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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 September 30, 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                               |  | 95-2086631            
|(State or other jurisdiction of          |  | (I.R.S. Employer      
|incorporation or organization)           |  | Identification Number)
|                                         |  |                       
|14731 Califa Street                      |  |                       
|Van Nuys, California                     |  | 91411                 
|(Address of principle executive offices) |  | (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 November 3, 2003 is
2,927,542.



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TABLE OF CONTENTS



|                           |                                                                                               |                                                                                 |  |  |  |  |  | 
|-------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- |  |  |  |  |  | 
|                           | ITEM 1.                                                                                      
|                           |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                                          
|                           |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
|                           |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                
|                           |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                           
|                           | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                           | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                           | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION
|                           | Item 1. Legal Proceedings                                                                    
|                           | Item 2. Changes in Securities and Use of Proceeds                                            
|                           | Item 3. Defaults Upon Senior Securities                                                      
|                           | Item 4. Submission of Matters to Vote of Security Holders                                    
|                           | Item 5. Other Information                                                                    
|                           | Item 6. Exhibits and reports on Form 8-K                                                     
|SIGNATURES                
|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.    |  |                       | Condensed Consolidated Balance Sheets as of Sep. 30, 2003 (Unaudited) and June 30, 2003 |  |                                                                                                                                                        | 3  |     
|           |  |                       |                                                                                         |  | Condensed Consolidated Statements of Operations and Comprehensive Income (loss) for the
Three Months Ended Sep. 30, 2003 (Unaudited) and Sep. 30,
2002 |    |      | 4 | 
|           |  |                       |                                                                                         |  | Condensed Consolidated Statements of Cash Flows for the Three Months Ended Sep. 30,
2003 (Unaudited) and Sep. 30, 2002                                 |    |      | 5 | 
|           |  |                       |                                                                                         |  | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                                                       |    |      | 6 | 
|Item 2.    |  |                       | Managements Discussion and Analysis of Financial Condition and Results of Operations   |  |                                                                                                                                                        | 11 |     
|Item 3.    |  |                       | Quantitative and Qualitative Disclosures about Market Risk                              |  |                                                                                                                                                        | 18 |     
|Item 4.    |  |                       | Controls and Procedures                                                                 |  |                                                                                                                                                        | 18 |     
|Part II.   |  | Other Information     |                                                                                         |  | 19                                                                                                                                                     |   
|Item 1.    |  |                       | Legal Proceedings                                                                       |  |                                                                                                                                                        | 19 |     
|Item 2.    |  |                       | Changes in Securities and Use of Proceeds                                               |  |                                                                                                                                                        | 19 |     
|Item 3.    |  |                       | Defaults upon Senior Securities                                                         |  |                                                                                                                                                        | 19 |     
|Item 4.    |  |                       | Submission of Matters to a Vote of Security Holders                                     |  |                                                                                                                                                        | 19 |     
|Item 5.    |  |                       | Other Information                                                                       |  |                                                                                                                                                        | 19 |     
|Item 6.    |  |                       | Exhibits and Reports on Form 8-K                                                        |  |                                                                                                                                                        | 19 |     
|Signatures |  |                       |                                                                                         |  | 19                                                                                                                                                     |   

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

|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |       |        | 
|------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- |  | ---- |  | ---- | ------ | ----------- | ------ | -------- | ------ | ----- | ------ | 
|                                           |                                                                                                                                                     |                            |  |      |  |      |        | Sep 30,     |        | June 30,
|                                           |                                                                                                                                                     |                            |  | Note |  | 2003 |        | 2003       
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |            
|                                           |                                                                                                                                                     |                            |  |      |  |      |        | (UNAUDITED) |        |          |        |      
|ASSETS                                     |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|CURRENT ASSETS:                            |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|                                           | Cash                                                                                                                                                |                            |  |      |  |      | $      | 927         |        |          | $      | 1,495 |       
|                                           | Short term deposits                                                                                                                                 |                            |  |      |  |      |        | 4,591       |        |          |        | 4,308 |       
|                                           | Investments in marketable securities                                                                                                                |                            |  |      |  |      |        | 3           |        |          |        | 485   |       
|                                           | Trade accounts receivable, less allowance for doubtful accounts
of $161 at Sep. 30, 2003 and $157 at Jun. 30, 2003, respectively                    |                            |  |      |  |      |        | 3,108       |        |          |        | 3,643 |       
|                                           | Other receivables                                                                                                                                   |                            |  |      |  |      |        | 376         |        |          |        | 373   |       
|                                           | Inventories, less provision for obsolete inventory of $732 at Sep. 30,
2003 and $735 at Jun. 30, 2003, respectively                                 |                            |  |      |  |      |        | 1,056       |        |          |        | 1,049 |       
|                                           | Prepaid expenses and other current assets                                                                                                           |                            |  |      |  |      |        | 222         |        |          |        | 140   |       
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|                                           |                                                                                                                                                     | Total current assets       |  |      |  |      |        |             | 10,283 |          |        |       | 11,493 | 
|PROPERTY, PLANT AND EQUIPMENT, Net         |                                                                                                                                                     |                            |  |      |  |      | 5,532  |             |        |          | 5,210  |      
|OTHER ASSETS, Net                          |                                                                                                                                                     |                            |  |      |  |      | 8      |             |        |          | 8      |      
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|TOTAL ASSETS                               |                                                                                                                                                     |                            |  |      |  | $    | 15,823 |             |        | $        | 16,711 |      
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|LIABILITIES AND SHAREHOLDERS EQUITY       |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|CURRENT LIABILITIES:                       |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|                                           | Lines of credit                                                                                                                                     |                            |  |      |  |      | $      | 145         |        |          | $      | 300   |       
|                                           | Accounts payable                                                                                                                                    |                            |  |      |  |      |        | 1,032       |        |          |        | 1,080 |       
|                                           | Accrued expenses                                                                                                                                    |                            |  |      |  |      |        | 2,150       |        |          |        | 2,096 |       
|                                           | Income taxes payable                                                                                                                                |                            |  |      |  |      |        | 67          |        |          |        | 56    |       
|                                           | Current portion of notes payable                                                                                                                    |                            |  |      |  |      |        | 312         |        |          |        | 632   |       
|                                           | Current portion of capitalized leases                                                                                                               |                            |  |      |  |      |        | 265         |        |          |        | 302   |       
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|                                           |                                                                                                                                                     | Total current liabilities  |  |      |  |      |        |             | 3,971  |          |        |       | 4,466  | 
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|NOTES PAYABLE, net of current portion      |                                                                                                                                                     |                            |  |      |  |      | 212    |             |        |          | 492    |      
|CAPITALIZED LEASES, net of current portion |                                                                                                                                                     |                            |  |      |  |      | 345    |             |        |          | 344    |      
|DEFERRED INCOME TAXES                      |                                                                                                                                                     |                            |  |      |  |      | 722    |             |        |          | 711    |      
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|TOTAL LIABILITIES                          |                                                                                                                                                     |                            |  |      |  |      | 5,250  |             |        |          | 6,013  |      
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|COMMITMENTS AND CONTINGENCIES              |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|MINORITY INTEREST                          |                                                                                                                                                     |                            |  |      |  |      | 2,162  |             |        |          | 2,108  |      
|SHAREHOLDERS EQUITY:                      |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|                                           | Common stock; no par value, authorized, 15,000,000 shares; issued
and outstanding 2,927,542 shares at Sep. 30, 2003 and Jun. 30,
2003, respectively |                            |  |      |  |      |        | 9,423       |        |          |        | 9,423 |       
|                                           | Additional paid-in capital                                                                                                                          |                            |  |      |  |      |        | 284         |        |          |        | 284   |       
|                                           | Accumulated deficit                                                                                                                                 |                            |  |      |  |      |        | (1,004      | )      |          |        | (739  | )     
|                                           | Accumulated other comprehensive income-marketable securities                                                                                        |                            |  |      |  |      |        |            |        |          |        | 45    |       
|                                           | Accumulated other comprehensive loss-foreign currency                                                                                               |                            |  |      |  |      |        | (292        | )      |          |        | (423  | )     
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|                                           |                                                                                                                                                     | Total shareholders equity |  |      |  |      |        |             | 8,411  |          |        |       | 8,590  | 
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      
|TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |                                                                                                                                                     |                            |  |      |  | $    | 15,823 |             |        | $        | 16,711 |      
|                                           |                                                                                                                                                     |                            |  |      |  |      |        |             |        |          |        |      

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

|                                                                          |                                                   |         |       |                    |       |          |       |       |       | 
|------------------------------------------------------------------------- | ------------------------------------------------- | ------- | ----- | ------------------ | ----- | -------- | ----- | ----- | ----- | 
|                                                                          |                                                   |         |       | Three Months Ended
|                                                                          |                                                   |         |       |                   
|                                                                          |                                                   |         |       | Sep. 30,           |       | Sep. 30,
|                                                                          |                                                   |         |       | 2003               |       | 2002    
|                                                                          |                                                   |         |       |                    |       |         
|NET SALES                                                                 |                                                   | $       | 3,850 |                    |       | $        | 5,915 |      
|COST OF SALES                                                             |                                                   |         | 2,925 |                    |       |          | 4,171 |      
|                                                                          |                                                   |         |       |                    |       |          |       |      
|GROSS PROFIT                                                              |                                                   |         | 925   |                    |       |          | 1,744 |      
|OPERATING EXPENSES:                                                       |                                                   |         |       |                    |       |          |       |      
|                                                                          | General and administrative                        |         |       | 983                |       |          |       | 1,283 |      
|                                                                          | Selling                                           |         |       | 205                |       |          |       | 260   |      
|                                                                          | Research and development                          |         |       | 32                 |       |          |       | 27    |      
|                                                                          | Loss on disposal of property, plant and equipment |         |       | 4                  |       |          |       | 112   |      
|                                                                          |                                                   |         |       |                    |       |          |       |      
|                                                                          |                                                   | Total   |       |                    | 1,224 |          |       |       | 1,682 | 
|                                                                          |                                                   |         |       |                    |       |          |       |      
|(LOSS) INCOME FROM OPERATIONS                                             |                                                   |         | (299  | )                  |       |          | 62    |      
|OTHER INCOME (EXPENSE)                                                    |                                                   |         |       |                    |       |          |       |      
|                                                                          | Interest expense                                  |         |       | (35                | )     |          |       | (51   | )    
|                                                                          | Other income                                      |         |       | 138                |       |          |       | 115   |      
|                                                                          |                                                   |         |       |                    |       |          |       |      
|                                                                          |                                                   | Total   |       |                    | 103   |          |       |       | 64    | 
|                                                                          |                                                   |         |       |                    |       |          |       |      
|(LOSS) INCOME BEFORE INCOME TAXES AND MINORITY INTEREST                   |                                                   |         | (196  | )                  |       |          | 126   |      
|INCOME TAXES                                                              |                                                   |         | 15    |                    |       |          | 68    |      
|                                                                          |                                                   |         |       |                    |       |          |       |      
|(LOSS) INCOME BEFORE MINORITY INTEREST                                    |                                                   |         | (211  | )                  |       |          | 58    |      
|MINORITY INTEREST                                                         |                                                   |         | (54   | )                  |       |          | (2    | )    
|                                                                          |                                                   |         |       |                    |       |          |       |      
|NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHARES                           |                                                   |         | (265  | )                  |       |          | 56    |      
|                                                                          |                                                   |         |       |                    |       |          |       |      
|OTHER COMPREHENSIVE INCOME (LOSS):                                        |                                                   |         |       |                    |       |          |       |      
|                                                                          | Unrealized (loss) gain on investment              |         |       | (45                | )     |          |       | 11    |      
|                                                                          | Foreign currency translation adjustment           |         |       | 131                |       |          |       | (114  | )    
|                                                                          |                                                   |         |       |                    |       |          |       |      
|COMPREHENSIVE LOSS                                                        |                                                   | $       | (179  | )                  |       | $        | (47   | )    
|                                                                          |                                                   |         |       |                    |       |          |       |      
|(LOSS) EARNINGS PER SHARE:                                                |                                                   |         |       |                    |       |          |       |      
|                                                                          | Basic                                             |         | $     | (0.09              | )     |          | $     | 0.02  |      
|                                                                          |                                                   |         |       |                    |       |          |       |      
|                                                                          | Diluted                                           |         | $     | (0.09              | )     |          | $     | 0.02  |      
|                                                                          |                                                   |         |       |                    |       |          |       |      
|WEIGHTED AVERAGE NUMBER OF COMMON AND
POTENTIAL COMMON SHARES OUTSTANDING |                                                   |         |       |                    |       |          |       |      
|                                                                          |                                                   | Basic   |       |                    | 2,928 |          |       |       | 2,928 | 
|                                                                          |                                                   | Diluted |       |                    | 2,928 |          |       |       | 2,928 | 

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

|                                                                          |                                                                                          |                                           |                                           |      |                    |      |          |      |      |      |  
|------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | ----------------------------------------- | ----------------------------------------- | ---- | ------------------ | ---- | -------- | ---- | ---- | ---- | -
|                                                                          |                                                                                          |                                           |                                           |      | Three Months Ended
|                                                                          |                                                                                          |                                           |                                           |      |                   
|                                                                          |                                                                                          |                                           |                                           |      | Sep. 30,           |      | Sep. 30,
|                                                                          |                                                                                          |                                           |                                           |      | 2003               |      | 2002    
|                                                                          |                                                                                          |                                           |                                           |      |                    |      |         
|CASH FLOWS FROM OPERATING ACTIVITIES:                                     |                                                                                          |                                           |                                           |      |                    |      |          |     
|                                                                          | Net (loss) income                                                                        |                                           | $                                         | (265 | )                  |      | $        | 56   |     
|                                                                          | Adjustments to reconcile net (loss) income to
net cash provided by operating activities: |                                           |                                           |      |                    |      |          |      |     
|                                                                          | Depreciation and amortization                                                            |                                           |                                           | 284  |                    |      |          | 332  |     
|                                                                          | Bad debt expense (recovery), net                                                         |                                           |                                           | 4    |                    |      |          | (23  | )   
|                                                                          | Inventory provision                                                                      |                                           |                                           |     |                    |      |          | (24  | )   
|                                                                          | Stock Compensation                                                                       |                                           |                                           |     |                    |      |          | 14   |     
|                                                                          | Loss on sale of property and equipment                                                   |                                           |                                           | 4    |                    |      |          | 112  |     
|                                                                          | Gain on disposal of marketable securities                                                |                                           |                                           | (114 | )                  |      |          | (49  | )   
|                                                                          | Deferred income taxes                                                                    |                                           |                                           | 11   |                    |      |          |     |     
|                                                                          | Minority interest                                                                        |                                           |                                           | 54   |                    |      |          | 2    |     
|                                                                          | Changes in operating assets and liabilities:                                             |                                           |                                           |      |                    |      |          |      |     
|                                                                          |                                                                                          | Accounts receivable, net                  |                                           |      | 531                |      |          |      | (426 | )   
|                                                                          |                                                                                          | Other receivables                         |                                           |      | (3                 | )    |          |      | 193  |     
|                                                                          |                                                                                          | Inventories                               |                                           |      | (7                 | )    |          |      | 218  |     
|                                                                          |                                                                                          | Prepaid expenses and other current assets |                                           |      | (82                | )    |          |      | (77  | )   
|                                                                          |                                                                                          | Accounts payable and accrued expenses     |                                           |      | 6                  |      |          |      | 571  |     
|                                                                          |                                                                                          | Income taxes payable                      |                                           |      | 11                 |      |          |      | 19   |     
|                                                                          |                                                                                          |                                           |                                           |      |                    |      |          |     
|                                                                          |                                                                                          |                                           | Net cash provided by operating activities |      |                    | 434  |          |      |      | 918  |  
|                                                                          |                                                                                          |                                           |                                           |      |                    |      |          |     
|CASH FLOWS FROM INVESTING ACTIVITIES:                                     |                                                                                          |                                           |                                           |      |                    |      |          |     
|                                                                          | Short term deposits                                                                      |                                           |                                           | (283 | )                  |      |          | 142  |     
|                                                                          | Capital expenditures                                                                     |                                           |                                           | (475 | )                  |      |          | (975 | )   
|                                                                          | Purchase of marketable securities                                                        |                                           |                                           | (4   | )                  |      |          | (79  | )   
|                                                                          | Other assets                                                                             |                                           |                                           |     |                    |      |          | 19   |     
|                                                                          | Proceeds from disposal of marketable securities                                          |                                           |                                           | 555  |                    |      |          | 298  |     
|                                                                          | Proceeds from sale of property and equipment                                             |                                           |                                           | 38   |                    |      |          |     |     
|                                                                          |                                                                                          |                                           |                                           |      |                    |      |          |     
|                                                                          |                                                                                          |                                           | Net cash used in investing activities     |      |                    | (169 | )        |      |      | (595 | )
|                                                                          |                                                                                          |                                           |                                           |      |                    |      |          |     
|CASH FLOWS FROM FINANCING ACTIVITIES:                                     |                                                                                          |                                           |                                           |      |                    |      |          |     
|                                                                          | Net payments and borrowings on lines of credit                                           |                                           |                                           | (157 | )                  |      |          | (348 | )   
|                                                                          | Principal payments of debt and capitalized leases                                        |                                           |                                           | (719 | )                  |      |          | (290 | )   
|                                                                          |                                                                                          |                                           |                                           |      |                    |      |          |     
|                                                                          |                                                                                          |                                           | Net cash used in financing activities     |      |                    | (876 | )        |      |      | (638 | )
|                                                                          |                                                                                          |                                           |                                           |      |                    |      |          |     
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                   |                                                                                          |                                           | 43                                        |      |                    |      | (46      | )   
|NET DECREASE IN CASH                                                      |                                                                                          |                                           | (568                                      | )    |                    |      | (361     | )   
|CASH, BEGINNING OF PERIOD                                                 |                                                                                          |                                           | 1,495                                     |      |                    |      | 1,128    |     
|                                                                          |                                                                                          |                                           |                                           |      |                    |      |          |     
|CASH, END OF PERIOD                                                       |                                                                                          | $                                         | 927                                       |      |                    | $    | 767      |     
|                                                                          |                                                                                          |                                           |                                           |      |                    |      |          |     
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                          |                                                                                          |                                           |                                           |      |                    |      |          |     
|                                                                          | Cash paid during the period for:                                                         |                                           |                                           |      |                    |      |          |      |     
|                                                                          |                                                                                          | Interest                                  |                                           | $    | 34                 |      |          | $    | 51   |     
|                                                                          |                                                                                          | Income taxes                              |                                           | $    | 4                  |      |          | $    | 61   |     
|NON-CASH INVESTING AND FINANCING ACTIVITIES                               |                                                                                          |                                           |                                           |      |                    |      |          |     
|-Acquisition of property, plant and equipment under capital finance lease |                                                                                          | $                                         | 70                                        |      |                    | $    |         |     

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONDENSED 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 thereafter) was
incorporated in 1958 under the laws of the State of California. TTI
provides third-party semiconductor testing and burn-in services primarily
through its Laboratories in Southeast Asia; in addition, TTI operates
test facilities in the United States and Europe. The Company also
designs, develops, manufactures and markets a broad range of equipment
and systems used in the manufacture and testing of semiconductor devices
and electronic components. TTI conducts business in three industry
segments: Testing Services, Manufacturing and Distribution. TTI has
subsidiaries in the U.S., Singapore, Malaysia, Thailand, 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 three months ended September 30, 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

|                                       |  |             |       |          |  |   |       |  
|-------------------------------------- |  | ----------- | ----- | -------- |  | - | ----- | -
|                                       |  | Sep 30,     |       |          |  |  
|                                       |  | 2003        |       | June 30,
|                                       |  | (unaudited) |       | 2003    
|                                       |  |             |       |         
|Raw materials                          |  | $           | 1,100 |          |  | $ | 873   |  
|Work in progress                       |  |             | 221   |          |  |   | 166   |  
|Finished goods                         |  |             | 467   |          |  |   | 745   |  
|Less: provision for obsolete inventory |  |             | (732  | )        |  |   | (735  | )
|                                       |  |             |       |          |  |   |       |  
|                                       |  | $           | 1,056 |          |  | $ | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                

|                                                                                                          |  |                    |       |             |  |   |      |  
|--------------------------------------------------------------------------------------------------------- |  | ------------------ | ----- | ----------- |  | - | ---- | -
|                                                                                                          |  | Three Months Ended
|                                                                                                          |  |                   
|                                                                                                          |  | Sept 30,           |       | Sept 30,   
|                                                                                                          |  | 2003               |       | 2002       
|                                                                                                          |  | (unaudited)        |       | (unaudited)
|                                                                                                          |  |                    |       |            
|Net (loss) income: as reported                                                                            |  | $                  | (265  | )           |  | $ | 56   |  
|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 |  |                    | (50   | )           |  |   | (31  | )
|                                                                                                          |  |                    |       |             |  |   |      |  
|Pro forma net (loss) income                                                                               |  | $                  | (315  | )           |  | $ | 39   |  
|                                                                                                          |  |                    |       |             |  |   |      |  
|Income (loss) per share - basic                                                                           |  |                    |       |             |  |   |      |  
|As reported                                                                                               |  | $                  | (0.09 | )           |  | $ | 0.02 |  
|Pro forma                                                                                                 |  | $                  | (0.11 | )           |  | $ | 0.01 |  
|Income (loss) per share - diluted                                                                         |  |                    |       |             |  |   |      |  
|As reported                                                                                               |  | $                  | (0.09 | )           |  | $ | 0.02 |  
|Pro forma                                                                                                 |  | $                  | (0.11 | )           |  | $ | 0.01 |  



|   |  | 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 1.71% to 2.93% and 2.79%, expected lives of 2 years for 2004
and 2003; volatility of 44.67% and 46.67% 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.

7



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| |  | Stock options to purchase 440,500 shares at prices ranging from $2.25 to
$6.69 per share were outstanding during the three months ending September
30, 2003 and were excluded in the computation of diluted EPS because
their effect would have been antidilutive.              
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Stock options and warrants to purchase 651,165 shares at prices ranging
from $2.25 to $8.00 per share were outstanding during the three months
ended September 30, 2002 and were excluded from the computation of
diluted EPS because their effect would have been antidilutive.
|
| |  | 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:                                                                                                                         

|                                                                              |  |                    |       |             |  |   |       | 
|----------------------------------------------------------------------------- |  | ------------------ | ----- | ----------- |  | - | ----- | 
|                                                                              |  | Three Months Ended
|                                                                              |  |                   
|                                                                              |  | Sep 30             |       | Sep 30.    
|                                                                              |  | 2003               |       | 2002       
|                                                                              |  | (unaudited)        |       | (unaudited)
|                                                                              |  |                    |       |            
|Net (loss) income used to compute basic
and diluted (loss) earnings per share |  | $                  | (265  | )           |  | $ | 56    | 
|                                                                              |  |                    |       |             |  |   |       | 
|Weighted average number of common
shares outstanding - basic                  |  |                    | 2,928 |             |  |   | 2,928 | 
|Dilutive effect of stock options                                              |  |                    |      |             |  |   |      | 
|                                                                              |  |                    |       |             |  |   |       | 
|Number of shares used to compute
earnings per share - diluted                 |  |                    | 2,928 |             |  |   | 2,928 | 
|                                                                              |  |                    |       |             |  |   |       | 



|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 September 30, 2003 is
adequate. However, actual write-offs might exceed the recorded
allowance.

|          |                                        |   |             |    |          |   |     |     |  
|--------- | -------------------------------------- | - | ----------- | -- | -------- | - | --- | --- | -
|          |                                        |   | Sep 30,     |    |          |   |    
|          |                                        |   | 2003        |    | June 30,
|          |                                        |   | (unaudited) |    | 2003    
|          |                                        |   |             |    |         
|Beginning |                                        | $ | 157         |    |          | $ | 174 |    
|          | Additions charged to cost and expenses |   |             | 6  |          |   |     |    |  
|          | Recovered                              |   |             | (2 | )        |   |     | (17 | )
|          | Actual write-offs                      |   |             |   |          |   |     |    |  
|          |                                        |   |             |    |          |   |     |    
|Ending    |                                        | $ | 161         |    |          | $ | 157 |    
|          |                                        |   |             |    |          |   |     |    

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

|          |                                        |   |             |    |          |   |     |      |  
|--------- | -------------------------------------- | - | ----------- | -- | -------- | - | --- | ---- | -
|          |                                        |   | Sep 30,     |    |          |   |    
|          |                                        |   | 2003        |    | June 30,
|          |                                        |   | (unaudited) |    | 2003    
|          |                                        |   |             |    |         
|Beginning |                                        | $ | 165         |    |          | $ | 305 |     
|          | Additions charged to cost and expenses |   |             |   |          |   |     | 1    |  
|          | Recovered                              |   |             |   |          |   |     | (126 | )
|          | Actual write-offs                      |   |             | (7 | )        |   |     | (15  | )
|          |                                        |   |             |    |          |   |     |     
|Ending    |                                        | $ | 158         |    |          | $ | 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 $25 and
$13 for the three months ended September 30, 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.                                                                                                             

Business Segment Information:

|                 |  |          |  |       |       |        |  |           |      |        |  |              |        |         |  |   |     |  |  |   |     |  |  | 
|---------------- |  | -------- |  | ----- | ----- | ------ |  | --------- | ---- | ------ |  | ------------ | ------ | ------- |  | - | --- |  |  | - | --- |  |  | 
|                 |  | Quarter  |  |       |       |        |  | Operating |      |        |  |              |        | Depr.   |  |   |     | 
|                 |  | Ended    |  | Net   |       | Income |  |           |      |        |  | and          |        | Capital
|                 |  | Sep. 30, |  | Sales |       | (loss) |  | Assets    |      | Amort. |  | Expenditures
|                 |  |          |  |       |       |        |  |           |      |        |  |             
|Manufacturing    |  | FY 2004  |  | $     | 906   |        |  | $         | (281 | )      |  | $            | 2,508  |         |  | $ | 22  |  |  | $ | 55  | 
|                 |  | FY 2003  |  | $     | 1,745 |        |  | $         | (130 | )      |  | $            | 3,159  |         |  | $ | 21  |  |  | $ | 2   | 
|Testing Services |  | FY 2004  |  | $     | 2,284 |        |  | $         | 82   |        |  | $            | 12,896 |         |  | $ | 232 |  |  | $ | 475 | 
|                 |  | FY 2003  |  | $     | 2,564 |        |  | $         | 287  |        |  | $            | 14,987 |         |  | $ | 281 |  |  | $ | 944 | 
|Distribution     |  | FY 2004  |  | $     | 660   |        |  | $         | (38  | )      |  | $            | 370    |         |  | $ | 28  |  |  | $ | 15  | 
|                 |  | FY 2003  |  | $     | 1,606 |        |  | $         | (17  | )      |  | $            | 468    |         |  | $ | 29  |  |  | $ | 29  | 
|Corporate and    |  | FY 2004  |  | $     |      |        |  | $         | (62  | )      |  | $            | 49     |         |  | $ | 2   |  |  | $ |    | 
|unallocated      |  | FY 2003  |  | $     |      |        |  | $         | (78  | )      |  | $            | 355    |         |  | $ | 1   |  |  | $ |    | 
|Total Company    |  | FY 2004  |  | $     | 3,850 |        |  | $         | (299 | )      |  | $            | 15,823 |         |  | $ | 284 |  |  | $ | 545 | 
|                 |  | FY 2003  |  | $     | 5,915 |        |  | $         | 62   |        |  | $            | 18,969 |         |  | $ | 332 |  |  | $ | 975 | 

9



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|                    |  |          |  |        |       |        |  |           |     |          |  |          |       |       |  |         |     |   |  |  |     |     |  |        |     |         |  |   |       |   |  | 
|------------------- |  | -------- |  | ------ | ----- | ------ |  | --------- | --- | -------- |  | -------- | ----- | ----- |  | ------- | --- | - |  |  | --- | --- |  | ------ | --- | ------- |  | - | ----- | - |  | 
|                    |  |          |  |        |       |        |  |           |     |          |  |          |       |       |  |         |     |   |  |  |     |     |  |        |     | Elimin- |  |   |       |  
|                    |  | Quarter  |  |        |       |        |  |           |     |          |  |          |       |       |  |         |     |   |  |  |     |     |  | ations |     |         |  |  
|                    |  | Ended    |  | United |       |        |  |           |     |          |  |          |       |       |  |         |     |   |  |  |     | and |  | Total 
|                    |  | Sep. 30, |  | States |       | Europe |  | Singapore |     | Thailand |  | Malaysia |       | Other |  | Company
|                    |  |          |  |        |       |        |  |           |     |          |  |          |       |       |  |        
|Net sales to        |  | FY 2004  |  | $      | 1,108 |        |  |           | 340 |          |  |          | 1,822 |       |  |         | 549 |   |  |  | 55  |     |  |        | (25 | )       |  | $ | 3,850 |  
|customers           |  | FY 2003  |  | $      | 1,908 |        |  |           | 245 |          |  |          | 2,615 |       |  |         | 597 |   |  |  | 563 |     |  |        | (13 | )       |  | $ | 5,915 |  
|Operating           |  | FY 2004  |  | $      | (129  | )      |  |           | (27 | )        |  |          | (61   | )     |  |         | (18 | ) |  |  | (2  | )   |  |        | (62 | )       |  | $ | (299  | )
|Income (loss)       |  | FY 2003  |  | $      | 21    |        |  |           | (50 | )        |  |          | 117   |       |  |         | 27  |   |  |  | 25  |     |  |        | (78 | )       |  | $ | 62    |  
|Property, plant     |  | FY 2004  |  | $      | 90    |        |  |           | 425 |          |  |          | 3,757 |       |  |         | 961 |   |  |  | 339 |     |  |        | (40 | )       |  | $ | 5,532 |  
|and
equipment - net |  | FY 2003  |  | $      | 148   |        |  |           | 439 |          |  |          | 4,096 |       |  |         | 768 |   |  |  | 640 |     |  |        | (40 | )       |  | $ | 6,051 |  

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##### Table of Contents



TRIO-TECH INTERNATIONAL AND SUBSIDIARIES




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

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

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

Overview

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

During the three months ended September 30, 2003, total assets decreased by
$888 from $16,711 at June 30, 2003 to $15,823 at September 30, 2003. The
majority of the decrease was in cash, investments in marketable securities and
trade accounts receivable but offset with the increase in short-term deposits,
net property, plant & equipment and prepaid expenses. The increase in net
property, plant and equipment was due to acquisition of equipment and extension
of building in the Thailand subsidiary. On the other hand, prepaid expenses
increased as a result of prepayments on insurance. The decrease in cash was a
result of payments on lines of credit, notes payable, capital lease obligations
and accounts payable. The decrease in trade accounts receivable was due to the
lower sales achieved in the three months ended September 30, 2003.

The accounts receivable turnover index (defined as net sales divided by average
ending accounts receivable less bad debt allowance, multiplied by 4) totaled
4.56 times at September 30, 2003, compared with 5.45 times at June 30, 2003 and
5.41 times at September 30, 2002. The accounts receivable at September 30,
2003 decreased by $535 or 14.7%, compared to accounts receivable at June 30,
2003. Net sales for the three months ended September 30, 2003 were $2,065 or
34.9% lower than net sales for the three months ended September 30, 2002. The
significant decrease in sales was the primary factor in the deterioration in
the accounts receivable turnover index.

The inventory turnover index (defined as cost of sales divided by average
ending inventory, multiplied by 4) was 11.12 times at September 30, 2003, down
from 15.75 times at June 30, 2003, and down from 18.19 times at September 30,
2002. Inventories increased marginally by $7 when compared with June 30, 2003
and increased by $236 when compared with September 30, 2002. The increase in
inventories when compared with the same period last year was attributable to an
increase in raw materials of $180 and $117 in finished goods purchased at the
end of this quarter in anticipation of large orders expected in the next
quarter. However, this was offset with the decrease in work-in-progress of
$23.

The investments in marketable securities decreased by $482 from $485 at June
30, 2003 to $3 at September 30, 2003. 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 $283 from $4,308 at June 30, 2003 to $4,591 at
September 30, 2003.

During fiscal 2003, the additions to property, plant and equipment totaled
$545, including fixed assets under capital lease arrangements.

11



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##### Table of Contents



Total liabilities at September 30, 2003 were $5,250, reflecting a decrease of
$763 from $6,013 at June 30, 2003. The decrease was due mainly to payments on
lines of credit, accounts payable, notes payable and capitalized lease
obligations, but offset by an increase of $54 in accrued expenses. As of
September 30, 2003, total liabilities were 62.4% 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 months
ended September 30, 2003 and 2002, respectively.

Revenue Components (Unaudited)

|           |               |  |               |        |         |  |  |        |  
|---------- | ------------- |  | ------------- | ------ | ------- |  |  | ------ | -
|           |               |  | Quarter Ended
|           |               |  |              
|           |               |  | Sep 30,       |        | Sep 30,
|           |               |  | 2003          |        | 2002   
|           |               |  |               |        |        
|Net Sales: |               |  |               |        |         |  |  |       
|           | Testing       |  |               | 59.33  | %       |  |  | 43.34  | %
|           | Manufacturing |  |               | 23.53  |         |  |  | 29.50  |  
|           | Distribution  |  |               | 17.14  |         |  |  | 27.16  |  
|           |               |  |               |        |         |  |  |        |  
|           | Total         |  |               | 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 is a major component of costs for testing services), and
overhead relating to 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 selling department, advertising,
utilities and other expenses directly related to selling activities. General
and administrative expenses include management payroll, property taxes, rental
expense, depreciation of fixed assets used by the management function,
utilities, employee fringe benefits, office supplies, travel and entertainment,
professional expense, outside services and other expenses related to management
and administration processes. Research and development expenses include
payroll and payroll tax, travel, and any other expenses that are directly
related to research activities.

Critical Accounting Policies

In response to the SECs Release No. 33-8040, Cautionary Advice Regarding
Disclosure About Critical Accounting Policy, the Company identified the most
critical accounting principles upon which its financial status depends. The
Company determined 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 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.

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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 62.3% and
73.3% of the total revenue in the Distribution Segment for the period ended
September 30, 2003 and September 30, 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.

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

Impairment of Long-Lived Assets

Effective July 1, 2002, we adopted the provisions of Statement of Financial
Accounting Standard No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS No. 144). SFAS No. 144 requires that long-lived
assets be reviewed for impairment 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.

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Whenever any such impairment exists, an impairment loss will be recognized for
the amount by which the carrying value exceeds the fair value.

Comparison of Three Months Ended September 30, 2003 (2004) and September 30,
2002 (2003)

Sales

Net sales decreased by $2,065 or 34.9% from $5,915 in 2003 to $3,850 in 2004.
This decrease was due mainly to the sudden reduction in demand for low-margin
products in the Distribution Operation and equipment sales in the Manufacturing
Operations. Additionally, in such poor market sentiment, equipment sales
became very competitive. We anticipate that the recovery in the semiconductor
industry will be slow as indicated by our quarterly backlog graph.

(QUARTERLY BACKLOG GRAPH)

Net sales in the Manufacturing Segment decreased by $839 or 48.1% from $1,745
in 2003 to $906 in 2004. The decrease was attributable mainly to operations in
the United States, which were affected by the conservative capital spending of
customers. Decreased demand for Artic Controlled Chucks resulted in a decrease
in sales of approximately $203, a 62.5% decrease in the number of such units
sold combined with a 33.2% decrease in their average selling price as compared
to 2003. Approximately $400 of the aggregate decrease related to the decrease
in sales of Wet Process Stations, an 83.3% decrease in the number of such units
sold combined with a 68.3% decrease in their average selling price as compared
to 2003. Additionally, no burn-in systems were sold in Singapore during the
quarter, compared to $325 of sales in 2003. However, this was offset with the
increase in sales of $80 in Burn-in Boards, an 11.9% increase in the number of
units sold combined with a 63.8% increase in the average selling price as
compared to 2003.The types of products we manufacture cover a broad spectrum,
resulting in a wide range of prices (the selling price of our products range
from $5 to $200). Revenue in the Manufacturing Segment depends heavily on
customers specific demands which correlate to their capital budgets.

Net sales in the Testing Services Segment decreased by $280 or 10.9% from
$2,564 in 2003 to $2,284 in 2004. The decrease was attributable to lower
activities in our Singapore operation where a decrease in demand for burn-in
services resulted in a $356 reduction in sales, with the average selling price
reduced by 16.3% as compared to 2003. However, this was offset by an increase
in sales of $77 by the Thailand operation over 2003, with no material effect on
the average selling price.

Net sales in the Distribution Segment decreased by $946 or 58.9% from $1,606 in
2003 to $660 in 2004. Of such decrease, $767 represented a reduction in demand
for low margin products, with a 42.5% drop in quantity sold, and a 39.3%
decrease in the average selling price with a price ranging from $0.1 to $1.
The remaining $179 of such decrease was due to a reduction in demand for
vibration and other products, with a 20% drop in quantity sold and a 58.8%
decrease in the average selling price of such products (the price of the
products ranges from $11 to $46). Revenue in the Distribution Segment depends
heavily on customers specific demands, which correlate to their capital
budgets.

Geographically, net sales into and within the United States decreased by $800
or 41.9% from $1,908 in fiscal 2003 to $1,108 in fiscal 2004, which was
attributable primarily to diminished demand in the U.S. for front-end low
margin products from the Distribution Segment in Singapore, and Wet Process
Stations from one of the U.S. operations.

Net sales into and within Singapore decreased by $793 or 30.3% from $2,615 in
2003 to $1,822 in 2004. The decrease of $793 was mainly due to low demand for
burn-in services and burn-in equipment.

Net sales into and within Malaysia decreased by $508 or 90.2% from $563 in 2003
to $55 in 2004. The decrease of $508 was mainly due to the low demand for
burn-in services. For the same reason, net sales into and within Thailand
decreased by $48 or 8% from $597 in 2003 to $549 in 2004. Revenue from a
customer, who moved their production from Malaysia to its facility in Thailand,
decreased in anticipation of their relocation from Malaysia to Thailand.

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Net sales into and within other foreign countries, including Europe, increased
by $95 or 38.8% from $245 in 2003 to $340 in 2004, primarily due to an increase
in demand for burn-in boards.

Cost of Sales

The Companys cost of sales decreased by $1,246 or 29.9% from $4,171 in 2003 to
$2,925 in 2004. Of the overall decrease of $1,246, the majority was related to
a decrease in material costs of $1,183, which is consistent with the reduction
in Distribution and Manufacturing sales. In addition, labor costs and overhead
were reduced by $37 and $18, respectively. However, as a percentage of sales,
the cost of sales increased 5.5% from 70.5% in 2003 to 76.0% in 2004. This
increase in cost of sales, as a percentage of sales, was due primarily to an
increase in utility rates and usage over the same period last year, with no
material effect on the selling price.

Operating Expenses

Operating expenses decreased by $458 or 27.2% from $1,682 in 2003 to $1,224 in
2004. Of the $458 reduction in operating expense, the majority was due to (1)
a diminished loss on disposal of fixed assets of $108, (2) a reduction of $310
in payroll and payroll related costs, (3) reduced commission and warranty of
$19, and (4) a decrease in travel and insurance expense of $24. As a
percentage of sales, operating expenses increased by 3.4% from 28.4% in 2003 to
31.8% in 2004, due to certain costs which remain fixed despite the significant
decrease in sales.

General and Administrative

General and Administrative (G&A) expenses decreased by $300 or 23.4% from
$1,283 in 2003 to $983 in 2004. As a percentage of sales, G&A increased 3.8%
from 21.7% in 2003 to 25.5% in 2004 due to certain costs which remain fixed
despite the significant decrease in sales. Of the decrease in expenses, (1) a
reduction in bonus provisions of $136 in the Singapore Operations and Corporate
headquarters was due to poorer performance in the first quarter of fiscal 2004,
(2) salaries were reduced by $60 in the Southeast Asia operations and $56 in
the U.S. operations as part of the implementation of cost cutting measures, (3)
insurance, travel and entertainment were reduced by $32 due to continued
implementation of cost-cutting measures, and (4) $16 was the result of a
decrease in miscellaneous expenses.

Selling Expenses

Selling expenses decreased by $55 or 21.2% from $260 in 2003 to $205 in 2004.
As a percentage of sales, selling expenses increased 0.9% from 4.4% in 2003 to
5.3% in 2004. Of the $55, (1) $13 was related to a decrease in commission
expense as a result of a decrease in commission-related sales in the
Distribution and Manufacturing segments, (2) $31 was due to a decrease in
salaries, mainly in the Singapore operations, as a result of a reduction in
headcount, and (3) $11 was due to a decrease in miscellaneous expenses as a
result of cost-cutting measures implemented during fiscal 2004.

Research and Development

Research and Development expenses increased by $5 or 18.5% from $27 in 2003 to
$32 in 2004. This increase was primarily due to the bonuses paid in 2004 to the
research group in our profitable, U.S. operation based on their fiscal year
2003 performance, while no such bonuses were paid in 2003.

Loss on Disposal of Property, Plant and Equipment

The loss on disposal of property, plant and equipment decreased by $108 from
$112 in 2003 to $4 in 2004 related to the disposal of the obsolete burn-in
facilities in Southeast Asia in 2003, replaced with investments in new
technology.

Income (Loss) from Operations

For segment reporting purposes, the loss from operations in our Manufacturing
Segment increased by $151 from $130 in 2003 to $281 in 2004. This was due to
eroding margins resulting from a significant decrease in sales and a decrease
in demand for Wet Process Stations and burn-in systems by 86.4% of total
decline in manufacturing sales from 2003. However, total expenses in this
segment decreased by 28.8% from $1,887 in 2003 to $1,213 in 2004. In addition,
the costs of sales and operating expenses comprised of fixed and semi-fixed
elements, such as salaries, rental, and insurance, which remained unchanged
despite the significant drop in sales.

Income from operations in our Testing Services Segment decreased by $205 or
71.4% from $287 in 2003 to $82 in 2004 mainly due to a decrease in burn-in
services in our Singapore operation of $387 from $2,017 in 2003 to $1,630 in
2004 and an increase of $113 in material costs in utility rates and usage as
compared to 2003.

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The loss in our Distribution operation increased $21 from $17 in 2003 to $38 in
2004. The majority of the decrease was due to a decrease in sales volume from
the low-margin front-end products. Additionally, due to the competition in the
market for chambers, vibration products and interface systems, customers took
advantage of price reductions to obtain necessary equipment, which reduced our
margins. The prices of products distributed by us range widely from $0.1 to
$46.

Corporate operating loss decreased from a $78 loss in 2003 to a $62 loss in
2004. This is mainly due to a compensation cost of $14 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 required to be charged in 2004 as all stock options granted in 2004
had exercise prices equal to the fair market value of the underlying Common
Stock.

Interest Expense

Interest expense decreased $16 or 31.4% in 2004 due primarily to a repayment of
$300 on the line of credit in the United States and payments of $719 on
long-term debt and capitalized leases.

Other Income

Other income increased by $23 or 20% from $115 in 2003 to $138 in 2004. The
increase of $23 was due to an increase in rental income of $18 and an increase
in a net gain of $65 on disposal of marketable securities. However, these were
offset with an increase in currency exchange loss of $45, a decrease of $13 in
dividend and interest income, and a decrease in other miscellaneous income of
$2.

Income Tax

Current income tax expense for 2004 was approximately $15, a decrease of $53,
or 77.9% compared to the income tax expense of $68 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 quarter ended September 30, 2003 was approximately $265,
which represented a reduction of $321 from a net income of approximately $56
attributable to common shares for the quarter ended September 30, 2002.
Consequently, basic earning per share for the quarter ended September 30, 2003
decreased to a loss of $0.09 per share, from basic earnings per share of $0.02
in 2003, which represented a change of $0.11 from net income to net loss.
Diluted loss per share for 2004 was $0.09 per share, representing a decrease of
$0.11 per share from diluted income per share of $0.02 for 2003.

Liquidity and Capital Resources

We had working capital (defined as current assets minus current liabilities) of
approximately $6,312 as of September 30, 2003, which represented a decrease of
approximately $715 compared to working capital of $7,027 as of June 30, 2003, a
10.2% decrease. The current ratio (defined as current assets divided by
current liabilities) was 2.59 times as of September 30, 2003 compared to 2.57
times as of June 30, 2003. The quick ratio (defined as current assets less
inventory, divided by current liabilities) also decreased slightly to 2.32
times as of September 30, 2003 from 2.34 times as of June 30, 2003. We believe
that the consistency of both the current and quick ratios at September 30, 2002
compared to those at September 30, 2003 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.

During the three month period ended September 30, 2003, total assets decreased
by $888 from $16,711 at June 30, 2003 to $15,823 at September 30, 2003. Most
of the decrease was in cash and accounts receivable as a result of payments on
lines of credit, notes payable, capital lease obligations, and accounts
payable. In addition, the bulk of the investments in marketable securities were
disposed of to realize the gain from the market. The overall impact resulted in
a reduction in working capital of $715.

The Companys credit rating provides ready and ample access to funds in global
capital markets. At September 30, 2003, the Company had available short-term
lines of credit totaling $3,032 of which $2,887 was unused.

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|                     |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|-------------------- |  | -------------- |  | -------- | ---- | ------ |  | ------ | ----- | - | ----- | - | ----- | - | ----- | 
|Entity with Facility |  | Type of        |  | Interest |      | Credit |  | Unused
|                     |  |                |  |          |      |        |  |       
|Trio-Tech Malaysia   |  | Line of Credit |  |          | 7.00 | %      |  | $      | 91    |   |       | $ | 91    |  
|Trio-Tech Bangkok    |  | Line of Credit |  |          | 6.50 | %      |  |        | 50    |   |       |   | 50    |  
|Trio-Tech Singapore  |  | Line of Credit |  |          | 7.00 | %      |  |        | 2,891 |   |       |   | 2,746 |  
|                     |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|                     |  |                |  |          |      |        |  |        |       | $ | 3,032 |   |       | $ | 2,887 | 
|                     |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 

Even though the Company suffered a net loss for the three months ended
September 30, 2003, management of the Company still believes that the Company
has the economic wherewithal to satisfy its cash needs for the next twelve
months plus one day as a going concern business. Managements belief is based,
in part, on the following: (1) we have short term deposits of approximately
$4,591 (of which approximately $3,382 is available immediately); (2) we had
backlog of $5,602 as of September 30, 2003; (3) our accounts receivable
turnover ratio is approximately 4.56 times per year (80 days of sales in
accounts receivable) for the period ended September 30, 2003; (4) our financing
facilities available as of September 30, 2003 were approximately $2,887 upon
which we are able to draw at any time; and (5) our efforts in 2004 to further
cut costs and expenses were effective. These cost cutting measures were
implemented through a freeze in headcount; reducing and consolidating the plant
capacity in order to reduce variable costs; and reducing insurance, travel and
other miscellaneous expenses. We anticipate that the costs and expenses in
fiscal 2004 will be lower than those in fiscal 2003 and, accordingly, cash
disbursement needs should be lower also. However, we cannot provide any
assurance that costs and expenses in fiscal 2004 or thereafter will not be
higher than those in fiscal 2003.

Net cash provided by operating activities during the three months ended
September 30, 2003 was $434, reflecting a decrease of $484 or 52.7%, compared
to net cash of $918 provided by operating activities during the three months
ended September 30, 2002. The decrease of $484 in cash provided by operating
activities was primarily attributable to the increase in net loss of $321,
offset by the decrease in accounts receivable of $957 as a result of the
decrease in net sales, utilization of cash to pay down accounts payable of $565
and an increase in other receivables and inventory of $401 as a result of the
slow down in the industry.

Net cash used in investing activities during the three months ended September
30, 2003 was $169 compared to $595 of net cash used in the three months ended
September 30, 2002. The $426 decrease in cash used was mainly attributable to
an increase in the proceeds from disposal of marketable securities of $257, a
continued reduction in the capital expenditures of $500 and a lower investment
in new marketable securities of $75, offset by the additional investment in
short-term deposits of $425.

Net cash used in financing activities during the three months ended September
30, 2003 was $876, reflecting an increase of $238 compared to $638 used in
financing activities during 2003. The cash outflow in financing activities
included (1) $157 of net repayments on lines of credit, and (2) $719 from
payments of long-term debts and capital lease obligations. During the three
months ended September 30, 2002, the cash outflow in financing activities
included $290 from payments on long-term debt and capitalized lease
obligations, and $348 from net payments and borrowings on lines of credit.

Approximately $1,557 of cash deposits as of September 30, 2003 is held in the
Companys 55% owned Malaysian subsidiary. Of such amount, $1,291 is
denominated in the currency of Malaysia, of which $165 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.

Corporate Guarantee Arrangement

The Company provides a corporate guarantee to one of its subsidiaries in
Southeast Asia of approximately $1,446 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.

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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. 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 the loans, capitalized leases and on our lines of credit range
from 5.50% to 7.25% per annum. As of September 30, 2003, the outstanding
principal balance on these loans was approximately $1,279. These interest rates
are subject to change and we cannot predict an increase or decrease in rates,
if any.

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 $131 and a decrease of $114 to shareholders equity
for three months ended September 30, 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 September 30, 2003. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that these disclosure controls and procedures were effective. During the period
covered by this report, 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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TRIO-TECH INTERNATIONAL
PART II. OTHER INFORMATION




Item 1. Legal Proceedings



Not applicable





Item 2. Changes in Securities and Use of Proceeds



Not applicable





Item 3. Defaults Upon Senior Securities



Not applicable





Item 4. Submission of Matters to Vote of Security Holders



Not applicable





Item 5. Other Information



Not applicable





Item 6. Exhibits and reports on Form 8-K



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

| |      |  |                                                                                                                     
| | ---- |  | --------------------------------------------------------------------------------------------------------------------
| | 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 quarter ended September 30, 2003:



| |     
| | ----
| | None






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: November 7 , 2003     

19