
|Gross Margin               |  |         | 28.1  | %       |  |  | 27.3  | %
|Operating Expenses         |  |         |       |         |  |  |       |  
|General and administrative |  |         | 19.2  | %       |  |  | 21.5  | %
|Selling                    |  |         | 4.2   | %       |  |  | 4.2   | %
|Research and development   |  |         | 0.5   | %       |  |  | 0.6   | %
|                           |  |         |       |         |  |  |       |  
|Operating Expenses         |  |         | 23.9  | %       |  |  | 26.3  | %
|                           |  |         |       |         |  |  |       |  
|Income from operations     |  |         | 4.2   | %       |  |  | 1.0   | %
|                           |  |         |       |         |  |  |       |  

Net Sales

Overall sales for Q2 2004 were $5,056, an increase of 0.09% as compared to Q2
2003. The increase was attributable to a change in sales mix for different
products. Our total sales for Burn-in systems in the Manufacturing segment
increased in Q2 2004 as some customers preferred to keep burn-in services
in-house and purchased their own equipment. Although the Distribution segment
saw an increase in the average selling price of Vibration products as a result
of our unique ability to meet customers specialized demands, this was offset
by a reduction in sales of low-margin front-end products.

Geographically, net sales into and within the Southeast Asia region saw a
significant increase of 22.5% when compared to Q2 2003. Net sales into and
within the United States declined 29.6% during Q2 2004 as compared to Q2 2003.
The reason for the decline appears to be that Asia continues to grow as a
global presence in the manufacturing arena due to its lower manufacturing
costs. The diminished demand in the U.S. for front-end low margin products from
the Distribution segment in Singapore, and Artic Temperature Controlled Chucks
and Wet Process Stations from the Manufacturing segment in the U.S., also
contributed to the decline in sales in the United States. Net sales into and
within Ireland and other countries remained essentially flat from Q2 2003 to Q2
2004.

Gross margin

Our overall gross margin improved marginally from 27.3% in Q2 2003 to 28.1% in
Q2 2004. The margin in the Distribution segment improved as compared to the
same quarter last year. In the Distribution segment, the average unit selling
price of Vibration products increased and sales of low-margin products actually
decreased significantly by $600 as compared to Q2 2003. This indirectly
improved the margin as there were comparatively higher sales from the Vibration
products with a higher margin..

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Manufacturing Segment

The revenue and operating income for the Manufacturing segment for the second
quarter of 2004 and 2003 were as follows:

|                          |  |         |       |         |  |   |       |  
|------------------------- |  | ------- | ----- | ------- |  | - | ----- | -
|(In Thousands, unaudited) |  | Q2 2004 |       | Q2 2003
|                          |  |         |       |        
|Revenue                   |  | $       | 1,715 |         |  | $ | 1,390 |  
|Operating income          |  | $       | 4     |         |  | $ | (150  | )

Net revenue in the Manufacturing segment increased by $325 from Q2 2003 to Q2
2004. The improvement was attributable mainly to increased sales of Burn-in
systems. Our total sales for Burn-in systems increased by $341 in Q2 2004 as
some customers preferred to keep burn-in services in-house and purchased their
own equipment. Even though the average unit selling price for this product
decreased by 39.6%, the price decrease was offset by a 300% increase in
quantity sold. The improvement in sales of burn-in systems offset the decrease
in sales for Artic Temperature Controlled Chucks, which saw a 42.9% drop in
quantity sold and a 17.6% drop in selling price as compared to Q2 2003.

As a result of the increase in sales in the Manufacturing segment, general and
administrative expenses as a percentage of sales decreased from 21.7% to 12.4%
in the second quarter of fiscal 2004. Our operating income went from a loss to
a gain with an income increase of $154 from Q2 2003 to Q2 2004. Salaries for
the operation in the United States were reduced by $67 due to lay-offs as part
of cost-cutting measures. Reserve for doubtful debt decreased by $31 as
customers proved consistently prompt with payments.

Testing Segment

The revenue and operating income for the Testing segment for the second quarter
of 2004 and 2003 were as follows:

|                          |  |         |       |         |  |   |       | 
|------------------------- |  | ------- | ----- | ------- |  | - | ----- | 
|(In Thousands, unaudited) |  | Q2 2004 |       | Q2 2003
|                          |  |         |       |        
|Revenue                   |  | $       | 2,349 |         |  | $ | 2,347 | 
|Operating income          |  | $       | 132   |         |  | $ | 322   | 

Net sales in the Testing segment remained basically flat from Q2 2003 to Q2
2004, although operating income did decrease (as explained below). The
activities in Singapore have slowed down due to lower demand for the Companys
burn-in services. However, this was offset by an increase in activities in our
Thailand operation with sales $143 greater than those of Q2 2003. As testing
services depend solely upon customer demand, it is difficult to predict whether
or not this trend will continue.

Gross margin dropped significantly from Q2 2003 to Q2 2004 due to several
factors, the first being a reduction in service fees of approximately 3.2% in
order to maintain market share. In addition, certain products required
extended burn-in hours, hence an increase in utilities usage, compounded by
inflated utilities rates which all resulted in an increase of $47. As a
result, operating income decreased from $322 in Q2 2003 to $132 in Q2 2004.

Distribution Segment

The revenue and operating income for the Distribution segment for the second
quarter of 2004 and 2003 were as follows:

|                          |  |         |     |         |  |   |       |  
|------------------------- |  | ------- | --- | ------- |  | - | ----- | -
|(In Thousands, unaudited) |  | Q2 2004 |     | Q2 2003
|                          |  |         |     |        
|Revenue                   |  | $       | 992 |         |  | $ | 1,314 |  
|Operating income          |  | $       | 76  |         |  | $ | (85   | )

Net revenue in the Distribution Segment decreased by $322 from Q2 2003 to Q2
2004. We saw a drop of almost half the quantity sold of low-margin products as
compared to Q2 2003, accompanied by a 5% drop in selling price. This was
offset by an increase in the average selling price for Vibration products in Q2
2004, mainly due to our unique ability to meet customers specialized demands,
hence our ability to charge more.

Despite the decrease in sales, the margin in the Distribution segment did show
improvement. A decrease in unit volume of low-margin products combined with
the improvement of the average unit selling price of Vibration products
resulted in an improved margin, which in turn resulted in an operating income
of $76 in Q2 2004 as opposed to an operating loss of $85 in Q2 2003.

Corporate

The operating loss for Corporate for the second quarter of 2004 and 2003 were
as follows:

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##### Table of Contents



|                          |  |         |   |         |  |   |     |  
|------------------------- |  | ------- | - | ------- |  | - | --- | -
|(In Thousands, unaudited) |  | Q2 2004 |   | Q2 2003
|                          |  |         |   |        
|Operating loss            |  | $       | 1 |         |  | $ | (36 | )

Corporate saw a decrease in operating loss of $35 in Q2 2004 as compared to Q2
2003. Corporate increased the allocation charged to subsidiaries by 10.1%
based on their increase in sales volume of 15.6%.

Operating Expenses

Operating expenses for the second quarter of 2004 and 2003 were as follows:

|                           |  |         |     |         |  |   |       | 
|-------------------------- |  | ------- | --- | ------- |  | - | ----- | 
|(In Thousands, unaudited)  |  | Q2 2004 |     | Q2 2003
|                           |  |         |     |        
|General and administrative |  | $       | 970 |         |  | $ | 1,087 | 
|Selling                    |  | $       | 212 |         |  | $ | 213   | 
|Research and development   |  | $       | 27  |         |  | $ | 28    | 

As a percentage of sales, operating expenses decreased by 2.4% from 26.3% in
the second quarter of 2003 to 23.9% in 2004, due to the decline in general and
administrative expenses as a percentage of sales.

As a percentage of sales, general and administrative expenses decreased by 2.3%
from 21.5% in Q2 2003 to 19.2% in Q2 2004, mainly attributable to the
Manufacturing segment. With tight cost control, the labor, overheads, office
salaries, insurance and traveling expenses in the Manufacturing segment did not
increase in accordance with the 23.4% increase in sales from Q2 2003.

General and administrative expenses decreased by $116 from $1,087 in Q2 2003 to
$970 in Q2 2004. This was attributable to the decrease in salaries for
operations in the United States by $36 as part of implementing cost-cutting
measures, and a decrease in salaries by $47 in Singapore as a result of a
reduction in headcount. Also, there was a $31 decrease in the reserve for
doubtful debts for the Manufacturing segment as customers are consistently
prompt with payment.

Selling and research and development expenses were essentially flat when
compared to Q2 2003, despite the increase in sales. The majority of the sales
increase was based on direct sales where no additional commission needed to be
paid out, hence as a percentage of sales, selling expenses remained consistent
at 4.2% .

There was no increase in research and development activities, as the demand for
Artic Temperature Controlled Chucks declined as compared to Q2 2003.

Interest Expense

Interest expense for second quarter 2004 and 2003 were as follow:

|                          |  |         |     |         |  |   |     |  
|------------------------- |  | ------- | --- | ------- |  | - | --- | -
|(In Thousands, unaudited) |  | Q2 2004 |     | Q2 2003
|                          |  |         |     |        
|Interest expense          |  | $       | (31 | )       |  | $ | (46 | )

Interest expense decreased $15 in Q2 2004 due primarily to a repayment of $300
on the line of credit and net repayment of $968 on long-term debt and
capitalized leases. This offset the additional borrowings obtained for
building extensions and burn-in systems in the second quarter.

Other Income

Other income for second quarter 2004 and 2003 were as follows:

|                          |  |         |    |         |  |   |    | 
|------------------------- |  | ------- | -- | ------- |  | - | -- | 
|(In Thousands, unaudited) |  | Q2 2004 |    | Q2 2003
|                          |  |         |    |        
|Other income              |  | $       | 58 |         |  | $ | 50 | 

Other income increased by $8 from Q2 2003 to Q2 2004. The increase was due to
a rise in rental income of $20 for the letting out of our factory in Ireland.
This increase was partially offset by a decrease of $12 in certain areas of
other income.

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Income Tax

Current income tax expense for Q2 2004 was approximately $18, a decrease of
$36, compared to the income tax provision reversal of $18 for 2003, mainly due
to higher tax assets in Q2 2003 to offset the taxable profits generated from
Southeast Asia. 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 generally incur certain income tax expenses in any
fiscal year.

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, 2003 was approximately
$218, which represented an increase of $127 in net income from a net income of
approximately $91 attributable to common shares for the quarter ended December
31, 2002. Consequently, basic earning per share for the quarter ended December
31, 2003 increased by $0.04 from basic earnings per share of $0.03 in 2003 to
$0.07 per share in 2004. Diluted income per share for 2004 was $0.07 per share,
representing an increase of $0.04 per share from diluted income per share of
$0.03 for 2003.

Year to Date Comparison of the Six Months Ended December 31, 2003 (2004) to
the Six Months Ended December 31, 2002 (2003)

The following table sets forth certain consolidated statements of income data
as a percentage of net sales for the first half of fiscal years 2004 and 2003,
respectively.

|                                |  |          |       |          |  |  |       |  
|------------------------------- |  | -------- | ----- | -------- |  |  | ----- | -
|                                |  | YTD 2004 |       | YTD 2003
|                                |  |          |       |         
|Net Sales                       |  |          | 100.0 | %        |  |  | 100.0 | %
|Cost of Sales                   |  |          | 73.6  | %        |  |  | 71.5  | %
|                                |  |          |       |          |  |  |       |  
|Gross Margin                    |  |          | 26.4  | %        |  |  | 28.5  | %
|Operating Expenses              |  |          |       |          |  |  |       |  
|General and administrative      |  |          | 21.9  | %        |  |  | 21.6  | %
|Selling                         |  |          | 4.7   | %        |  |  | 4.3   | %
|Research and development        |  |          | 0.7   | %        |  |  | 0.5   | %
|(Gain) Loss on disposal of PP&E |  |          | 0.1   | %        |  |  | 1.0   | %
|                                |  |          |       |          |  |  |       |  
|Operating Expenses              |  |          | 27.4  | %        |  |  | 27.4  | %
|                                |  |          |       |          |  |  |       |  
|(Loss) Income from operations   |  |          | -1.0  | %        |  |  | 1.1   | %
|                                |  |          |       |          |  |  |       |  

Net Sales

Overall sales for 2004 were $8,906, a decrease of 18.8% as compared to 2003.
This decrease was attributable to a decline in sales in all operations during
the first half of 2004Distribution, Testing, and Manufacturing. The
Distribution segment saw its most significant drop off in the area of low
margin front-end products, which decreased by $1,370 when compared to the first
half of 2003, due to declining customer demand for low margin front-end
products. Deteriorating sales in the Testing segment were attributed to a
reduction in service fees in order to remain competitive in the market, as well
as lower activities in Singapore as a result of lower demand for Burn-in
services. However, this was offset with an increase in activities for the
Thailand operation. In the Manufacturing segment, sales for Artic Temperature
Controlled Chucks and Standard Assemblies and spare parts decreased due to
lower demand and a decline in unit selling price for these products.

Geographically, net sales into and within the Southeast Asia region decreased
by 11.3% compared to the first half of 2003, due to the declining demand for
Burn-in services from the Testing segment in Singapore. Net sales into and
within the United States decreased 35.9% as compared to this same period last
year, due mostly to declining demand in the U.S. for front-end products from
the Distribution segment in Singapore, as well as Wet Process Stations and
Artic Temperature Controlled Chucks from the Manufacturing segment in the U.S..

Gross Margin

Our overall gross margin dropped from 28.5% in the first half of 2003 to 26.4%
in 2004, a 2.1% difference. Margins in both the Testing and Manufacturing
segments deteriorated as compared to 2003. In our Testing segment, this was a
result of a reduction in service fees in an effort to retain existing customers
and capture new ones in an increasingly competitive market. Additionally,
material costs such as utilities increased due to higher usage of certain
products in our Testing segment. Gross margin in the Manufacturing

18



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##### Table of Contents



segment deteriorated because, while Burn-in systems increased in sales volume,
they decreased in average unit selling price thereby generating a lower margin.

Manufacturing Segment

The revenue and operating income for the Manufacturing segment for the first
half of 2004 and 2003 were as follows:

|                          |  |          |       |          |  |   |       |  
|------------------------- |  | -------- | ----- | -------- |  | - | ----- | -
|(In Thousands, unaudited) |  | YTD 2004 |       | YTD 2003
|                          |  |          |       |         
|Revenue                   |  | $        | 2,621 |          |  | $ | 3,135 |  
|Operating loss            |  | $        | (277  | )        |  | $ | (279  | )

Net sales in the Manufacturing segment decreased by $514 from the first half of
2003 to the first half of 2004, as customers in United States remained
conservative in their capital spending and the demand for certain products
dropped. This decline was attributable mainly to a decrease in sales of $302
worth of Artic Temperature Controlled Chucks, a 53.3% drop in quantity sold and
a 27% drop in selling price as compared to last year. Standard Assemblies and
spare parts also saw a significant decline of $121 in sales, an 87.7% decrease
in selling price, in spite of holding steady on the quantity sold.

Our operating loss reduced marginally by $2 due mainly to the decrease in gross
margin as a result of lower margin for Artic Temperature Controlled Chucks and
Burn-in systems with lower average selling price when compared to the same
period last year. With the reduction in headcount, labor costs and salaries
decreased by $56 and $78 respectively as compared to the first half of 2003.
However, the operating loss did not substantially reduce as cost of sales and
operating expenses comprised of fixed and semi-fixed elements, such as
depreciation, rental and insurance, remained unchanged despite the significant
drop in sales.

Testing Segment

The revenue and operating income for the Testing segment for the first half of
2004 and 2003 were as follows:

|                          |  |          |       |          |  |   |       | 
|------------------------- |  | -------- | ----- | -------- |  | - | ----- | 
|(In Thousands, unaudited) |  | YTD 2004 |       | YTD 2003
|                          |  |          |       |         
|Revenue                   |  | $        | 4,633 |          |  | $ | 4,911 | 
|Operating income          |  | $        | 214   |          |  | $ | 609   | 

The activities in Singapore have slowed down due to lower demand for Burn-in
services. However, this was partly offset by an increase in activities in our
Thailand operation with sales $218 greater as compared to the first half of
2003. As testing services depend solely upon customer demand, it is difficult
to predict whether or not this trend will continue.

Gross margin dropped significantly in the first half of 2004 for two major
reasons. Firstly, the segment reduced service fees of approximately 5.5% in
order to maintain market share. Secondly, certain products required increased
burn-in hours, hence an increase in utilities usage, compounded by a rise in
utility rates. Consequently, utilities as a part of material costs increased
by $142 as compared to the same period last year. Labor costs remained the same
despite the decline in sales. As a result, operating income decreased by $395
as compared to the first half of 2003.

Distribution Segment

The revenue and operating income for the Distribution segment for the first
half of 2004 and 2003 were as follows:

|                          |  |          |       |          |  |   |       |  
|------------------------- |  | -------- | ----- | -------- |  | - | ----- | -
|(In Thousands, unaudited) |  | YTD 2004 |       | YTD 2003
|                          |  |          |       |         
|Revenue                   |  | $        | 1,652 |          |  | $ | 2,920 |  
|Operating income          |  | $        | 38    |          |  | $ | (101  | )

Net revenue in the Distribution segment decreased by $1,268 from the first half
of 2003 to the first half of 2004. We saw a drop of 46% of the quantity sold of
low margin products as compared to the first half of 2003, accompanied by a
23.1% drop in selling price. Vibration and other products saw an increase in
sales of $91 from this same period last year, in spite of holding steady on the
quantity sold, due to a 21.1% increase in the selling price.

Despite the decrease in sales, the margin in the Distribution segment did show
improvement. A decrease in unit volume of low-margin products combined with
the improvement of the average unit selling price of Vibration products
resulted in an improved margin, which in turn resulted in an operating income
of $38 in the first half of 2004 as opposed to an operating loss of $101 in
2003.

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Corporate

The operating loss for Corporate for the first half of 2004 and 2003 were as
follows:

|                          |  |          |     |          |  |   |      |  
|------------------------- |  | -------- | --- | -------- |  | - | ---- | -
|(In Thousands, unaudited) |  | YTD 2004 |     | YTD 2003
|                          |  |          |     |         
|Operating loss            |  | $        | (61 | )        |  | $ | (115 | )

Corporate saw a decrease in operating loss of $54 in the first half of 2004 as
compared to 2003. This was mainly due to the increase in allocation charged to
subsidiaries by 10.1%, offset by a decrease in subsidiaries sales by 8%. In
addition, a compensation cost of $14 was charged in 2003 because of the grant
of certain stock options having exercise prices at less than the then fair
market value of the underlying Common Stock. No similar compensation cost was
charged in 2004 as all stock options granted in 2004 had exercise prices equal
to the fair market value of the underlying Common Stock.

Operating Expenses

Operating expenses for the first half of 2004 and 2003 were as follows:

|                                                  |  |          |       |          |  |   |       | 
|------------------------------------------------- |  | -------- | ----- | -------- |  | - | ----- | 
|(In Thousands, unaudited)                         |  | YTD 2004 |       | YTD 2003
|                                                  |  |          |       |         
|General and administrative                        |  | $        | 1,953 |          |  | $ | 2,371 | 
|Selling                                           |  | $        | 417   |          |  | $ | 472   | 
|Research and development                          |  | $        | 59    |          |  | $ | 55    | 
|Loss on disposal of
property, plant and
equipment |  | $        | 4     |          |  | $ | 112   | 

As a percentage of sales, operating expenses decreased by 0.1% from 27.4% in
the first half of 2003 to 27.3% in 2004.

General and administrative expenses decreased by $418 from the first half of
2003 due to several factors. To begin with, salaries were reduced by $78 in
Southeast Asia and $99 in the U.S. as part of cost cutting measures. As
further cost cutting measures, insurance, travel and entertainment were reduced
by $42. Due to poorer performance in 2004, bonus provisions were reduced by
$151 in the Singapore operation and in our Corporate facilities. There were
fewer provisions for doubtful debts by $31 in our Manufacturing operations as
customers consistently proved prompt in payment. Compensation costs decreased
by $14 due to the granting of certain stock options in 2003 which had an
exercise option price of less than the fair market value. Finally, there was a
$3 decrease in miscellaneous costs.

Selling expenses decreased by $55 in the first half of 2004 as compared to the
same period in 2003. $12 related to a decrease in commission-related sales in
our Distribution and Manufacturing segments. A reduction in headcount,
primarily in our Singapore operations, resulted in a $43 drop in salaries.

In the first half of 2004, research and development expenses increased
primarily due to the bonuses paid to the research group in profitable U.S.
operations based on their 2003 performance.

Loss on Disposal of Property, Plant and Equipment

The loss on disposal of property, plant and equipment decreased in 2004. Of
that decrease, $112 related to obsolete burn-in facilities in Southeast Asia in
2003 replaced with investments in new technology.

Interest Expense

Interest expense for the first half 2004 and 2003 were as follows:

|                          |  |          |     |          |  |   |     |  
|------------------------- |  | -------- | --- | -------- |  | - | --- | -
|(In Thousands, unaudited) |  | YTD 2004 |     | YTD 2003
|                          |  |          |     |         
|Interest expense          |  | $        | (66 | )        |  | $ | (97 | )

Interest expense decreased $31 in the first half of 2004 as compared to 2003
due to lower interest incurred on our line of credit, as our Singapore
operations repaid one of the lines of credit fully during the end of 2003.
Additionally, lower interest incurred on the term loan in our Singapore
operation, as more than 50% of the loan had been repaid. This offset the
interest from additional borrowings obtained for building extensions and
Burn-in systems in the second quarter.

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Other Income

Other income for first half of 2004 and 2003 were as follows:

|                          |  |          |     |          |  |   |     | 
|------------------------- |  | -------- | --- | -------- |  | - | --- | 
|(In Thousands, unaudited) |  | YTD 2004 |     | YTD 2003
|                          |  |          |     |         
|Other income              |  | $        | 196 |          |  | $ | 164 | 

Other income increased by $32 from the first half of 2003 to the first half of
2004. The increase was due to a rise in rental income of $38 and an increase
of $69 in net gain on disposal of marketable securities income. These were
offset by an increase of $28 in currency exchange loss, a decrease of $26 in
dividends and interest income, and a decrease of $20 in royalty income.

Income Tax

Current income tax expense for 2004 was approximately $33, a decrease of $17
compared to the income tax expenses of $50 for 2003, mainly due to lower
profits generated from Southeast Asia. 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 generally incur certain
income tax expenses in any fiscal year.

Net Income (Loss)

As a result of all of the factors analyzed above, the net loss attributable to
common shares for the first half of 2004 was approximately $47, which
represented a loss of $194 in 2004 from a net income of approximately $147 in
2003 attributable to common shares for the first half of 2003. Consequently,
basic earnings per share for 2004 decreased by $0.07 from basic earnings per
share of $0.05 for 2003 to a loss of $0.02 per share for 2004. Diluted loss per
share for 2004 was $0.02 per share, representing a decrease of $0.07 per share
from diluted income per share of $0.05 for 2003.

Liquidity and Capital Resources

We had working capital (defined as current assets minus current liabilities) of
approximately $7,176 as of December 31, 2003, which represented an increase of
approximately $149 compared to working capital of $7,027 as of June 30, 2003, a
2.1% increase. The current ratio (defined as current assets divided by current
liabilities) was 2.58 as of December 31, 2003 compared to 2.57 as of June 30,
2003. The quick ratio (defined as current assets less inventory, divided by
current liabilities) also increased slightly to 2.35 as of December 31, 2003
from 2.34 as of June 30, 2003. We believe that the consistency of both the
current and quick ratios at December 31, 2003 compared to those at December 31,
2002 indicate the strong liquidity position of the Company and its ability to
meet its short term obligations. The Company had positive working capital for
the nine fiscal years prior to the year ended June 30, 2003. We believe that
the Company has the ability to maintain positive working capital and strong
liquidity in the near future.

The Companys credit rating provides ready and ample access to funds in global
capital markets. At December 31, 2003, the Company had available short-term
lines of credit totaling $3,075 of which $2,928 was unused.

|                     |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|-------------------- |  | -------------- |  | -------- | ---- | ------ |  | ------ | ----- | - | ----- | - | ----- | - | ----- | 
|Entity with Facility |  | Type of        |  | Interest |      | Credit |  | Unused
|                     |  |                |  |          |      |        |  |       
|Trio-Tech Malaysia   |  | Line of Credit |  |          | 7.00 | %      |  | $      | 91    |   |       | $ | 91    |  
|Trio-Tech Bangkok    |  | Line of Credit |  |          | 5.75 | %      |  |        | 50    |   |       |   | 50    |  
|Trio-Tech Singapore  |  | Line of Credit |  |          | 6.00 | %      |  |        | 2,934 |   |       |   | 2,787 |  
|                     |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|                     |  |                |  |          |      |        |  |        |       | $ | 3,075 |   |       | $ | 2,928 | 
|                     |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 

Net cash provided by operating activities during the six months ended December
31, 2003 was $1,146, reflecting a decrease of $141 or 11%, compared to net cash
of $1,287 provided by operating activities during the six months ended December
31, 2002. Net income deteriorated by $194 from $147 to a net loss of $47,
mainly resulting from a decrease in sales of $2,060 or 18.8% for the six months
ended December 31, 2003 compared to the six months ended December 31, 2002. In
addition, all the marketable securities were disposed during the six months
ended December 31, 2003, resulting in a higher gain on disposal of $114
compared to $45 for the six months ended December 31, 2002, which was adjusted
as a non-cash item. This resulted in less cash provided by operating
activities.

Net cash used in investing activities during the six months ended December 31,
2003 was $509 compared to $696 of net cash used in the six months ended
December 31, 2002. The $187 decrease in cash used was partly attributable to
fewer purchases of marketable

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securities of only $4 for the six months ended December 31, 2003, as compared
to $304 for the six months ended December 31, 2002. The Company generated
higher proceeds by disposing of $100 of marketable securities when we sold and
exited the market during the six months ended December 31, 2003. These were
offset by higher investments of $256 in short term deposits during the six
months ended December 31, 2003.

Net cash used in financing activities during the six months ended December 31,
2003 was $137, reflecting a decrease of $608 compared to $745 used in financing
activities during 2003. Out of the decrease of $608, $585 was due to lower net
repayment on lines of credit, debt and capitalized leases during the six months
ended December 31, 2003 compared to net repayment of $674 for the six months
ended December 31, 2002.

Approximately $1,510 of cash deposits as of December 31, 2003 is held in the
Companys 55% owned Malaysian subsidiary. Of such amount, $1,243 is
denominated in the currency of Malaysia, of which $157 is currently available
for movement to overseas, as authorized by the Central Bank of Malaysia. There
are additional amounts available for distribution as dividends (after making
deductions for income tax) pursuant to Malaysian regulations.

The future cash requirements are mainly for use in daily operations. The
subsidiaries are projected to generate positive cashflow in the short term as
they continue to implement strict cost-control measures, despite the outlook in
the market remaining slow. There are no capital commitments except those that
have been disclosed, as of December 31, 2003 or in the foreseeable future.

Corporate Guarantee Arrangement

The Company provides a corporate guarantee to one of its subsidiaries in
Southeast Asia of approximately $1,467 to secure line-of-credit and term loans
from a bank to finance the operations of such subsidiary. With the strong
financial position of the subsidiary company, the Company believes this
corporate guarantee arrangement will have no material impact on its liquidity
or capital resources.

Recently Issued Accounting Pronouncements

In May 2003, FASB issued Statement of Financial Accounting Standards No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity (SFAS 150). SFAS 150 clarifies the accounting for
certain financial instruments with characteristics of both liabilities and
equity, and requires that those instruments be classified as liabilities in the
balance sheets. Previously, many of those financial instruments were
classified as equity. SFAS 150 is effective for financial instruments entered
into or modified after May 31, 2003 and is otherwise effective at the beginning
of the first interim period beginning after June 15, 2003. The adoption of
SFAS No. 150 did not have a material impact on its results of operations and
financial condition.

In January 2003, FASB issued Financial Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46). FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, Consolidated Financial Statements to
those entities defined as Variable Interest Entities (more commonly referred
to as special purpose entities) in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 applies immediately
to all Variable Interest Entities created after January 31, 2003 and by the
beginning of the first interim or annual reporting period commencing after June
15, 2003 for Variable Interest Entities created prior to February 1, 2003. On
October 9, 2003, the FASB issued FASB Staff Position 46-6 (FSP 46-6)
deferring the effective date for applying the provisions of FIN 46 for public
entities with variable interests in entities created before February 1, 2003,
until the end of the first interim or annual period ending after December 15,
2003. In December 2003, the FASB issued a revised version of FIN 46. This
revised version defers the effective date for public entities that are not
small business issuers to the first reporting period beginning March 15, 2004.
The Company has no variable interests in entities.




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 as a result of 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 our loans, capitalized leases and lines of credit range from
4.50% to 13% per annum. As of December 31, 2003, the outstanding aggregate
principal balance on these loans was approximately $2,078. These interest rates
are subject to change and we cannot predict an increase or decrease in rates,
if any.

22



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##### Table of Contents



Foreign Currency Exchange Rate
Risk. Significant portions of our revenues are
denominated in Singapore dollars, Malaysian ringgit, Thai baht 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 an increase of $223 and a decrease of $8 to shareholders equity
for six months ended December 31, 2003 and 2002, 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

An evaluation was carried out by the Companys Chief Executive Officer and
Chief Financial Officer of the effectiveness of the Companys disclosure
controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the
Securities Exchange Act of 1934) as of December 31, 2003. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that these disclosure controls and procedures were effective. During the
Companys second fiscal quarter, there have been no changes in the Companys
internal control over financial reporting that have materially affected or are
reasonably likely to materially affect the Companys internal control over
financial reporting.

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##### Table of Contents






TRIO-TECH INTERNATIONAL
PART II. OTHER INFORMATION






|Item 1. |  | Legal Proceedings
|------- |  | -----------------
|       
|        |  | Not applicable   






|Item 2. |  | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities
|------- |  | --------------------------------------------------------------------------------
|       
|        |  | Not applicable                                                                  






|Item 3. |  | Defaults Upon Senior Securities
|------- |  | -------------------------------
|       
|        |  | Not applicable                 






|Item 4. |  | Submission of Matters to Vote of Security Holders                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       
|        |  | An annual meeting of shareholders was held December 9, 2003. The only
matter voted on at the annual meeting was the election of Directors.
Proxies for the annual meeting were solicited pursuant to Regulation 14A
under the Securities Exchange Act of 1934. There was no solicitation in
opposition to managements nominees for Directors as listed in the Proxy
Statement. All of such nominees were elected. The number of votes for
each of such nominees was as follows (there being no abstentions or votes
withheld):

|                  |  |     |           |         |  |         |       |         |  |       |  |  |  |  |  |  |  |  |           | 
|----------------- |  | --- | --------- | ------- |  | ------- | ----- | ------- |  | ----- |  |  |  |  |  |  |  |  | --------- | 
|Director          |  | For |           | Against |  | Abstain |       | No Vote |  | Total
|                  |  |     |           |         |  |         |       |         |  |      
|Jason Adelman     |  |     | 2,385,175 |         |  |         | 3,587 |         |  |       |  |  |  |  |  |  |  |  | 2,388,762 | 
|Richard Horowitz  |  |     | 2,385,175 |         |  |         | 3,587 |         |  |       |  |  |  |  |  |  |  |  | 2,388,762 | 
|Yong Siew Wai     |  |     | 2,385,175 |         |  |         | 3,587 |         |  |       |  |  |  |  |  |  |  |  | 2,388,762 | 
|A. Charles Wilson |  |     | 2,385,175 |         |  |         | 3,587 |         |  |       |  |  |  |  |  |  |  |  | 2,388,762 | 






|Item 5. |  | Other Information
|------- |  | -----------------
|       
|        |  | Not applicable   






|Item 6. |  | Exhibits and reports on Form 8-K
|------- |  | --------------------------------
|       
|        |  | (a) Exhibits                    

|     |  |                                                                                                                     
|---- |  | --------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Principal Executive Officer of Registrant
Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002
|     |  |                                                                                                                     
|31.2 |  | Certification of Principal Financial Officer of Registrant
Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002
|     |  |                                                                                                                     
|32   |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002                                             



| |  | (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 ended December 31, 2003:
|-----------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                     
|(1) Form 8-K, filed November 13, 2003 (with date of earliest event
reported of November 7, 2003) reporting under Item 12.                            
|                                                                                                                                                     
|(2) Form 8-K, filed October 1, 2003 (with date of earliest event
reported of September 25, 2003) reporting under Items 7 and 12.                     

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##### Table of Contents






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
(Principal Financial Officer)
Dated: February 9, 2004

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