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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K



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

For the fiscal year ended June 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
incorporation or organization) |  | (I.R.S. Employer
Identification Number)

|                                         |  |           
|---------------------------------------- |  | ----------
|14731 Califa Street                      |  |           
|Van Nuys, California                     |  | 91411     
|(Address of principal executive offices) |  | (Zip Code)

Registrants Telephone Number: 818-787-7000

Securities registered pursuant to
Section 12(b) of the Act:

|                           |  |                      
|-------------------------- |  | ---------------------
|                           |  | Name of each exchange
|Title of each class        |  | On which registered  
|Common Stock, no par value |  | AMEX                 

Securities registered pursuant to
Section 12(g) of the Act:None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed 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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrants knowledge, in the definitive proxy statement
incorporated by reference in Part III of this Form 10-K.
o

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

The aggregate market value of voting stock held by non-affiliates of
Registrant, as of December 27, 2002, was approximately $6.1 million (based upon
the last sales price for shares of Registrants Common Stock as reported by the
AMEX on December 27, 2002, the last business day of the Companys most recently
completed second fiscal quarter). Shares of Common Stock held by each officer,
director and holder of 5% or more of the outstanding Common Stock (including
shares with respect to which a holder has the right to acquire beneficial
ownership within 60 days) have been excluded in that such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

The number of shares of common stock outstanding as of September 5, 2003
was 2,927,542.



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TABLE OF CONTENTS



|              |                                                                                                |                                                                       |  |  |  |  |  | 
|------------- | ---------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- |  |  |  |  |  | 
|PART I       
|              | ITEM 1  BUSINESS                                                                             
|              | ITEM 2  PROPERTIES                                                                           
|              | ITEM 3  LEGAL PROCEEDINGS                                                                    
|              | ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II      
|              | ITEM 5  MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|              | ITEM 6  SELECTED FINANCIAL DATA                                                              
|              | ITEM 7  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|              | ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|              | ITEM 8  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|              | ITEM 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|              | ITEM 9A  CONTROLS AND PROCEDURES                                                             
|PART III     
|              | ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES                                              
|PART IV      
|              | ITEM 15  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                     
|SIGNATURES   
|EXHIBITS     
|              |                                                                                                | INDEPENDENT AUDITORS REPORT                                         
|              |                                                                                                | INDEPENDENT AUDITORS REPORT                                         
|              |                                                                                                | CONSOLIDATED BALANCE SHEETS                                          
|              |                                                                                                | CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
|              |                                                                                                | CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY                      
|              |                                                                                                | CONSOLIDATED STATEMENTS OF CASH FLOW                                 
|              |                                                                                                | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                           
|EXHIBIT 10.22
|EXHIBIT 10.23
|EXHIBIT 10.24
|EXHIBIT 23.1 
|EXHIBIT 23.2 
|EXHIBIT 31.1 
|EXHIBIT 31.2 
|EXHIBIT 32.1 



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TRIO-TECH INTERNATIONAL

INDEX

|           |  |                                                                                                                        |  |     
|---------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                                        |  | Page
|           |  |                                                                                                                        |  |     
|           |  | Part I                                                                                                                 |  |     
|          
|Item 1     |  | Business                                                                                                               |  | 3   
|Item 2     |  | Properties                                                                                                             |  | 9   
|Item 3     |  | Legal Proceedings                                                                                                      |  | 10  
|Item 4     |  | Submission of matters to a vote of security holders                                                                    |  | 10  
|          
|           |  | Part II                                                                                                                |  |     
|          
|Item 5     |  | Market for registrants common equity and related stockholder matters                                                  |  | 11  
|Item 6     |  | Selected financial data                                                                                                |  | 12  
|Item 7     |  | Managements discussion and analysis of financial condition and results of operations                                  |  | 13  
|Item 7A    |  | Quantitative and qualitative disclosures about market risk                                                             |  | 27  
|Item 8     |  | Financial statements and supplementary data                                                                            |  | 28  
|Item 9     |  | Changes in and disagreements with accountants on accounting and financial disclosure                                   |  | 28  
|Item 9A    |  | Controls and Procedures                                                                                                |  | 28  
|          
|           |  | Part III                                                                                                               |  |     
|          
|Item 10    |  | Directors and executive officers of the registrant                                                                     |  | 29  
|Item 11    |  | Executive compensation                                                                                                 |  | 29  
|Item 12    |  | Security ownership of certain beneficial owners and management and related
stockholder matters                         |  | 29  
|Item 13    |  | Certain relationships and related transactions                                                                         |  | 29  
|Item 14    |  | Principal Accountant Fees and Services                                                                                 |  | 29  
|          
|           |  | Part IV                                                                                                                |  |     
|          
|Item 15    |  | Exhibits, financial statement schedules, and reports on Form 8-K                                                       |  | 29  
|          
|Signatures |  |                                                                                                                        |  | 32  
|Exhibits   |  |                                                                                                                        |  |     
|          
|           |  | Independent Auditors Report for the years ended June 30, 2003 and 2002                                                |  | 36  
|          
|           |  | Independent Auditors Report for the year ended June 30, 2001                                                          |  | 37  
|          
|           |  | Consolidated Balance Sheets as of June 30, 2003 and 2002                                                               |  | 38  
|          
|           |  | Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years
Ended June 30, 2003, 2002 and 2001 |  | 39  
|          
|           |  | Consolidated Statements of Shareholders Equity for the Years Ended June 30, 2003,
2002 and 2001                       |  | 40  
|          
|           |  | Consolidated Statements of Cash Flows for the Years Ended June 30, 2003 2002 and 2001                                  |  | 41  
|          
|           |  | Notes to Consolidated Financial Statements                                                                             |  | 42  



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TRIO-TECH INTERNATIONAL
PART I

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

The discussions of Trio-Tech Internationals (the Company) business and
activities set forth in this Form 10-K and in other past and future reports and
announcements by the Company may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, 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-K, including under the heading
Certain Risks That May Affect Our Future Results, 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.




ITEM 1  BUSINESS

Trio-Tech International was incorporated in 1958 under the laws of the State of
California. As used herein, the term Trio-Tech or Company or we or us
or Registrant includes Trio-Tech International and its subsidiaries unless
the context otherwise indicates. Our mailing address and executive offices are
located at 14731 Califa Street, Van Nuys, California 91411, and our telephone
number is (818) 787-7000.

With more than 45 years dedicated to the semiconductor and related industries,
we have applied our expertise to our global customer base in test services,
design, engineering, manufacturing, and distribution.

General

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

The Company operates in three business segments: Testing Services,
Manufacturing and Distribution.

Our core business, Testing Services, is expected to show growth in the coming
year and has changed the direction of our strategic growth plan. We currently
operate five testing facilities, one in the United States, one in Europe and
three in Southeast Asia. These facilities provide customers with a full range
of testing services, such as burn-in and product life testing for finished or
packaged components. In fiscal 2003, other than providing burn-in test
services, the Company also began programming services in Irelands operation.

We manufacture wet processing and cleaning stations used in the manufacturing
of semiconductor circuits and temperature controlled chucks that are used to
manufacture and test silicon wafers and other microelectronic substrates in
what is commonly called the front-end, or creation of semiconductor circuits.
Additionally, we also manufacture centrifuges, leak detectors, HAST (Highly
Accelerated Stress Test) systems and burn-in systems that are used primarily
in the back-end of the semiconductor manufacturing process to test finished
semiconductor devices and electronic components.

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Our business in Southeast Asia has an active distribution business.
Additionally, the Southeast Asia operation markets and supports distribution of
their own manufactured equipment in addition to distributing complementary
products from other manufacturers that are used by the Companys customers and
other semiconductor and electronics manufacturers.

Subsequent to the year end, the Company has decided to move one of the
operations in the United States, Universal Systems, to Singapore and this
transition is anticipated to be completed in fiscal 2004.

Company History

|     |  |                                                                                                                                                     
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|1958 |  | Incorporated in California                                                                                                                          
|    
|1976 |  | The Company formed Trio-Tech International Pte. Ltd. in Singapore.                                                                                  
|    
|1984 |  | The Company formed the European Electronic Test Center (EETC), a Cayman Islands domiciled subsidiary,
to operate a test facility in Dublin, Ireland.
|    
|1985 |  | The Companys Singapore subsidiary entered into a joint-venture agreement, Trio-Tech Malaysia, to
operate a test facility in Penang.                
|    
|1986 |  | Trio-Tech International listed on the NASDAQ Small Cap market under the symbol TRTC.                                                                
|    
|1988 |  | The Company acquired the Rotating Test Equipment Product Line of Genisco Technology Corporation.                                                    
|    
|1990 |  | Trio-Tech International acquired Express Test Corporation in
California.
Trio-Tech Malaysia opened a new facility in Kuala Lumpur.                  
|    
|1992 |  | Trio-Tech Singapore opened Trio-Tech Bangkok, Thailand.
Trio-Tech Singapore achieved ISO 9002 certification.                                        
|    
|1994 |  | Trio-Tech Malaysia started a new components assembly operation in Batang Kali.                                                                      
|    
|1995 |  | Trio-Tech Singapore achieved ISO 9001 certification.                                                                                                
|    
|1997 |  | In November 1997, the Company acquired KTS Incorporated, dba Universal Systems of Campbell, California.                                             
|    
|1998 |  | In September 1998, the Company listed on AMEX under the symbol TRT.                                                                                 
|    
|2000 |  | Trio-Tech Singapore achieved QS 9000 certification.
Trio-Tech Malaysia closed its facility in Batang Kali.                                          
|    
|2001 |  | The Company divested the Rotating Test Equipment Product Line.
Trio-Tech Malaysia closed its facility in Kuala Lumpur.                              

Subsequent Events

Subsequent to the year end, management made the decision to relocate one of the
manufacturing operations in the United States to Singapore. This transition is
anticipated to be completed in fiscal 2004.

The Company also incorporated a wholly owned subsidiary, Trio-Tech (Suzhou) Co.
Ltd., in the Peoples Republic of China, with a registered capital of
approximately $70.

Analysis of Sales

Complete Business Segment and Geographic Area Information is set forth under
Note 15 to the Consolidated Financial Statements for the years ended June 30,
2003, 2002 and 2001 and is incorporated herein as part of this Form 10-K.

Background

In 2002, the worldwide market for semiconductor devices was estimated at $141
billion, approximately 1.3% greater than the year 2001, with shipments of $139
billion. The Semiconductor Industry Association (SIA) expects the growth rate
to accelerate to 23% in 2003 and 20% in 2004 with wireless and digital consumer
products leading the growth of semiconductor sales.

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In addition to the growing demand for semiconductors, integrated circuits
(ICs) are continually shrinking in size while increasing in capacity,
complexity, and versatility. In order to fabricate these semiconductors,
manufacturers must continually improve their equipment, packaging and test
facilities. Semiconductor Equipment and Materials International (SEMI) reported
recently that worldwide sales of semiconductor manufacturing equipment totaled
$19 billion in 2002, a 32% year-over-year decline, the worst drop in sales on
record. However, SEMI has projected that worldwide semiconductor equipment
sales will recover and grow by 3.9% in 2003, and the chip-making tool market
will rebound and increase by 24% in 2004 and 18% in 2005. The market for
semiconductor manufacturing equipment can be divided into front-end
applications, including wafer fabrication and assembly, and back-end
applications, comprised of packaging and testing. SIA estimated that the
semiconductor equipment market was approximately 70% front-end equipment, 20%
back-end equipment and 10% facilities.

Back-End

Trio-Techs test services are concentrated on the back-end screening and
testing of semiconductor devices. With the high concentration of semiconductor
assembly and packaging facilities in Southeast Asia, a large demand exists for
third party test services in this region. Customers use third party test
services to accommodate fluctuations in output or to benefit from economies
that can be offered by third party service providers.

Finished devices are put through a series of tests, such as burn-in and
electrical testing, to ensure that they meet the necessary performance and
quality standards, before shipment to the customer. Our component
centrifuges, leak detectors, HAST equipment and COBIS burn-in systems are all
used to test and screen finished semiconductor devices to ensure that they meet
the specifications required by the manufacturers and customers.

Front-End

Semiconductor devices are fundamental building blocks used in electronic
equipment and systems. Each semiconductor device consists of an integrated
circuit designed to perform a specific electronic function. Integrated circuits
are manufactured through a series of complex steps on a wafer substrate,
etching or depositing the circuit pattern on a surface, typically a circular
silicon wafer, measuring three to twelve inches in diameter. Multiple
integrated circuit patterns are transferred to the wafer, and each completed
integrated circuit is called a device or die. The number of devices or dies
depends on the size of the circuit and the size of the wafer. Manufacturers
can significantly increase the number of devices or dies per wafer by shrinking
the circuit size or by expanding the wafer size. The transition to increased
wafer size, from 200mm (8 inch) to 300mm (12 inch) wafers, is currently
underway throughout the industry.

After etching or deposition of integrated circuits, wafers are typically sent
through a series of 100 to 300 additional processing steps. At many of these
process steps, the wafer is washed and dried using wet process stations, which
we manufacture.

The finished wafer is then put through a series of tests in which each separate
integrated device on the wafer is tested for functionality. Our Artic
temperature chucks are used with a wafer prober to test semiconductor wafers at
accurately controlled temperatures. After testing, the wafer is diced or cut
up, and each die is then placed into a packaging material, usually plastic or
ceramic, with lead wires to permit mounting onto printed circuit boards.

Testing Services

We own and operate facilities that provide testing services for semiconductor
devices and other electronic components to meet the requirements of military,
aerospace, industrial and commercial applications. Testing services
represented approximately 45%, 46% and 31% of sales for the fiscal years ended
June 30, 2003, 2002 and 2001, respectively.

The Company uses its own proprietary equipment for certain burn-in, centrifugal
and leak tests, and commercially available equipment for various other
environmental tests. The Company conducts the majority of its testing
operations in Southeast Asia with facilities in Singapore, Malaysia and
Thailand. All of the facilities in Southeast Asia are ISO 9002 as well as QS
9000 certified. The Company also operates test facilities in Ireland.

The testing services are used by manufacturers and purchasers of semiconductors
and other components who either lack testing capabilities or whose in-house
screening facilities are insufficient for testing devices to military or
certain commercial specifications. For those customers with adequate in-house
capabilities, we offer testing services for their overflow requirements and
also provide independent testing verification services.

Trio-Techs laboratories perform a variety of tests, including stabilization
bake, thermal shock, temperature cycling, mechanical shock, constant
acceleration, gross and fine leak tests, electrical testing, static and dynamic
burn-in tests, and vibration testing. The laboratories also perform
qualification testing, consisting of intense tests conducted on small samples
of output from manufacturers who require qualification of their processes and
devices.

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Manufacturing Products

The Company designs, develops, manufactures and markets equipment for the
manufacturing and testing of semiconductor wafers, devices and other electronic
components. Revenue from the sale of products manufactured represented
approximately 22%, 26% and 51% of sales for the fiscal years ended June 30,
2003, 2002 and 2001, respectively.

Front-End Products

Wet Process Stations

Wet process benches are used for cleaning, rinsing and drying semiconductor
wafers, magnetic disks, flat panel displays and other microelectronic
substrates. The wet process bench product line, which is manufactured by the
Companys subsidiary, Universal Systems, includes manual, semi-automated and
automated wet process stations, and features radial and linear robots,
state-of-the-art PC touch-screen controllers and sophisticated scheduling and
control software.

Artic Temperature Controlled Wafer
Chucks

The Artic Temperature Controlled Chucks are used for test, characterization and
failure analysis of semiconductor wafers and other components at accurately
controlled hot and cold temperatures. Several models are available, with
temperature ranges from -65°C to +400°C, and in diameters from 4 to 12 inch.
These systems provide excellent performance to meet the most demanding customer
applications. Several unique mechanical design features, for which patents are
pending, provide excellent mechanical stability under high probing forces and
across the temperature ranges.

Back-End Products

Autoclaves and HAST (Highly Accelerated Stress Test) Equipment

We manufacture a range of autoclaves and HAST systems and specialized test
fixtures. Autoclaves provide pressurized, saturated vapor (100% relative
humidity) test environments for fast and easy monitoring of integrated circuit
manufacturing processes. HAST equipment, which provides a pressurized high
temperature environment with variable humidity, is used to determine the
moisture resistance of plastic encapsulated devices. HAST provides a fast and
cost-effective alternative to conventional non-pressurized temperature and
humidity testing.

Burn-in Equipment and Boards

We manufacture burn-in systems, burn-in boards and burn-in board test systems.
Burn-in equipment is used to subject semiconductor devices to elevated
temperatures while testing them electrically to identify early product failures
and to assure long-term reliability. Burn-in testing approximates, in a
compressed time frame, the electrical and thermal conditions to which the
device would be subjected during its normal life.

The Company manufactures the COBIS II burn-in system which offers
state-of-the-art dynamic burn-in capabilities and a Windows-based operating
system with full data logging and networking features. The Company developed,
and now offers, a new Power Line Conditioner for the COBIS II, which reduces
all varieties of electrical interruptions. The Company also offers burn-in
boards for its BISIC, COBIS and COBIS II burn-in systems and other brands of
burn-in systems. Burn-in boards are used to mount devices during high
temperature environmental stressing. The Burn-in Board Tester is an extremely
accurate software programmable burn-in board tester, which can be programmed to
check up to 1024 sockets pins.

In 2000 through 2002, the Company developed several new products to complement
the burn-in processes, including semi-automatic (LUBIBM) and automatic burn-in
board loaders & unloaders (LUBIB). These products were designed to perform
precise, high-speed transfer of IC packages from the semiconductor holding tray
to the burn-in board, or vice-versa, while maintaining the integrity of the
ICs leads. Additional features have been further integrated into the LUBIB to
improve productivity and minimize human handling including the integration of
automatic burn-in board handling systems and the automatic electrical board
check station. We have improvised the LUBIBM with built-in test functions for a
major microprocessor company to study device characteristics and to weed out
device failures. Burn-in-board cleaning systems (CUBIB) are designed to perform
wet or dry cleaning for burn-in boards and other modular boards. Recently, we
jointly developed a fully automatic CUBIB with one of our major customers. We
also recently developed and introduced a new innovation, the burn-in Socket
Contact Conditioner (SCC), which removes fragments of solder residue from the
contact pins of an IC Socket, improving the productivity of the test process
and reducing contact failure on socket pins.

In 2002 through 2003, the Company was chosen by a customer to be its major
supplier to build Smart Burn-In (SBI) electrical testers to test
microprocessors. This tester is a higher-end method of testing microprocessor
devices. While providing integrated burn-in solutions, our sales team presented
the total burn-in automation solutions (in the BITS conference in Phoenix,
Arizona in

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March 2003) to improve products yield, reduce process downtime and
improve efficiency. In addition, the Company developed a cooling solution for
high power heat dissipation semiconductor devices. This solution involves the
cooling or maintaining of the temperature of high power semiconductor devices.

Component Centrifuges and Leak
Detection Equipment

Component centrifuges and leak detection equipment are used to test the
mechanical integrity of ceramic and other hermetically sealed semiconductor
devices and electronic parts for high reliability and aerospace applications.
The Companys centrifuges spin these devices and parts at specific acceleration
rates, creating gravitational-forces (gs) up to 30,000 gs (900,000 pounds per
square inch), thereby indicating any mechanical weakness in the devices. Leak
detection equipment is designed to detect leaks in hermetic packaging by first
pressurizing the devices in a tracer gas or fluid and then visually scanning
for bubble trails emanating from defective devices. Applications include
automotive and aerospace markets.

Distribution Activities

The Companys Singapore subsidiary continues to develop its international
distribution division. The distribution operation markets, sells and supports
our products in Southeast Asia. In addition to our own products, this
operation also distributes complementary products from other manufacturers
based in the United States, Europe, Japan and other countries. These products
are widely used by high quality and volume production manufacturers in the
semiconductor and electronic industries. The products include environmental
chambers, shaker systems, handlers, interface systems, vibration systems,
solderability testers and other manufacturing products. Revenue from
distribution activities represented approximately 33%, 29% and 18% of sales for
the years ended June 30, 2003, 2002 and 2001, respectively.

Product Research and
Development

We continue to invest in research and development to improve our products and
services. Our previous efforts have been concentrated on products for the
Front End and in developing new testing technology that allows us to offer
more advanced processes. However, the management has decided to reduce research
and development activities as the demand for customized products in the
Manufacturing Segment was reduced. The Company incurred research and
development costs of $121,000 in fiscal 2003, $331,000 in fiscal 2002 and
$216,000 in fiscal 2001.

During 2000 through 2002, the Company developed new equipment and facilities to
participate in a new generation of burn-in technology known as HBI and SBI.
This technology was developed to meet the unique test requirements of the
latest microprocessor products. The HBI and SBI test systems are multiple
positions, independently programmable systems that can economically run long
test times at unique burn-in conditions. We developed significant facilities,
including a power sub-station and improved environmental controls, to house the
HBI and SBI technology.

Marketing, Distribution and
Services

The Company markets its products and services worldwide, directly and through
independent sales representatives. Additionally, we have approximately 16
independent sales representatives operating in the United States and another 17
in various foreign countries. Of the 33 sales representatives, 5 represent the
Distribution Segment and the others represent the Manufacturing Segment.
Trio-Techs United States marketing efforts are coordinated from its California
locations. Southeast Asia marketing efforts are assigned to its subsidiary in
Singapore. The Company advertises its products in trade journals and
participates in trade shows.

Independent testing laboratories, users, assemblers and manufacturers of
semiconductor devices, including many, large well-known corporations, purchase
the Companys products and services. These customers depend on the current and
anticipated market demand for integrated circuits and products utilizing
semiconductor devices. In fiscal 2003, 2002, and 2001, sales of equipment and
services to our two largest customers (Catalyst Semiconductor and AMD)
accounted for approximately 49.3%, 55%, and 40%, respectively, of our net
revenues. Our ability to maintain close, satisfactory relationships with our
customers is essential to our stability and growth. The loss of or reduction
or delay in orders from our significant customers, or delays in collecting
accounts receivable from our significant customers, could adversely affect our
financial condition and results of operations. During the fiscal year ended
June 30, 2003, the Company had sales of $3,563,000 (17%) and $6,904,000 (32%)
to Catalyst Semiconductor and AMD, respectively.

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Backlog

The following table sets forth the Companys backlog at the dates indicated
(amounts in thousands):

|                        |  |               |       |               |  |   |       | 
|----------------------- |  | ------------- | ----- | ------------- |  | - | ----- | 
|                        |  | June 30, 2003 |       | June 30, 2002
|                        |  |               |       |              
|Manufacturing backlog   |  | $             | 582   |               |  | $ | 785   | 
|Testing service backlog |  |               | 5,138 |               |  |   | 6,615 | 
|Distribution backlog    |  |               | 206   |               |  |   | 537   | 
|                        |  |               |       |               |  |   |       | 
|                        |  |               | 5,926 |               |  |   | 7,937 | 
|                        |  |               |       |               |  |   |       | 

Based upon past experience, the Company does not anticipate any significant
cancellations or renegotiation of sales. The purchase orders for manufacturing,
testing and distribution require delivery within the next 12 months. The
Company does not anticipate any difficulties in meeting delivery schedules. Our
backlog (in thousands), as of September 5, 2003, is $1,408, $4,220 and $484 for
manufacturing, testing and distribution, respectively and totals $6,112.

Manufacturing and Supply

The Companys products are designed by its engineers and are assembled and
tested at its facilities in California, Singapore and Ireland. We purchase all
parts, and certain components, from outside sources for assembly by the
Company. We have no written contracts with any of our key suppliers.

Competition

There are numerous competing testing laboratories in Southeast Asia that
perform a range of testing services similar to those offered by the Company.
However, recent severe competition and attrition in the Asian test and burn-in
services industry has reduced the total number of the Companys competitors to
approximately three. Product performance and reliability in the Testing
Segment, although fundamentally equivalent, are provided by using our own
proprietary equipment for certain burn-in, centrifugal and leak tests. As the
Company has sold and will continue to sell its products to competing
laboratories, and as other test products are available from many other
manufacturers, the Companys competitors can offer the same testing
capabilities. Testing equipment is also available to semiconductor
manufacturers and users who might otherwise use outside testing laboratories,
including the Company, to perform environmental testing. The existence of
competing laboratories and the availability of testing equipment to
semiconductor manufacturers and users pose competitive threats to the Companys
future testing services revenues and earnings. Although the aforementioned
laboratories and new competitors may challenge the Company at any time, the
Company believes that other factors, including its reputation, long service
history and strong customer relationships, are important factors in determining
the Companys position in the market.

The Southeast Asia Distribution Segment sells a wide range of more than 27
different testing products, of which 3% are front-end products, the sales
volumes of which are highly dependent on customer capital expenditure plans.
That segment has one main competitor. Through 45 years dedicated to the
semiconductor and related industries, we have formed lasting relationships with
key suppliers in our Distribution Segment which allows us to competitively
price our distributed products.

The semiconductor equipment manufacturing industry is highly competitive.
There are approximately three competitors in our Manufacturing Segment for
Burn-in Boards and Burn-in Ovens. In the United States, we have one competitor
for HAST Systems, one for Artic Thermal Chucks, and one for Gross Leak Test
Equipment. There are approximately four competitors of the same size as one
another in the Western United States for Wet Benches. There can be no assurance
that competition will not increase or that the Companys technological
advantages may not be reduced or lost as a result of technological advances by
competitors or changes in semiconductor processing technology. We continue to
invest in research and development to improve our products and services.

We believe that the principal competitive factors in the manufacturing industry
include product performance, reliability, service and technical support,
product improvements, price, established relationships with customers and
product familiarity. The Company makes every effort to compete favorably with
respect to each of these factors. For example, we believe that the products
manufactured by the Company meet or exceed customer applications through unique
design features, which applications demand systems that work year after year in
a production setting. Our manufactured systems have a track record of
reliability. The Company has been in business for more than 45 years and has
facilities in several regions of the world. The Company believes those factors
have combined not only to help establish long-term relationships with customers
but also to

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allow it to continue to do business with customers upon their
relocation to other regions in which the Company conducts business. The
Company believes that its pricing of manufactured and distributed systems is
competitive in the market. Our competitive position in the markets we are
serving is not readily determinable, because there is no information publicly
available regarding our competitors who are privately held companies.

Patents

Trio-Techs Manufacturing Segment holds a United States Patent granted in 1987
in relation to its pressurization humidity testing equipment. The Company also
holds a United States Patent granted in 1994 on certain aspects of its Artic
temperature test systems. In 2000, the Company filed, and was granted in 2001,
a new United States patent (20 years) for several aspects of its new range of
Artic temperature chucks. Although the Company believes these patents are an
integral part of our Manufacturing Segment, the capitalized cost of the patents
was written off in fiscal 2002 because of the impairment assessed by our
management. This assessment was based on an examination of the estimated
undiscounted future cash flows which are generated by the subsidiaries where
certain long-lived assets (goodwill and certain fixed assets) are used.

Several unique mechanical design features, for which patents are pending,
provide excellent mechanical stability under high probing forces and across the
temperature ranges.

It is typical in the semiconductor industry to receive notices from time to
time alleging infringement of patents or other intellectual property rights of
others. The Company does not believe that it infringes on the intellectual
property rights of others. However, should any claims therefore be brought
against the Company, the cost of litigating such claims, and any damages that
may result there from, could materially and adversely affect our business,
financial condition or results of operations.

Employees

As of June 30, 2003, the Company had approximately 27 employees in the United
States, 361 in Southeast Asia and 10 in Ireland for a total of approximately
398 employees. None of the Companys employees are represented by a labor
union. There are approximately 314 employees in the testing segment, 65
employees in the manufacturing segment, 16 in the distribution segment and 3 in
Corporate. Currently, as of September 5, 2003, there are approximately 391
employees.




ITEM 2  PROPERTIES

At this time, the Company believes that it uses about 53% of its fixed property
capacity. The Company also believes that its existing facilities are
under-utilized and are adequate and suitable to cover any sudden increase in
the Companys needs in the foreseeable future.

The following table sets forth information as to the location and general
character of the principal manufacturing and testing facilities of the
Registrant:

|                                 |  |                       |  |          |        |               |  |                  
|-------------------------------- |  | --------------------- |  | -------- | ------ | ------------- |  | -----------------
|                                 |  |                       |  |          |        |               |  | Owned (O)        
|                                 |  |                       |  | Approx.  |        | or Leased (L)
|                                 |  |                       |  | Sq. Ft.  |        | Expiration   
|Location                         |  | Principal Use/Segment |  | Occupied |        | Date         
|                                 |  |                       |  |          |        |              
|14731 Califa Street              |  | Headquarters/         |  |          | 10,000 |               |  | (L) Jan. 2005    
|Van Nuys, CA 9l411               |  | Testing/Manufacturing |  |          |        |               |  |                  
|                                
|6951-A Via Del Oro               |  | Manufacturing         |  |          | 15,000 |               |  | (L) Feb. 2004*3  
|San Jose, CA 95119               |  |                       |  |          |        |               |  |                  
|                                
|Abbey Road                       |  | Testing               |  |          | 18,400 |               |  | (O)              
|Deansgrange Co.                  |  |                       |  |          |        |               |  |                  
|Dublin, Ireland                  |  |                       |  |          |        |               |  |                  
|                                
|1004, Toa Payoh North, Singapore |  |                       |  |          |        |               |  |                  
|HEX 07-01/07,                    |  | Testing               |  |          | 6,833  |               |  | (L) Sept.
2003 *2
|HEX 03-01/03,                    |  | Testing/Manufacturing |  |          | 2,959  |               |  | (L) Sept. 2003 *2
|HEX 03-16/17,                    |  | Testing               |  |          | 1,983  |               |  | (L) Sept. 2003 *2
|HEX 01-08/15                     |  | Testing/Manufacturing |  |          | 6,865  |               |  | (L) Jan. 2006    

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|                                 |  |                  |  |  |        |  |  |                  
|-------------------------------- |  | ---------------- |  |  | ------ |  |  | -----------------
|HEX 01-16/17                     |  | Testing          |  |  | 1,983  |  |  | (L) Feb. 2004 *2 
|HEX 02-08/10,                    |  | Testing          |  |  | 2,959  |  |  | (L) Aug. 2005    
|HEX 02-11/15                     |  | Testing          |  |  | 3,905  |  |  | (L) Apr. 2005    
|                                
|1008, Toa Payoh North, Singapore |  |                  |  |  |        |  |  |                  
|HEX 03-01/06,                    |  | Testing          |  |  | 7,345  |  |  | (L) Feb. 2006    
|HEX 03-09/15,                    |  | Logistics        |  |  | 4,435  |  |  | (L) Jan. 2006    
|HEX 03-16/18,                    |  | Distribution     |  |  | 5,130  |  |  | (L) Jan. 2006    
|HEX 01-08,                       |  | Transformer Room |  |  | 603    |  |  | (L) Jun. 2003 *2 
|HEX 07-17/18,                    |  | Testing          |  |  | 4,315  |  |  | (L) Nov. 2003 *2 
|HEX 07-01,                       |  | Testing          |  |  | 3,466  |  |  | (L) Jan. 2004 *2 
|                                
|HEX 01-S3/S4                     |  | Power Substation |  |  | 1,628  |  |  | (L) Sept. 2003 *1
|                                
|Plot 1A, Phase 1                 |  | Testing          |  |  | 49,924 |  |  | (O)              
|Bayan Lepas Free Trade Zone      |  |                  |  |  |        |  |  |                  
|11900 Penang                     |  |                  |  |  |        |  |  |                  
|                                
|327, Chalongkrung Road,          |  | Testing          |  |  | 11,300 |  |  | (O)              
|Lamplathew, Lat Krabang,         |  |                  |  |  |        |  |  |                  
|Bangkok 10520, Thailand          |  |                  |  |  |        |  |  |                  
|                                
|Lot No. B7, Kawasan MIEL         |  | Lease Out        |  |  | 24,142 |  |  | (O)              
|Batang Kali, Phase II,           |  |                  |  |  |        |  |  |                  
|43300 Batang Kali                |  |                  |  |  |        |  |  |                  
|Selangor Darul Ehsan, Malaysia   |  |                  |  |  |        |  |  |                  



| |  | *1 The Company built and owns a Power Substation building, which building is
situated on property that the Company leases. Although the lease expires
in September 2003, the Company anticipates that the landlord will offer
similar terms on such lease at renewal and does not believe that material
expenses will be incurred.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | *2 With respect to the various leases that expire during fiscal 2004, the
Company anticipates that the landlord will offer similar terms on each
such lease at renewal and does not believe that material expenses will be
incurred.                                                                                              
|
| |  | *3 With respect to Universal Systems, the lease is not expected to be
renewed as the operation will be moved to Southeast Asia.                                                                                                                                                                                                   




ITEM 3  LEGAL PROCEEDINGS

The Company is, from time to time, the subject of litigation claims and
assessments arising out of matters occurring in its normal business operations.
In the opinion of management, resolution of these matters will not have a
material adverse effect on the Companys financial statements.

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

There was no litigation relating to environmental action which arose from
operations.




ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II




ITEM 5  MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Registrants common stock is traded on the American Stock Exchange under
the symbol TRT. The following table sets forth, for the periods indicated,
the range of high and low sales prices of our common stock as quoted by AMEX:

|              |  |                    |  |     |      |  |  |   |      | 
|------------- |  | ------------------ |  | --- | ---- |  |  | - | ---- | 
|Quarter Ended |  | High               |  | Low
|              |  |                    |  |    
|Fiscal 2002   |  |                    |  |     |      |  |  |  
|              |  | September 30, 2001 |  | $   | 4.02 |  |  | $ | 2.96 | 
|              |  | December 31, 2001  |  |     | 3.26 |  |  |   | 2.48 | 
|              |  | March 31, 2002     |  |     | 3.25 |  |  |   | 2.50 | 
|              |  | June 30, 2002      |  |     | 3.06 |  |  |   | 2.65 | 
|Fiscal
2003   |  |                    |  |     |      |  |  |  
|              |  | September 30, 2002 |  |     | 2.65 |  |  |   | 1.87 | 
|              |  | December 31, 2002  |  |     | 2.30 |  |  |   | 1.51 | 
|              |  | March 31, 2003     |  |     | 2.30 |  |  |   | 1.86 | 
|              |  | June 30, 2003      |  |     | 2.45 |  |  |   | 1.86 | 
|Fiscal 2004   |  |                    |  |     |      |  |  |  
|              |  | July 1, 2003       |  |     | 3.60 |  |  |   | 2.40 | 
|              |  | September 5, 2003  |  |     |      |  |  |   |      | 

There were approximately 609 shareholders of record of our common stock as of
September 5, 2003. Approximately 2,133,324 shares are held by Cede and Co., a
clearinghouse that holds stock certificates in street name for an unknown
number of shareholders.

The Company has never declared any cash dividends on its common stock. Any
future determination as to cash dividends will depend upon the earnings and
financial position of the Company at that time and such other factors as the
Board of Directors may deem appropriate. It is anticipated that no dividends
will be paid to holders of common stock in the foreseeable future.

The following table sets forth certain information regarding equity
compensation plans of the Company:

|                                                           |       |                            |                                      |                      |  |                         |        |        |  |  |         |         | 
|---------------------------------------------------------- | ----- | -------------------------- | ------------------------------------ | -------------------- |  | ----------------------- | ------ | ------ |  |  | ------- | ------- | 
|                                                           |       |                            | EQUITY COMPENSATION PLAN INFORMATION |                      |  |                         |       
|                                                          
|Plan Category                                              |       | Number of securities to be |                                      | Weighted-average     |  | Number of securities   
|                                                           |       | issued
upon exercise of    |                                      | exercise price of    |  | remaining available for
|                                                           |       | outstanding options,       |                                      | outstanding options, |  | future issuance under  
|                                                           |       | warrants and rights        |                                      | warrants and rights  |  | equity compensation    
|                                                           |       |                            |                                      |                      |  | plans (excluding       
|                                                           |       |                            |                                      |                      |  | securities reflected in
|                                                           |       |                            |                                      |                      |  | column(a))             
|                                                           |       | (a)                        |                                      | (b)                  |  | (c)                    
|                                                           |       |                            |                                      |                      |  |                        
|Equity compensation plans
approved by security holders     |       |                            |                                      |                      |  |                         |        |        |  |  |         |        
|(1) Companys 1998                                         |       |                            |                                      |                      |  |                         |        |        |  |  |         |        
|Stock Option Plan                                          |       |                            | 182,500                              |                      |  | $                       | 4.3896 |        |  |  | 117,500 |        
|(2) Directors Stock
Option Plan                            |       |                            | 167,000                              |                      |  | $                       | 3.4919 |        |  |  | 133,000 |        
|Equity compensation plans not
approved by security holders |       |                            | 0                                    |                      |  | $                       | 0.0000 |        |  |  | 0       |        
|                                                           |       |                            |                                      |                      |  |                         |        |        |  |  |         |        
|                                                           | Total |                            |                                      | 349,500              |  |                         | $      | 3,9607 |  |  |         | 250,500 | 
|                                                           |       |                            |                                      |                      |  |                         |        |        |  |  |         |        

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ITEM 6  SELECTED FINANCIAL DATA

(In thousands, except (Loss) Earnings
per share)

|                                           |         |   |          |       |          |   |          |       |          |   |          |       |  |   |        |       |  |   |        |       | 
|------------------------------------------ | ------- | - | -------- | ----- | -------- | - | -------- | ----- | -------- | - | -------- | ----- |  | - | ------ | ----- |  | - | ------ | ----- | 
|                                           |         |   | June 30, |       | June 30, |   | June 30, |       | June 30, |   | June 30,
|                                           |         |   | 2003     |       | 2002     |   | 2001     |       | 2000     |   | 1999    
|                                           |         |   |          |       |          |   |          |       |          |   |         
|Consolidated Statements of Operations      |         |   |          |       |          |   |          |       |          |   |          |       |  |   |        |       |  |   |        |      
|Net sales                                  |         | $ | 21,246   |       |          | $ | 19,617   |       |          | $ | 36,133   |       |  | $ | 26,943 |       |  | $ | 21,181 |      
|(Loss) Income from Operations              |         |   | (287     | )     |          |   | (3,579   | )     |          |   | 1,383    |       |  |   | 1,180  |       |  |   | (207   | )    
|(Loss) Net income                          |         |   | (81      | )     |          |   | (3,547   | )     |          |   | 1,163    |       |  |   | 1,034  |       |  |   | 195    |      
|(Loss) Earnings per share:                 |         |   |          |       |          |   |          |       |          |   |          |       |  |   |        |       |  |   |        |      
|                                           | Basic   |   |          | (0.03 | )        |   |          | (1.21 | )        |   |          | 0.40  |  |   |        | 0.37  |  |   |        | 0.07  | 
|                                           | Diluted |   |          | (0.03 | )        |   |          | (1.21 | )        |   |          | 0.39  |  |   |        | 0.36  |  |   |        | 0.07  | 
|Weighted
average common shares outstanding |         |   |          |       |          |   |          |       |          |   |          |       |  |   |        |       |  |   |        |      
|                                           | Basic   |   | 2,928    |       |          |   | 2,928    |       |          |   | 2,884    |       |  |   | 2,759  |       |  |   | 2,745  |      
|                                           | Diluted |   |          | 2,928 |          |   |          | 2,928 |          |   |          | 3,006 |  |   |        | 2,895 |  |   |        | 2,757 | 
|Consolidated Balance Sheets                |         |   |          |       |          |   |          |       |          |   |          |       |  |   |        |       |  |   |        |      
|Cortent assets                             |         | $ | 11,493   |       |          | $ | 13,405   |       |          | $ | 15,501   |       |  | $ | 17,279 |       |  | $ | 12,723 |      
|Current liabilities                        |         |   | 4,466    |       |          |   | 6,486    |       |          |   | 7,599    |       |  |   | 8,349  |       |  |   | 5,934  |      
|Working capital                            |         |   | 7,027    |       |          |   | 6,919    |       |          |   | 7,902    |       |  |   | 8,930  |       |  |   | 6,789  |      
|Total assets                               |         |   | 16,711   |       |          |   | 19,075   |       |          |   | 24,150   |       |  |   | 22,712 |       |  |   | 18,932 |      
|Long-term
debt and capitalized leases      |         |   | 836      |       |          |   | 986      |       |          |   | 1,745    |       |  |   | 586    |       |  |   | 962    |      
|Shareholdersequity                        |         | $ | 8,590    |       |          | $ | 8,618    |       |          | $ | 11,609   |       |  | $ | 10,448 |       |  | $ | 9,051  |      

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ITEM 7  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

The discussions of Trio-Tech Internationals (the Company) business and
activities set forth in this Form 10-K 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, SARS virus, 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-K 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 fiscal year ended June 30, 2003, total assets decreased by $2,364
from $19,075 at June 30, 2002 to $16,711 at June 30, 2003. The majority of the
decrease was in short-term deposits as a result of payments on lines of credit,
notes payable, capital lease obligations, accounts payable. Accounts
receivable have decreased due to faster collection of debt from customers.

The accounts receivable turnover index (defined as net sales divided by average
ending accounts receivable less bad debt allowance) totaled 5.45 times at June
30, 2003, compared with 4.57 times at June 30, 2002. The Company believes that
the foregoing reflects its consistent emphasis on the collection of accounts
receivable. The accounts receivable at June 30, 2003 decreased by $505 or
12.2%, compared to accounts receivable at June 30, 2002. Net sales for the
fiscal year ended June 30, 2003 were 8.3% higher than net sales for the fiscal
year ended June 30, 2002. The increased sales were the primary factor in the
improvement in the accounts receivable turnover.

The inventory turnover ratio (defined as cost of sales divided by average
ending inventory) increased from 10.86 times at June 30, 2002 to 15.75 times at
June 30, 2003. Inventories at June 30, 2003 increased marginally by $35 from
$1,014 at June 30, 2002 to $1,049 at June 30, 2003. The increase in inventories
was attributable to an increase in finished goods of $463, and offset with
decreases in work in progress and raw materials in the amount of $104 and $324,
respectively. The inventory turnover rate improved from 34 days in fiscal 2002
to 23 days in fiscal 2003, partly due to inventory of $511 written down in
fiscal 2002 because of obsolescence.

In addition, short-term deposits and investments in marketable securities
decreased by $1,788 from $6,581 at June 30, 2002 to $4,793 at June 30, 2003.
The cash proceeds coming from the decrease in short-term deposits and
investment in marketable securities were used to pay lines of credit, notes
payable, capital lease obligations and accounts payable.

During fiscal 2003, the additions to property, plant and equipment totaled
$1,262, including fixed assets under capital lease arrangements.

Total liabilities at June 30, 2003 were $6,013, reflecting a $2,128 decrease
from $8,141 at June 30, 2002. The decrease was due mainly to payments on lines
of credit and accounts payable. As of June 30, 2003, total liabilities
(excluding minority interest) was 70% of total capital, compared with 94.5% at
June 30, 2002. The Company believes its strong cash position provides ready and
ample access to funds in the global capital market.

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The following table sets forth our revenue components for the past three years:

Revenue Components

|           |               |  |          |        |          |  |            |        |   |  |  |        |  
|---------- | ------------- |  | -------- | ------ | -------- |  | ---------- | ------ | - |  |  | ------ | -
|           |               |  |          |        |          |  | Year Ended |        |   |  | 
|           |               |  |         
|           |               |  | June 30, |        | June 30, |  | June 30,  
|           |               |  | 2003     |        | 2002     |  | 2001      
|           |               |  |          |        |          |  |           
|Net Sales: |               |  |          |        |          |  |            |        |   |  |  |       
|           | Testing       |  |          | 44.74  | %        |  |            | 45.58  | % |  |  | 30.75  | %
|           | Manufacturing |  |          | 22.00  |          |  |            | 25.60  |   |  |  | 51.11  |  
|           | Distribution  |  |          | 33.26  |          |  |            | 28.82  |   |  |  | 18.14  |  
|           |               |  |          |        |          |  |            |        |   |  |  |       
|           | Total         |  |          | 100.00 | %        |  |            | 100.00 | % |  |  | 100.00 | %
|           |               |  |          |        |          |  |            |        |   |  |  |       

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

Our cost of sales is made up of the cost of inventories, labor, depreciation,
utilities (which 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 unsalable, excess or obsolete raw materials, work-in-process
and finished goods by charging such write-downs to cost of sales. In addition
to write downs based on newly introduced parts, statistical and judgmental
assessments are calculated for the remaining inventory based on salability and
obsolescence.

Revenue Recognition

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

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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,
and 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 either list separate installation (including training) and upgrades as a
separate line item. In addition, most front-end products
(which account for approximately 82% of the total revenue in the distribution
segment for fiscal 2003 and 2002) 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. Whenever any such
impairment exists, an impairment loss will be recognized for the amount by
which the carrying value exceeds the fair value.

Year Ended June 30, 2003 (2003) Compared to Year Ended June 30, 2002 (2002)

Sales

Net sales for the Company increased by $1,629 or 8.3% from $19,617 in fiscal
2002 to $21,246 in fiscal 2003, due to the recovery of semiconductor sales,
such as wireless and digital consumer products. The Semiconductor Industry
Association (SIA) expects

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the growth rate for these products to be
approximately 23% in fiscal 2003 and 20% in fiscal 2004. The Testing Operation
in Bangkok and sales of low margin products in the Distribution Segment mainly
contributed to this increase in net sales.

The sales in the Manufacturing Segment decreased by $348 or 6.9% from $5,022 in
fiscal 2002 to $4,674 in fiscal 2003. The decrease was attributed mainly to
operations in the United States, which we believe were affected by the
conservative capital spending by customers. The decrease in demand resulted in
a decrease in sales of approximately $500 for Artic Temperature Controlled
Chucks, a 58% decrease in the number of units sold combined with an 11%
decrease in the average selling price, and $70 related to the decrease in sales
for Environmental Test Equipment, a 20% decrease in the number of units sold
combined with a 38% decrease in the average selling price. However, the
decrease in sales was offset by a $200 increase from the sale of Burn-in
Equipment as a result of an increase in the average selling price of the units
without a material effect on the number of units sold. The types of products
we manufacture cover a broad range, resulting in a wide range of prices (our
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 Testing Services Segment increased by $563 or 6.3% from $8,942 in
fiscal 2002 to $9,505 in fiscal 2003. Of such increase, $461 was attributable
to our Thailand operation because of new contracts secured from existing
customers and new customers. There was an increase in activities for the
Thailand operation without material effect on the average selling price. The
remaining $102 increase was attributable to our Singapore operation with an
increase in activities which had an immaterial effect on the average selling
price. Of the increase of $461, approximately $102 of revenue in Thailand was
attributable to a customer who moved their production from Malaysia to its
facility in Thailand. Revenue from this particular customer decreased in
fiscal 2002, in anticipation of their relocation from Malaysia to Thailand.

The sales in the Distribution Segment increased by $1,414 or 25% from $5,653 in
fiscal 2002 to $7,067 in fiscal 2003. Of such increase, $1,213 represented a
70% increase in the average selling price with prices ranging from $0.1 to
$1.2, despite a 25.8% decrease in the number of units sold for low margin
products. Furthermore, $201 of such increase was due to the increase in demand
for test chambers and vibration products with selling prices ranging 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 increased by $955
or 11.8% from $8,083 in fiscal 2002 to $9,038 in fiscal 2003, which related
mainly to the Distribution Segment. The increase of $955 was attributable
primarily to an increased demand in the U.S. for front-end low margin products
from the Distribution Segment in Singapore. Net sales within Southeast Asia
increased $1,213 or 12.0% from $10,093 in fiscal 2002 to $11,306 in fiscal
2003. Of the increase of $1,213, $461 was primarily related to new burn-in
testing services in the Thailand operation. Furthermore, $797 of the increase
was due to an increase in demand for burn-in equipments and boards, which
related to the Manufacturing Segment in Singapore. Net sales in Europe
decreased by $536 or 36.2% from $1,479 in fiscal 2002 to $943 in fiscal 2003,
of which $490 was attributed to the Manufacturing Segment and $46 was primarily
due to a decline in demand for testing services, which occurred when several
large customers moved out of Europe.

Cost of Sales

The Companys cost of sales increased by $319 or 2% from $15,926 in fiscal 2002
to $16,245 in fiscal 2003. Of the increase of $319, the majority was related to
an increase in material costs of $970, which is consistent with the increase in
sales, offset by the reduction in net payroll costs of $467 and overheads of
$184 from the Manufacturing Segment. However, as a percentage of sales, the
cost of sales decreased 4.7% from 81.2% in fiscal 2002 to 76.5% in fiscal 2003.
This decrease in cost of sales, as a percentage of sales, was due primarily to
the inventory obsolescence of $511 recorded in fiscal 2002 which did not recur
in fiscal 2003, and lower depreciation expenses of $234 incurred due to the
impairment loss of fixed assets recorded in fiscal year 2002 which did not
recur in fiscal 2003. Along with cost-cutting measures being adopted in the
U.S. operations, the effect of reducing payroll related expense in Singapore by
$261 in fiscal 2003 also contributed to the decrease of cost of sales as a
percentage of revenue.

Operating Expenses

Operating expenses decreased by $1,982 or 27.3% from $7,270 in fiscal 2002 to
$5,288 in fiscal 2003. As a percentage of total revenue, our operating
expenses in fiscal 2003 decreased from 37.1% in fiscal 2002 to 24.9%. The major
reduction in operating expenses was attributable to (1) a reduction in
impairment loss of $1,273, (2) a reduction of $120 in net payroll related
expense, (3) a reduction of $210 in research and development, (4) a reduction
of $322 in selling expenses related to commission and warranty expense, and (5)
a reduction of $57 in other costs.

General and Administrative

General and Administrative (G&A) expenses decreased by $149 or 3.6% from
$4,141 in fiscal 2002 to $3,992 in fiscal 2003. As a percentage of sales, G&A
decreased by 2.3% from 21.1% in 2002 to 18.8% in fiscal 2003. Although we had
a $333

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decrease in G&A during fiscal 2003 as a result of a decrease in payroll
related expenses, primarily in the U.S. operations, such decrease was offset by
$264 increase in payroll expenses in Southeast Asia as operations increased
based on increased sales. In addition, we had a $40 decrease in rental,
relocation, and insurance expense due to relocation to smaller facilities in
Van Nuys, California, and a $40 decrease in depreciation expense due to the
impairment loss of assets recorded in fiscal 2002.

Selling

Selling expenses decreased by $498 or 41.5% from $1,200 in fiscal 2002 to $702
in fiscal 2003. As a percentage of sales, selling expenses decreased 2.8% from
6.1% in fiscal 2002 to 3.3% in fiscal 2003. Of the $498, (1) $195 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)
$127 was related to a decrease in warranty expense incurred in Southeast Asia
reflecting the fact that the products sold that require warranty were reduced
in fiscal 2003, (3) a $60 decrease was due to an impairment loss recorded in
fiscal 2002, which did not recur in fiscal 2003, (4) an approximate $50
decrease in travel and related costs was due to fewer sales trips made in the
second half of fiscal 2003 as a result of the Iraq war and the SARS outbreak in
Asia, and (5) a $66 decrease in other expense items was a result of
cost-cutting measures implemented during fiscal 2003.

Research and Development

Research and development expense decreased by $210 or 63.4% from $331 in fiscal
2002 to $121 in fiscal 2003. This decrease was due primarily to managements
decision to reduce research and development activities on its Automated Wet
Benches and Artic Temperature Controlled Chucks, based on reduced demand for
these customized products in the Manufacturing Segment.

Impairment loss

Impairment loss decreased by $1,273 or 78.1%, from $1,631 in fiscal 2002 to
$358 in fiscal 2003. The decrease of $1,273 was primarily due to the remaining
fixed and intangible assets written to their fair value in fiscal 2003, which
was not written down previously. The Company recorded an impairment loss based
on its examination of the estimated undiscounted future cash flows generated by
the subsidiaries where certain long-lived assets (certain fixed assets) are
used.

The impairment loss of $358 in fiscal 2003 consisted of machinery and
equipment, furniture and fixtures, and leasehold improvements (pertaining to
the Malaysia and Singapore Testing Segments) due to changes in demand for
certain burn-in services which in turn made certain of our existing burn-in
facilities obsolete.

(Gain) Loss on Sale of Property,
Plant and Equipment

The result of disposing of property, plant and equipment decreased by $148 from
a gain of $33 in fiscal 2002 to a loss of $115 in fiscal 2003. The disposal
loss was related to the disposal of the obsolete burn-in facilities in
Southeast Asia due to the development and advancement in technology.

Income (Loss) from Operations

For segment reporting purposes, the loss from operations in our Manufacturing
Segment was reduced by $3,211 from $4,013 in fiscal 2002 to $802 in fiscal
2003, due to (1) a reduction of $1,045 in impairment loss of machinery and
equipment recorded in fiscal 2002, (2) a reduction of $234 depreciation expense
in 2003 as a result of impairment charge recorded in fiscal 2002 which did not
recur in fiscal 2003, (3) a reduction of $788 in payroll related expense as a
result of implementing cost-cutting measures in fiscal 2003, and a reduction of
$284 in cost of sales in the U.S. operations consistent with the decrease in
revenue, (4) an inventory obsolescence of $511 recorded in fiscal 2002 not
recurring in fiscal 2003, (5) a reduction in research and development costs of
$210 due to a change in demand for products sold by our Manufacturing Segment,
and (6) reducing rent, insurance, travel and other miscellaneous expenses by
$139.

Income from operations in our Testing Services Segment increased by $123 or
18.1% from $680 in fiscal 2002 to $803 in fiscal 2003 due to (1) a reduction in
impairment loss of $130 in fiscal 2003 which consisted of machinery and
equipment, furniture and fixtures, and leasehold improvements pertaining to the
Malaysia and Singapore Testing Segments, and (2) lower depreciation of $75 due
to machinery and equipment disposed of during fiscal 2003 compared to a loss of
$67 in fiscal 2002. These were offset by higher losses of $147 incurred in
Ireland in fiscal 2003 compared to a loss of $67 in fiscal 2002.

Loss from operations in our Distribution Segment increased by $143 from $69 in
fiscal 2002 to $212 in fiscal 2003. The increase of $143 in loss from
operations resulted primarily from the increase in products sold with low
margins. Due to the fierce competition in the capital equipment market and the
decrease in customers capital spending budgets, customers took advantage of
price reductions to obtain necessary equipment, which, although increasing our
revenue, reduced our margins. Because the prices of products distributed by us
range widely (from $0.1 to $46), the increase in sales volume was not
sufficient in fiscal 2003 to offset the effects of the price reduction.

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Corporate operating loss decreased from $177 in fiscal 2002 to $76 in fiscal
2003 due to an increase in the allocation percentage being charged to our
subsidiaries based on sale volume, which increased corporate income by $101.

Interest Expenses

Interest expense decreased by $22 or 10.6% from $207 in fiscal 2002 to $185 in
fiscal 2003. This decrease was primarily due to net repayments of $932 on the
line of credit and payments of $1,284 on long-term debt and capitalized leases.

Other Income (Expense)

Other income increased by $41 or 13.4% from $306 in fiscal 2002 to $347 in
fiscal 2003. Changes in other income in fiscal 2003 compared to that in fiscal
2002 consist of mainly of (1) an increase in gain on disposal of marketable
securities of $50, (2) increase in exchange gain of $116 in fiscal 2003 and,
(3) a decrease in interest income of $99 in fiscal 2003.

Income Tax

The total income tax provision increased by $41 or 77% from $53 in fiscal 2002
to $94 in fiscal 2003. Of the change of $41, $19 was related to the current
portion of income tax due to the increase of $18 in foreign income tax expense
and $1 in state income tax expense compared to those in fiscal 2002. The
remaining $22 related to the deferred portion of income taxes expense. The
increase of $18 in current foreign income tax expense was a result of an
increase in income in Thailand from a loss of $36 in fiscal 2002 to an income
of $288 in fiscal 2003, which was offset by the decrease in income in Singapore
of $466 in fiscal 2002 to $182 in fiscal 2003. Though Singapore had a higher
income in fiscal 2002, the allowance on depreciation for tax purposes reduced
the taxable income and thus resulted in lower tax provision in fiscal 2002.

The deferred portion of income tax provision increased by $22 from $20 in
fiscal 2002 to $42 in fiscal 2003, which was attributed in the increase in the
deferred tax liability incurred mainly in Singapore. The increase in deferred
income tax expense was the result of the timing differences related to the
recording of depreciation expense for book and tax purposes. We did not
recognize any income tax benefits related to the losses generated in the U.S.
We believe that when the future taxable income exceeds the cumulative losses,
it is likely that such benefits will be realized.

The Companys effective income tax rate increased from 2% in fiscal 2002 to 75%
in fiscal 2003. The increase in the effective income tax rate in fiscal 2003
was due to the decrease in net loss generated in the U.S. and the increase in
the net income before taxes generated by the operations conducted in foreign
countries. In addition, the net loss incurred in the U.S. cannot offset the
taxable income in Singapore and Thailand. Therefore, the main portion of
income tax expense of $94 was incurred in Singapore and Thailand.

The Company files income tax returns in the U.S., Singapore, Thailand,
Malaysia, and Ireland, respectively. Income taxes are provided in those
countries where taxable income is earned. Income in one country is not offset
by losses in another country. Accordingly, no benefit is provided for losses
in the countries except where the loss can be carried back against income
recognized in previous years. The effect of providing tax against taxable
income while not providing benefit for losses results in an effective tax rate
that differs from the federal statutory rate. The nature and terms of income
tax holidays, abatements, rate reductions and similar arrangements granted by
foreign taxing authorities and their impact on the provision for income taxes
are as follows:



|1. |  | Capital allowances are available in the Southeast Asia operations to
offset taxable income, which is the same as accelerated allowance on fixed
assets. This reduces the income tax payable and creates deferred tax
liabilities for the next few years.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Reinvestment allowances can only offset the tax payable if the expansion,
modernization or diversification is carried out in a promoted area.                                                                                                           

Net (Loss) Income

As a result of all of the factors analyzed above, the net loss for the fiscal
year ended June 30, 2003 was approximately $81, which represented a decrease in
losses of $3,466 from a net loss of $3,547 for fiscal 2002, or a 97.7% change.
Basic loss per share for fiscal 2003 decreased to $0.03 per share, from a basic
loss per share of $1.21 in fiscal 2002, which represented a decrease of $1.18,
a 97.7% change. Diluted loss per share for fiscal 2003 was $0.03 per share, a
decrease of $1.18 per share from diluted loss per share of $1.21 for fiscal
2002.

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Year Ended June 30, 2002 (2002) Compared to Year Ended June 30, 2001 (2001)

Sales

Net sales decreased by $16,516 or 45.7% from $36,133 in fiscal 2001 to $19,617
in fiscal 2002 due to a worldwide decline in semiconductor equipment sales,
which was projected by The Semiconductor Equipment and Materials International
(SEMI) to decline by 3% in fiscal 2002. SEMI also reported recently that
worldwide sales of semiconductor manufacturing equipment totaled $28 billion in
fiscal 2001, a 41% year-over-year decline, and the worst drop in sales on
record. The chip-making tool market is projected to rebound and increase by 29%
in fiscal 2003 and 23% in fiscal 2004.

The sales in Manufacturing Segment decreased by $13,446 or 72.8% from $18,468
in fiscal 2001 to $5,022 in fiscal 2002. The decrease was attributed to
operations in the United States and Singapore, which were affected by
conservative capital spending by customers. The decrease in demand resulted in
a decrease in sales of approximately $5,353, $6,974 and $1,119, related to the
decrease in sales for front-end products such as Artic Temperature Controlled
Chucks and Wet Process benches, back-end products such as Environmental Test
Equipment and Burn-in Equipment and boards, and other products, respectively.
The types of products we manufacture cover a broad range, resulting in a wide
range of prices (our selling price of our products range from $5 to $200).
Consequently, the impact of changes in prices of the products sold on our
revenue did not reflect the changes in Manufacturing Segment business because
the movement of revenue in the Manufacturing Segment depends heavily on
customers specific demands which correlate to their capital budgets.

The Testing Services Segment sales decreased by $2,170 or 19.5% from $11,112 in
fiscal 2001 to $8,942 in fiscal 2002. Of this decrease of $2,170, $1,476 was
attributed to the operation in Malaysia, as several large customers moved from
Malaysia to other parts of Southeast Asia. The remaining $694 decrease was
attributed to the Ireland operation due to a decline in demand for testing
services, which occurred when several large customers moved out of Europe.

The Distribution Segment decreased $900 or 13.7% from $6,553 in fiscal 2001 to
$5,653 in fiscal 2002. The decrease of $900 was mainly due to the decline in
demand for Test Chambers and vibration products with selling prices ranging
from $11 to $46. The change in revenue in Distribution Segment depends heavily
on customers specific demands, which correlate to their capital budgets.

Geographically, net sales into and within the United States decreased $3,170 or
28.2% from $11,253 in fiscal 2001 to $8,083 in fiscal 2002, which was
attributed to the Manufacturing Segment. This decline of $3,170 reflected a
decrease in demand for front-end products, back-end products and other products
from the United States. Net sales within Southeast Asia decreased $8,396 or
44.4% from $18,489 in fiscal 2001 to $10,093 in fiscal 2002. Of the decrease of
$8,396, $1,476 was mainly related to the Testing Service Segment, $6,046
related to the Manufacturing Segment and $874 related to the Distribution
Segment due to the decline in demand for products in respective segments. Net
sales in and to Europe decreased $5,282 or 78.1% from $6,761 in fiscal 2001 to
$1,479 in fiscal 2002. This decrease was due primarily to a decline in demand
for front-end manufactured products and Testing services, which occurred when
several large customers moved out of Europe.

Cost of Sales

The Companys cost of sales decreased by $10,823 or 40.5% from $26,749 in
fiscal 2001 to $15,926 in fiscal 2002. Of the decrease of $10,823, the majority
was related to a decrease in material costs (including an inventory write down)
of $7,932, which was consistent with the reduction in sales for Manufacturing
Segment. In addition, the Manufacturing Segment implemented cost cutting
measures to reduce headcount and shorten work weeks, which reduced net payroll
costs and overheads of $922 and $981 respectively. $988 was related to a
decrease in material costs of $386 and net payroll costs of $602 in the Testing
Service Segment. As a percentage of sales, the cost of sales increased 7.2%
from 74% in fiscal 2001 to 81.2% in fiscal 2002 mainly due to an inventory
write down of $511 attributed from the U.S. operations. The future impact on
the future gross margins for the slow-moving/obsolete nature of this inventory
cannot be readily identified at this time, and the price at which these items
can be sold is not known until a buyer can be identified.

Operating Expenses

Operating expenses decreased by $731 or 9.1% from $8,001 in fiscal 2001 to
$7,270 in fiscal 2002. The decrease of $731 in expenses is attributed to (1)
cost-cutting measures implemented company-wide in late fiscal 2002, which
reduced headcount and related expenses by $1,447, and (2) a reduction in
selling expenses of $519 in commissions and warranty provisions, (3) less
traveling during fiscal 2002 after the 911 incident, resulting in a reduction
in traveling costs of $214, (4) legal fees of $115 incurred in fiscal 2001 to
review the acquisition of a company, which did not occur in 2002, and (5) an
increase of $67 in other expenses. These were offset by an impairment loss on
goodwill, intangibles and assets of $1,631 provided in fiscal 2002, from the
Manufacturing Segment in the U.S. operations and the Testing Service Segment in
Southeast Asia. As a result our operating expenses in fiscal 2002, as a
percentage of total revenue, increased from 22.1% in fiscal 2001 to 37.1% in
fiscal 2002.

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General and Administrative

General and Administrative (G&A) expenses decreased by $1,735 or 29.5% from
$5,876 in fiscal 2001 to $4,141 in fiscal 2002 primarily due to the
implementation of cost cutting measures. Of the decrease of $1,735, (1) a
decrease of $565 was due to a reduction in payroll and payroll related costs in
the U.S. operations, which were, accomplished through layoffs, reduction in
management and shortened work weeks. In addition, (2) a reduction of $882 was
due to a reduction of payroll expenses in operations in Malaysia and Singapore
as cost cutting measures were implemented through reduced bonuses, shortened
work weeks, and periodical closures. (3) A reduction of approximately of $145
in travel and related costs as a result of fewer trips made during fiscal 2002
due to the 911 incident, and strict costs cutting measures implemented due to
economic downturn, (4) legal fees of $115 incurred to review the acquisition of
a company in fiscal 2001, but not recurring in fiscal 2002, and (5) $28 related
to other miscellaneous expenses. As a percentage of sales, G&A increased by
4.8% from 16.3% in fiscal 2001 to 21.1% in fiscal 2002 due to certain expenses
that are fixed and thus do not decrease even though sales decreased.

Selling

Selling expenses decreased by $660 or 35.5% from $1,860 in fiscal 2001 to
$1,200 in fiscal 2002. Of the decrease of $660, (1) $419 was related to a
decrease in commission due to a decrease in commission-related sales in the
Distribution and Manufacturing Segments. In addition, (2) a reduction of $172
in warranty expense incurred in Southeast Asia reflecting the fact that the
products sold that require warranty were reduced in 2002, (3) a reduction of
approximately of $69 in travel and related costs as a result of fewer trips
made in fiscal 2002 due to the 911 incident, and strict costs cutting measures
implemented due to economic downturn. As a percentage of sales, selling
expenses increased 1% from 5.1% in fiscal 2001 to 6.1% in fiscal 2002 due to
certain fixed cost elements included in selling expenses.

Research and Development

Research and Development increased by $115 or 53.2% from $216 in fiscal 2001 to
$331 in fiscal 2002. This increase was primarily due to managements decision
to invest in research and development to improve its Automated Wet Benches. The
Company produced several new systems that allow photo resistant stripping,
rinsing and drying, all in a single process chamber. Other tools under
development include a sophisticated plating tool and an advanced chemical
dispensing tool that utilizes ozone injection systems for organic cleaning of
silicon wafers.

Impairment loss

In fiscal 2002, the Company recorded an impairment loss of approximately $1,631
based on its examination of estimated undiscounted future cash flows, which are
generated by the subsidiaries where certain long-lived assets (goodwill and
certain fixed assets) are used. The impairment loss of $1,631 consisted of (1)
$393 in goodwill, related to the Companys acquisition of manufacturing product
lines in the United States; (2) $121 in intangibles, used in its manufacturing
segment (within the United States); and (3) $1,117 of fixed assets, consisting
of machinery and equipment, furniture and fixtures, leasehold improvements, and
demonstration equipment. Approximately 63% pertained to the United States
Manufacturing Segment and the balance pertained to the Southeast Asia Testing
Segment. The Testing Segment incurred a one time impairment loss of $603, of
which $534 of the impairment loss was a write down because of obsolescence due
to a new generation of burn-in technology known as HBI and SBI.

Gain/(Loss) on Sale of Property,
Plant and Equipment

The gain on sale of property, plant and equipment increased by $82 from a loss
of $49 in fiscal 2001 to income of $33 in fiscal 2002 due to a gain on disposal
of assets, mainly in Malaysia.

Income (Loss) from Operations

For segment reporting purposes, the loss from operations in our Manufacturing
Segment increased by $3,782 from a loss of $231 in fiscal 2001 to a loss of
$4,013 in fiscal 2002, due to eroding margins and a significant decrease in
sales of Artic Temperature Controlled Chucks, Wet Process benches, HAST,
Environmental Test Equipment and COBIS-II Burn-in Boards. The Manufacturing
Segment also incurred an impairment loss of $1,045 on goodwill, intangibles and
machinery and equipment based on the estimated undiscounted cash flow generated
where these intangible assets and fixed assets were used.

Income from operations in our Testing Services Segment decreased by $62 or 8.4%
from $742 in fiscal 2001 to $680 in fiscal 2002. Of the decrease of $62, the
majority was due to (1) impairment charge of $589, which consisted of machinery
and equipment, furniture and fixtures, and leasehold improvements, offset with
(2) the lower utilities costs of $201 as a better utilities rate was obtained
from the vendor, and (3) a reduction in net payroll costs and overheads of
$450, after cost-cutting measures were implemented in the Southeast Asia
operation, except for the Thailand operation, to reduce headcount and shorten
work weeks.

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Income (loss) from operations in our Distribution Segment decreased by $510
from an income of $441 in fiscal 2001 to a loss of $69 in fiscal 2002. The
decrease of $510 in loss from operations resulted primarily from the decrease
in products sold at lower margins. Due to the fierce competition in the
capital equipment market and the decrease in customers capital spending
budgets, customers took advantage of price reductions to obtain necessary
equipment, which although increasing our revenue, reduced our margins. Because
the prices of products distributed by us range widely from $0.1 to $46, the
increase in sales volume was not sufficient in fiscal 2002 to offset the
effects of the price reduction.

Corporate operating income was reduced from an operating income of $431 in
fiscal 2001 to an operating loss of $177 in fiscal 2002 due to a decrease in
the allocation percentage being charged on lower sales volumes from our
subsidiaries, which reduced Corporates income by $608.

Interest Expenses

Interest expense increased by $8 or 4%, from $199 in fiscal 2001 to $207 in
fiscal 2002, due to an increase in lines of credit, capitalized leases and
financing activity for capital expenditures.

Other Income (Expense)

Other income decreased by $138 or 31.1% from $444 in fiscal 2001 to $306 in
fiscal 2002. Changes in other income from fiscal 2001 to fiscal 2002 were due
to lower (1) interest income of $40, (2) rental income of
$41, and (3) dividend
income of $34, and (4) gain (loss) on disposal of marketable securities of $25.

Income Tax

The total income tax provision decreased by $302 or 85% from $355 in fiscal
2001 to $53 in fiscal 2002. Of the change of $302, $393 was related to the
current portion of income tax due to the decrease of $395 in foreign income tax
expense and increased of $2 in state income tax expense compared to those in
fiscal 2001. The remaining increase of $91 related to the deferred portion of
income taxes. The decrease of $395 in current foreign income tax expense was a
result of a decrease in income in the Southeast Asia and Ireland operations
from $2,469 and $222 in fiscal 2001 to $244 and a loss of $66 in fiscal 2002,
respectively.

The deferred portion of income tax provision increased by $91 from $71 income
tax benefits in fiscal 2001 to $20 income tax expense in fiscal 2002, which was
attributed in the increase in the deferred tax liability incurred mainly in
Singapore. The increase in deferred income tax expense was the result of the
timing differences related to the recording of depreciation expense for book
and tax purposes. We did not recognize any income tax benefits related to the
losses generated in the U.S. We believe that when the future taxable income
exceeds the cumulative losses, it is likely that such benefits will be
realized.

The Companys effective income tax rate decreased from 22% in fiscal 2001 to 2%
in fiscal 2002. The decrease in the effective income tax rate in fiscal 2003
was due to the increase in net loss generated in the U.S. and the decrease in
the net income before taxes generated by the operations conducted in foreign
countries, In addition, the net loss incurred in the U.S. cannot offset the
taxable income in Singapore and Thailand. Therefore, the main portion of
income tax expense of $53 was incurred in Southeast Asia.

The Company files income tax returns in the U.S., Singapore, Thailand,
Malaysia, and Ireland, respectively. Income taxes are provided in those
countries where taxable income is earned. Income in one country is not offset
by losses in another country. Accordingly, no benefit is provided for losses
in the countries except where the loss can be carried back against income
recognized in previous years. The effect of providing tax against taxable
income while not providing benefit for losses results in an effective tax rate
that differs from the federal statutory rate. The nature and terms of income
tax holidays, abatements, rate reductions and similar arrangements granted by
foreign taxing authorities and their impact on the provision for income taxes
are as follows:



|1. |  | Capital allowances are available in the Southeast Asia operations to
offset taxable income, which is the same as accelerated allowance on fixed
assets. This reduces the income tax payable and creates deferred tax
liabilities for the next few years.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Reinvestment allowances can only offset the tax payable if the expansion,
modernization or diversification is carried out in a promoted area.                                                                                                           

Net Loss

As a result of all of the factors analyzed above, the net loss attributable to
common shares for the fiscal year ended June 30, 2002 was approximately $3,547,
which represented a decrease of $4,710 from net income of approximately $1,163
attributed to common shares for fiscal 2001, a 405% decrease. Consequently,
basic loss per share for fiscal 2002 decreased to a loss of $1.21 per share,
from basic earnings per share of $0.40 in fiscal 2001, which represented a
change of $1.61 from net income to net loss, a 405% decrease. Diluted loss per
share for fiscal 2002 was $1.21 per share, a decrease of $1.60 per share from
diluted earnings per share of $0.39 for fiscal 2001.

21



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Liquidity and Capital Resources

We had working capital (defined as current assets minus current liabilities) of
approximately $7,027 as of June 30, 2003, which represented an increase of
approximately $108 compared to working capital of $6,919 as of June 30, 2002, a
1.6% increase. The current ratio (defined as current assets divided by current
liabilities) improved to 2.57 times as of June 30, 2003 from 2.07 times as of
June 30, 2002. The quick ratio (defined as current assets less inventory,
divided by current liabilities) also showed an improvement to 2.34 times as of
June 30, 2003 from 1.91 times as of June 30, 2002. Both the current and quick
ratios improved significantly as of June 30, 2003. The ratios give the
indication of the strong liquidity position of the Company with no difficulties
in meeting its short term obligations. Historically, the Company had positive
working capital for the nine fiscal years prior to the fiscal year ended June
30, 2003. We believe that the Company has the ability to maintain positive
working capital and strong liquidity ratio in the near future.

During the fiscal year ended 2003, total assets decreased by $2,364 from
$19,075 at June 30, 2002 to $16,711 at June 30, 2003. Most of the decrease was
in cash deposits, accounts receivable and fixed assets as a result of payments
on lines of credit, notes payable, capital lease obligations, and accounts
payable. The overall impact resulted in improvement in working capital of
$108.

The Companys credit rating provides ready and ample access to funds in global
capital markets. At June 30, 2003, the Company had available short-term lines
of credit totaling $7,553 of which $7,253 was unused. However, of this $7,253,
the line of credit in Trio-Tech Singapore of $4,554 will expire in July 2003.

|                        |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|----------------------- |  | -------------- |  | -------- | ---- | ------ |  | ------ | ----- | - | ----- | - | ----- | - | ----- | 
|Entity with Facilty     |  | Type of        |  | Interest |      | Credit |  | Unused
|                        |  |                |  |          |      |        |  |       
|Trio-Tech Malaysia      |  | Line of Credit |  |          | 7.00 | %      |  | $      | 91    |   |       | $ | 91    |  
|Trio-Tech Bangkok       |  | Line of Credit |  |          | 6.50 | %      |  |        | 47    |   |       |   | 47    |  
|Trio-Tech Singapore     |  | Line of Credit |  |          | 7.00 | %      |  |        | 2,561 |   |       |   | 2,561 |  
|Trio-Tech Singapore     |  | Line of Credit |  |          | 6.13 | %      |  |        | 4,554 |   |       |   | 4,554 |  
|Trio-Tech International |  | Line of Credit |  |          | 5.75 | %      |  |        | 300   |   |       |   |      |  
|                        |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 
|                        |  |                |  |          |      |        |  |        |       | $ | 7,553 |   |       | $ | 7,253 | 
|                        |  |                |  |          |      |        |  |        |       |   |       |   |       |   |       | 

Even though the Company suffered a net loss in the fiscal year ended June 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 a fixed cash deposit of approximately $4.3 million
(of which approximately $2.9 million is available immediately); (2) we had
backlog of $5.9 million as of June 30, 2003; (3) our accounts receivable
turnover ratio is approximately 5.45 times per year (67 days of sales in
accounts receivable) in fiscal 2003; (4) our financing facilities available as
of June 30, 2003 were approximately $7.3 million upon which we are able to draw
at any time; and (5) our efforts in fiscal 2003 to cut costs and expenses were
effective. These cost cutting measures were implemented through (1) shortened
work weeks, salary reductions and a freeze in headcount, (2) reducing and
consolidating the plant capacity in order to reduce variable costs, (3)
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.

The following contractual obligations servicing table describes our overall
future cash obligations based on various contracts in the next five years:

|                 |  |       |       |        |  |                        |       |       |  |         |       |           |  |   |    |  |  |   |   | 
|---------------- |  | ----- | ----- | ------ |  | ---------------------- | ----- | ----- |  | ------- | ----- | --------- |  | - | -- |  |  | - | - | 
|                 |  |       |       |        |  | Payments Due by Period |       |       |  |        
|                 |  |      
|                 |  |       |       |        |  | Less than              |       | 1 - 3 |  | 4 - 5   |       | More Than
|                 |  | Total |       | 1 Year |  | Years                  |       | Years |  | 5 Years
|                 |  |       |       |        |  |                        |       |       |  |        
|Lines of Credit  |  | $     | 300   |        |  | $                      | 300   |       |  | $       |      |           |  | $ |   |  |  | $ |  | 
|Notes Payable    |  |       | 1,124 |        |  |                        | 632   |       |  |         | 438   |           |  |   | 54 |  |  |   |  | 
|Capital Leases   |  |       | 722   |        |  |                        | 345   |       |  |         | 332   |           |  |   | 45 |  |  |   |  | 
|Operating Leases |  |       | 1,288 |        |  |                        | 625   |       |  |         | 663   |           |  |   |   |  |  |   |  | 
|                 |  |       |       |        |  |                        |       |       |  |         |       |           |  |   |    |  |  |   |   | 
|                 |  | $     | 3,434 |        |  | $                      | 1,902 |       |  | $       | 1,433 |           |  | $ | 99 |  |  | $ |  | 
|                 |  |       |       |        |  |                        |       |       |  |         |       |           |  |   |    |  |  |   |   | 

22



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Fiscal 2003

Net cash provided by operating activities during the year ended June 30, 2003
was $1,256 compared to net cash of $1,717 used in operating activities during
the year ended June 30, 2002. The increase in net cash provided of
approximately $2,973 or 173% reflects the fact that our operating cash flow has
improved. The $1,256 of net cash provided by operating activities in fiscal
2003 was primarily attributable to a net loss of $81, offset by non-cash items
such as $1,271 in depreciation and amortization, and impairment loss of $358.
The cash flow from our accounts receivable in fiscal 2003 was $522 compared to
only $300 in fiscal 2002, a change of 74%, reflecting the fact that our total
revenue in fiscal 2003 increased and accounts receivable turnover times
increased. The cash used in inventory in fiscal 2003 was $36 compared to cash
provided of $409 in fiscal 2002, which includes an inventory of $511 written
down in fiscal 2002 due to obsolescence. In fiscal 2003, there was a non-cash
item attributed to impairment loss of $358, while there was a non-cash item
attributed to impairment loss of $1,631 in fiscal 2002.

Net cash provided by investing activities during fiscal 2003 was $1,017
compared to $1,241 in fiscal 2002. The change of $224 is mainly attributable
to a decrease of $53 or 3.2% in short-term deposits, and an increase in capital
expenditures of $451 in the testing segment for business expansion in Southeast
Asia. We decreased our investment in marketable securities by $139, to $676
in fiscal 2003 from $ 537 in fiscal 2002.

Net cash used in financing activities during fiscal 2003 was $1,751, reflecting
a decrease of $1,843 compared to $92 provided by financing activities during
fiscal 2002. The cash outflow in financing activities included (1) $932 of net
repayments on lines of credit, (2) $1,284 from payments of long-term debts and
capital lease obligations, and (3) $70 in dividends paid to the minority
interest which was offset by a cash inflow of $535 from proceeds from long-term
debt. In fiscal 2002, the cash outflow in financing activities included (1)
$1,181 from payments on long-term debt and capitalized lease obligations and,
(2) $4 in dividends paid to minority interest, offset with cash inflow from (a)
$1,205 from net payments and borrowings on lines of credit and, (b) $72 from
proceeds from long-term debt.

Approximately $806 of cash deposits as of June 30, 2003 are held in the
Companys 55% owned Malaysian subsidiary. Of such amount, $535 is denominated
in the currency of Malaysia, of which $168 is currently available for movement
to overseas, as authorized by the Central Bank of Malaysia. There are
additional amounts available as dividends (after making deductions for income
tax) pursuant to Malaysian regulations in force from July 1, 2000.

Corporate Guarantee Arrangement

The Company provides a corporate guarantee to one of its subsidiaries in
Southeast Asia of approximately $1,423 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.

Fiscal 2002

Net cash used in operating activities during the year ended June 30, 2002 was
$1,717 compared to net cash of $5,239 provided by operating activities during
the year ended June 30, 2001. The downward change of approximately $6,.956 or
133% reflects the fact that our operating cash flow was significantly affected
by the economic downturn and decrease in capital investment demand from the
semiconductor industry. The $1,717 of net cash used in operating activities in
fiscal 2002 was primarily attributable to a net loss of $3,547 and a decrease
of $2,396 in accounts payable and accrued liabilities. The cash flow from our
accounts receivable in fiscal 2002 was only $300 compared to $1,696 in fiscal
2001, a change of 82.3% reflecting the fact that our total revenue in fiscal
2002 decreased and accounts receivable turnover times decreased. The cash flow
from our inventory was only $409 compared $804 in fiscal 2001 reflecting the
fact that our inventory turnover times decreased. In fiscal 2002, one major
non-cash item was attributed to an impairment loss of $1,631, which did not
incur in fiscal 2001.

Net cash provided by investing activities during fiscal 2002 was $1,241
compared to $7,202 used by investing activities in fiscal 2001. The change was
an increase of $5,961, or 82.8%. The net cash provided by investing activities
was due mainly to the decrease of $1,666 in short-term deposits, compared to
the increase in short-term deposits of $2,541 in fiscal 2001, reflecting a
decrease of $4,207 or a change of 166%. In fiscal 2002, our capital
expenditures were $448 which related to the investment in testing segment
covering Southeast Asia, Ireland, and the U.S. Compared to the capital
expenditure of $4,451 in fiscal 2001, we reduced our investment by $4,003 or by
89.9% as a result of economic downturn. We increased our investment in
marketable securities by $676 compared to $302 in fiscal 2001.

Net cash provided by financing activities during fiscal 2002 was $92,
reflecting a decrease of $1,262 or 93.2% compared to $1,354 provided by
financing activities during fiscal 2001. The cash inflow of (1) $1205 from net
payments and borrowings under lines of credit, (2) ) $72 from proceeds under
long-term debt. These were offset by the cash outflow in financing activities
which included (3) $1,181 of principal payments of long-term debts and capital
lease obligations and, (4) $4 from dividends paid

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to minority interest. In
fiscal 2001, the cash inflow from financing activities included (1) $2,293 from
proceeds under long-term debt, (2) $356 from the issuance of common stock.
These were offset by (3) $241 from net payments and borrowings under lines of
credit, (4) $892 of principal payments on long-term debts and capital lease
obligations and, (5) $162 from dividends paid to minority interest.

Approximately $3,090 of cash deposits as of June 30, 2002 were held in the
Companys 55% owned Malaysian subsidiary. Of such amounts, $488 was
denominated in the currency of Malaysia. On September 2, 1998, the government
of Malaysia announced its intention to limit the movement of certain cash
balances denominated in Malaysian currency. During fiscal 2001, limits on the
movement of cash balances were removed. $1,442 is currently available for
movement, as the Central Bank of Malaysia has authorized $1,800 for movement
and the Company previously utilized $358 of this authorization. In addition,
approximately $3,161 is available as dividend (after making deductions for
income tax) pursuant to Malaysian regulations in force from July 1, 2000.
There is an additional amount of $2,083 that is used as collateral for the
Singapore credit facility.

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 Company expects
that the adoption of SFAS No. 150 will not have a material impact on its
results of operations and financial condition.

In January 2003, FASB issued Financial Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46). FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, Consolidated Financial Statements to
those entities defined as Variable Interest Entities (more commonly referred
to as special purpose entities) in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 applies immediately
to all Variable Interest Entities created after January 31, 2003 and by the
beginning of the first interim or annual reporting period commencing after June
15, 2003 for Variable Interest Entities created prior to February 1, 2003. The
Company expects that the adoption of FIN 46 will not have a material impact on
its results of operations and financial condition.

CERTAIN RISKS THAT MAY AFFECT OUR FUTURE RESULTS

We hereby caution stockholders, prospective investors in Trio-Tech
International and other readers that the following important factors, among
others, in some cases have affected, and in the future could affect, our stock
price or cause our actual results for the fiscal year ending June 30, 2003 and
future fiscal years and quarters to differ materially from those expressed in
any forward-looking statements, oral or written, made by or on behalf of us.

Our operating results are affected by a variety of factors

Our operating results are affected by a wide variety of factors that could
materially affect revenues and profitability or lead to significant variability
of quarterly or annual operating results. These factors include, among others,
components relating to:



| |  | economic and market conditions in the semiconductor industry;                                                         
|- |  | ----------------------------------------------------------------------------------------------------------------------
| 
| |  | market acceptance of our products and services;                                                                       
| 
| |  | changes in technologies in the semiconductor industry, which could affect demand for our products and services;       
| 
| |  | changes in testing processes;                                                                                         
| 
| |  | the impact of competition;                                                                                            
| 
| |  | the lack of long-term purchase or supply agreements with customers and vendors;                                       
| 
| |  | changes in military or commercial testing specifications, which could affect
the market for our products and services;
| 
| |  | difficulties in profitably integrating acquired businesses, if any, into the Company;                                 
| 
| |  | the loss of key personnel or the shortage of available skilled employees;                                             

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| |  | international political or economic events;                                        
|- |  | -----------------------------------------------------------------------------------
| 
| |  | currency fluctuations; and                                                         
| 
| |  | other technological, economic, financial and regulatory factors beyond our control.

Unfavorable changes in these or other factors could materially and adversely
affect our financial condition or results of operations. We may not be able to
generate revenue growth and any revenue growth that is achieved may not be
sustained. Our business, results of operations and financial condition would be
materially adversely affected if operating expenses increase and are not
subsequently followed by increased revenues.

The semiconductor industry cycles have a large effect on our business

Our business depends primarily upon the capital expenditures of semiconductor
manufacturers, assemblers and other testing companies worldwide. These
industries depend on the current and anticipated market demand for integrated
circuits and products utilizing semiconductor devices. The global
semiconductor industry generally, and the semiconductor testing equipment
industry in particular, are volatile and cyclical, with periodic capacity
shortages and excess capacity. In periods of excess capacity, the industry
sharply cuts its purchases of capital equipment, including our distributed
products, and reduces testing volumes, including our testing services. Excess
capacity also causes downward pressure on the selling prices of our products
and services.

Our operating results have been adversely affected by past downturns and
slowdowns. There is no assurance that there will not be downturns or slowdowns
in the future that may adversely affect our financial condition or operating
results. In addition, if one or more of our primary customers reduces its or
their purchases or use of our products or testing services, our financial
results could be materially and adversely affected. We anticipate that we will
continue to be primarily dependent on the semiconductor industry for the
foreseeable future.

Rapid technological changes may make our products obsolete or result in
decreased prices or increased expenses

Technology changes rapidly in the semiconductor industry and may make our
services or products obsolete. Advances in technology may lead to significant
price erosion for products tested with our older testing technologies. Our
success will depend in part on our ability to develop and offer more advanced
testing technologies and processes in the future, to anticipate both future
demand and the technology to supply that demand, to enhance our current
products and services, to provide those products and services at competitive
prices on a timely and cost-effective basis and to achieve market acceptance of
those products and services. To accomplish these goals, we may be required to
incur significant engineering expenses. As new products or services are
introduced, we may experience warranty claims or product returns. We may not
be able to accomplish these goals correctly or timely enough. If we fail in
our efforts, our products and services may become obsolete or less competitive.

Our dependence on international sales involves significant risk

Sales and services to customers outside the United States accounted for
approximately 58%, 59% and 70% of our net revenues for fiscal 2003, 2002 and
2001, respectively. Approximately 53%, 51% and 51% of our net revenues in
fiscal 2003, 2002 and 2001, respectively, were generated from business in
Southeast Asia. We expect that our non-U.S. sales and services will continue
to generate the major part of our future revenues. Testing services in
Southeast Asia were performed primarily for American companies, and to a lesser
extent German companies, selling products and doing business in those regions.
International business operations may be adversely affected by many factors
including fluctuations in exchange rates, imposition of government controls,
trade restrictions, political, economic and business events and social and
cultural differences.

We may incur losses due to foreign currency fluctuations

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 translation adjustments resulted in an increase of $18 to
shareholders equity for fiscal 2003, an increase of $262 to shareholders
equity for fiscal 2002 and a decrease of $358 to shareholders equity for
fiscal 2001.

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.

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We do not rely on patents to protect our products or technology

We hold U.S. patents relating to our pressurization humidity testing equipment
and certain aspects of our Artic temperature test systems. Additionally, in
fiscal 2001, we were granted patents for certain aspects of our new ranges of
Artic temperature controlled chucks. However, generally we do not rely on
patent or trade secret protection for our products or technology. Competitors
may develop technologies similar to or more advanced than ours. We cannot
assure you that our current or future products will not be copied or will not
infringe on the patents of others. Moreover, the cost of litigation of any
claim or damages resulting from infringement of patents or other intellectual
property could adversely affect our business, financial condition and results
of operations.

Intense competition can adversely affect our operating results

The semiconductor equipment and testing industries are intensely competitive.
Significant competitive factors include price, technical capabilities, quality,
automation, reliability, product availability and customer service. We face
competition from established and potential new competitors, many of whom have
greater financial, engineering, manufacturing and marketing resources than our
Companys resources. New products or testing facilities offered by our
competitors could cause a decline in our revenues or a loss of market
acceptance of our existing products and services. Increased competitive
pressure could also lead to intensified price-based competition. Price-based
competition may result in lower prices, adversely affecting our operating
results.

Loss, reduction or delay of orders from significant customers could adversely
affect our financial condition

The semiconductor manufacturing industry is highly concentrated, with a
relatively small number of large manufacturers and assemblers accounting for a
substantial portion of our revenues from product sales and testing revenues.
Our experience has been that sales to particular customers may fluctuate
significantly from quarter to quarter and year to year. In fiscal 2003, 2002,
and 2001, sales of equipment and services to our two largest customers
accounted for approximately 49%, 55%, and 40%, respectively, of our net
revenues. Our ability to maintain close, satisfactory relationships with our
customers is essential to our stability and growth. The loss of or reduction
or delay in orders from our significant customers, or delays in collecting
accounts receivable from our significant customers, could adversely affect our
financial condition and results of operations.

There is a limited market for our testing products and services

If testing equipment is purchased by semiconductor manufacturers and
assemblers, it may reduce the likelihood that they will make further purchases
of such equipment, or use our laboratories for testing services. Although
military or other specifications require certain testing to be done by
independent laboratories, over time other current customers may have less need
for our testing services. We believe that there is a growing trend toward
outsourcing of the integrated circuit test process. As a result, we anticipate
continued growth in the test laboratory business. However, there is no
assurance that this trend will continue. In an attempt to diversify our sales
mix, we may seek to develop and introduce new or advanced products, and to
acquire other companies in the semiconductor equipment manufacturing business.

Acquisition and integration of new businesses could disrupt our ongoing
business, distract management and employees, increase our expenses and
adversely affect our business

A portion of any future growth may be accomplished through the acquisition of
other entities. The success of those acquisitions will depend, in part, on our
ability to integrate the acquired personnel, operations, products, services and
technologies into our organization, to retain and motivate key personnel of the
acquired entities and to retain the customers of those entities. We may not be
able to identify suitable acquisition opportunities, obtain financing on
acceptable terms to bring the acquisition to fruition or to integrate such
personnel, operations, products or services. The process of identifying and
closing acquisition opportunities and integrating acquisitions into our
operations may distract our management and employees, disrupt our ongoing
business, increase our expenses and materially and adversely affect our
operations. We may also be subject to certain other risks if we acquire other
entities, such as the assumption of additional liabilities. We may issue
additional equity securities or incur debt to pay for future acquisitions.

We do not have contracts with key suppliers

We have no written contracts with any of our suppliers. Our suppliers may
terminate their relationships with us at any time without notice. There can be
no assurance that we will be able to find satisfactory replacement suppliers or
that new suppliers would not be more expensive than the current suppliers if
any of our suppliers were to terminate their relationship with us.

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We are highly dependent on key personnel

Our success has depended, and, to a large extent will depend, on the continued
services of S.W. Yong, our Chief Executive Officer and President, Victor H. M.
Ting, our Vice President and Chief Financial Officer, our other key senior
executives and engineering, marketing, sales, productions and other personnel.
We do not have an employment agreement with Mr. Yong or Mr. Ting, but we are
the beneficiary of key man life insurance in the amount of $6 million on Mr.
Yong and $2 million on Mr. Ting. The loss of these key personnel, who would be
difficult to replace, could harm our business and operating results.
Competition for management in our industry is intense and we may be
unsuccessful in attracting and retaining the executive management and other key
personnel that we require.

Our management has significant influence over corporate decisions

Currently our officers and directors and their affiliates beneficially own
32.9% of the outstanding shares of common stock, including options held by them
that are exercisable within 60 days of the date of this 10-K. As a result,
they may be able to significantly influence matters requiring approval of the
shareholders, including the election of directors, and may be able to delay or
prevent a change in control of the Company.

We have not paid cash dividends

We have never paid any cash dividends on our common stock. We anticipate that
the future earnings, if any, will be retained for use in the business or for
other corporate purposes. We do not expect to pay cash dividends on our common
stock in the future.

Possible dilutive effect of outstanding options

As of June 30, 2003, there were 349,500 shares of common stock reserved for
issuance upon exercise of outstanding stock options. The outstanding options
are currently exercisable at exercise prices ranging from $2.25 to $6.69 per
share. We anticipate that the trading price of our common stock at the time of
exercise of any such outstanding options will exceed the exercise price under
those options. Thus such exercise will have a dilutive effect on our
shareholders.

The market price for our common stock is subject to fluctuation

The trading price of our common stock has from time to time fluctuated widely.
The trading price may similarly fluctuate in the future in response to
quarter-to-quarter variations in our operating results, announcements of
innovations or new products by us or our competitors, general conditions in the
semiconductor industry and other events or factors. In addition, in recent
years, broad stock market indices in general, and the securities of technology
companies in particular, have experienced substantial price fluctuations on a
daily basis. Fluctuations in the trading price of our common stock may
adversely affect our liquidity.




ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

The outstanding aggregate principal balance on loans to us and on our lines of
credit range from 5.45% to 7.25% per annum. As of June 30, 2003, the
outstanding principal balance on these loans was approximately $1,424. These
interest rates are subject to change and we cannot predict an increase or
decrease in rates, if any.

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There-
    
    
    
    
    
    FairPeriod ending June 30,
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    after
    
    Total
    
    ValueLoans:denominated by Singapore Dollars
    
    $
    210
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    210
    
    
    $
    210Interest rate (fixed)
    
    
    6.50
    %denominated by Singapore Dollars
    
    $
    189
    
    
    $
    141
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    330
    
    
    $
    330Interest rate (varaible)
    
    
    7.25
    %
    
    
    7.25
    %denominated by Singapore Dollars
    
    $
    187
    
    
    $
    198
    
    
    $
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    413
    
    
    $
    413Interest rate (fixed)
    
    
    5.50
    %
    
    
    5.50
    %
    
    
    5.50
    %denominated Irish Pound
    
    $
    30
    
    
    $
    23
    
    
    $
    25
    
    
    $
    27
    
    
    $
    2
    
    
    
    
    
    
    $
    107
    
    
    $
    107Interest rate (variable)
    
    
    6.23
    %
    
    
    6.23
    %
    
    
    6.23
    %
    
    
    6.23
    %
    
    
    6.23
    %denominated Irish Pound
    
    $
    16
    
    
    $
    11
    
    
    $
    12
    
    
    $
    13
    
    
    $
    12
    
    
    
    
    
    
    $
    64
    
    
    $
    64Interest rate (variable)
    
    
    5.54
    %
    
    
    5.54
    %
    
    
    5.54
    %
    
    
    5.54
    %
    
    
    5.54
    %Line
of credit:denominated by Singapore Dollars
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    Interest rate (varaible)denominated by Singapore Dollars
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    Interest rate (varaible)denominated by U.S. Dollars
    
    $
    300
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    300
    
    
    $
    300Interest rate (variable)
    
    
    5.75
    %Total
    
    $
    932
    
    
    $
    373
    
    
    $
    65
    
    
    $
    40
    
    
    $
    14
    
    
    $
    
    
    
    $
    1,424
    
    
    $
    1,424


Foreign Currency Exchange Rate Risk. Although the majority of our sales, cost
of manufacturing and marketing are transacted in U.S. dollars, significant
portions of our revenues are denominated in Singapore, Malaysian and other
currencies. Consequently, a portion of our costs, revenues and operating
margins may be affected by fluctuations in exchange rates, primarily between
the U.S. dollar and such foreign currencies. We are also affected by
fluctuations in exchange rates if there is a mismatch between our foreign
currency denominated assets and liabilities. Foreign currency translation
adjustments resulted in an increase of $18 to shareholders equity for fiscal
2003, an increase of $262 to shareholders equity for fiscal 2002 and a
decrease of $358 to shareholders equity for fiscal 2001.

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 8  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information called for by this item is included in the Companys
consolidated financial statements beginning on page 38 of this Annual Report on
Form 10-K.







ITEM 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None







ITEM 9A  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 of June 30, 2003 (as defined in Rule 13a-15(e) or
15d-15(e) under the

28



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##### Table of Contents



Securities Exchange Act of 1934). 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.







PART III

The information required by Items 10 through 13 of Part III of this Form 10-K
(information regarding our directors and executive officers, executive
compensation, security ownership of certain beneficial owners, management and
related stockholder matters, and certain relationships and related
transactions, respectively) is hereby incorporated by reference from the
Companys Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days after the end of fiscal 2003.







ITEM 14  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable







PART IV







ITEM 15  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1 and 2) FINANCIAL STATEMENTS AND SCHEDULES:

The following financial statements, including notes thereto and the
independent auditors report with respect thereto, are filed as part
of this Annual Report on Form 10-K, starting on page 31 hereof:



| | 1. |  | Independent Auditors Report
| | -- |  | ----------------------------



| | 2. |  | Consolidated Balance Sheets
| | -- |  | ---------------------------



| | 3. |  | Consolidated Statements of Income and Comprehensive Income (Loss)
| | -- |  | -----------------------------------------------------------------



| | 4. |  | Consolidated Statements of Shareholders Equity
| | -- |  | -----------------------------------------------



| | 5. |  | Consolidated Statements of Cash Flows
| | -- |  | -------------------------------------



| | 6. |  | Notes to Consolidated Financial Statements
| | -- |  | ------------------------------------------



|(b) |  | REPORTS ON FORM 8-K:
|--- |  | --------------------

The Company filed on May 20, 2003 a Form 8-K, with a date of earliest
even reputed of May 15, 2003, reporting on items 7 and 9 and
attaching the Companys earnings release for the third quarter of
fiscal 2003.



|(c) |  | EXHIBITS:
|--- |  | ---------

Number
    
    Description3.1
    
    Articles of Incorporation, as currently in effect. [Incorporated by
reference to Exhibit 3.1 to the Registrants Annual Report on Form 10-K
for June 30, 1988.]3.2
    
    Bylaws, as currently in effect. [Incorporated by reference to Exhibit
3.2 to the Registrants Annual Report on Form 10-K for June 30, 1988.]10.1
    
    Credit Facility Letter dated January 4, 2001, between Trio-Tech
International Pte. Ltd. and Standard Chartered Bank. [Incorporated by
reference to Exhibit 10.9 to the Registrants Annual Report on Form 10-K
for June 30, 2001.]10.2
    
    1998 Stock Option Plan. [Incorporated by reference to Exhibit 1 to the
Companys proxy statement filed under regulation 14A on October 27, 1997].
**10.3
    
    Directors Stock Option Plan. [Incorporated by reference to Exhibit 2 to
the Companys proxy statement filed under regulation 14A on October 27,
1997]. **10.4
    
    Real Estate Lease dated February 1, 1999 between Martinvale Development
Company and Universal Systems. [Incorporated by reference to Exhibit 10.12
to the Registrants Annual Report on Form 10-K for June 30, 1999.]


29



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10.5
    
    Real Estate Lease dated February 16, 2001 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1004 Toa Payoh North
#07-01/07 and #03-01/03. [Incorporated by reference to Exhibit 10.13 to
the Registrants Annual Report on Form 10-K for June 30, 2001.]10.6
    
    Real Estate Lease dated May 13, 1999 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1004 Toa Payoh North
#03-16/17. [Incorporated by reference to Exhibit 10.14 to the
Registrants Annual Report on Form 10-K for June 30, 2001.]10.7
    
    Real Estate Lease dated October 13, 1999 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1004 Toa Payoh North
#01-08/15. [Incorporated by reference to Exhibit 10.15 to the Registrants
Annual Report on Form 10-K for June 30, 2001.]10.8
    
    Real Estate Lease dated December 7, 2000 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1004 Toa Payoh North
#01-16/7. [Incorporated by reference to Exhibit 10.16 to the Registrants
Annual Report on Form 10-K for June 30, 2001.]10.9
    
    Real Estate Lease dated January 3, 2000 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1008 Toa Payoh North
#03-01/06. [Incorporated by reference to Exhibit 10.17 to the Registrants
Annual Report on Form 10-K for June 30, 2001.]10.10
    
    Real Estate Lease dated October 13, 1999 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1008 Toa Payoh North
#03-09/15 and #03-16/18. [Incorporated by reference to Exhibit 10.18 to
the Registrants Annual Report on Form 10-K for June 30, 2001.]10.11
    
    Real Estate Lease dated May 2, 2000 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1008 Toa Payoh North #01-08.
[Incorporated by reference to Exhibit 10.19 to the Annual Report on Form
10-K for June 30, 2001.]10.12
    
    Real Estate Lease dated September 12, 2000 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1008 Toa Payoh North
#07-17/18. [Incorporated by reference to Exhibit 10.20 to the
Registrants Annual Report on Form 10-K for June 30, 2001.]10.13
    
    Real Estate Lease dated October 30, 2000 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1008 Toa Payoh North #07-01.
[Incorporated by reference to Exhibit 10.21 to the Registrants Annual
Report on Form 10-K for June 30, 2001.]10.14
    
    Real Estate Lease dated February 26, 2002 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1004 Toa Payoh North
#02-11/15. [Incorporated by reference to Exhibit 10.14 to the Registrants
Annual Report on Form 10-K for June 30, 2002.]10.15
    
    Real Estate Lease dated June 10, 2002 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Block 1004 Toa Payoh North
#02-08/10. [Incorporated by reference to Exhibit 10.15 to the
Registrants Annual Report on Form 10-K for June 30, 2002.]10.16
    
    Credit Facility Letter dated November 16, 2001 and June 24, 2002,
between Trio-Tech International Pte. Ltd. and Standard Chartered Bank.
[Incorporated by reference to Exhibit 10.16 to the Registrants Annual
Report on Form 10-K for June 30, 2002.]10.17
    
    Credit Facility Letter dated July 24, 2002, between Trio-Tech
International Pte. Ltd. and OCBC Bank. [Incorporated by reference to
Exhibit 10.17 to the Registrants Annual Report on Form 10-K for June 30,
2002.]10.18
    
    Credit Facility Letter dated May 21, 2002, between Trio-Tech (M) Sdn Bhd
and HSBC Bank Malaysia Berhad. [Incorporated by reference to Exhibit 10.18
to the Registrants Annual Report on Form 10-K for June 30, 2002.]10.19
    
    Credit Facility Letter dated January 22, 2002, between Trio-Tech (KL)
Sdn Bhd and Public Bank Berhad. [Incorporated by reference to Exhibit
10.19 to the Registrants Annual Report on Form 10-K for June 30, 2002.]10.20
    
    Real Estate Lease dated November 8, 2001 between Elbar Investments, L.P.
and Trio-Tech International for 14731 Califa Street, Van Nuys.
[Incorporated by reference to Exhibit 23.1 to the Registrants Annual
Report on Form 10-K for June 30, 2002.]


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##### Table of Contents



10.21
    
    Amendment to the Directors Stock Option Plan [Incorporated by reference
to Exhibit 10.21 to the Registrants Annual Report on Form 10-K for June
30, 2002.] **10.22
    
    Credit Facility Letter dated January 28, 2003, between Trio-Tech (M) Sdn
Bhd and HSBC Bank Malaysia Berhad *10.23
    
    Credit Facility Letter dated September 20, 2002, between KTS
Incorporated and Bank of America. *10.24
    
    Real Estate Lease dated January 12, 2001 between JTC Corporation and
Trio-Tech International Pte. Ltd. for Toa Payoh North #01-S3/S4. *21.1
    
    Subsidiaries of the Registrant (100% owned by the Registrant except as otherwise stated):Trio-Tech International Pte. Ltd., a Singapore CorporationTrio-Tech Test Services Pte. Ltd., a Singapore CorporationTrio-Tech Reliability Services, a California CorporationExpress Test Corporation, A California CorporationEuropean Electronic Test Center. Ltd. A Cayman Islands CorporationTrio-Tech Malaysia, a Malaysia Corporation (55% owned by the Registrant)Trio-Tech Kuala Lumpur, a Malaysia Corporation (100% owned by Trio-Tech Malaysia)Trio-Tech Bangkok, a Thailand CorporationTrio-Tech Thailand, a Thailand CorporationPrestal Enterprise Sdn. Bhd., a Malaysia Corporation (76% owned by the Registrant)KTS Incorporated, dba Universal Systems, a California CorporationTrio-Tech (Suzhou) Co. Ltd., a China Corporation23.1
    
    Independent Auditors Consent (BDO International) *23.2
    
    Independent Auditors Consent (Deloitte & Touche LLP) *31.1
    
    Rule 13a-14(a) Certification of Principal Executive Officer of Registrant*31.2
    
    Rule 13a-14(a) Certification of Principal Financial Officer of Registrant*32
    
    Section 1350 Certification. *




---

|*  |  | Filed electronically herewith                                                                                          
|-- |  | -----------------------------------------------------------------------------------------------------------------------
|  
|** |  | Indicates management contracts or compensatory plans or arrangements
required to be filed as an exhibit to this report.

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Pursuant to the requirements of Section 13 or 15(d) 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 INTERNATIONALBy:
    
    /s/ Victor H.M. Ting

VICTOR H.M. TING
Vice President and
Chief Financial Officer
Date: September 17, 2003


Pursuant to the requirement of the Securities Exchange Act of 1934, the
following persons on behalf of the Registrant and in the capacities and as of
the dates indicated have signed this report below.

/s/ A. Charles Wilson

A. Charles Wilson, Director
Chairman of the Board
    
    September 17, 2003/s/ S. W. Yong

S. W. Yong, Director
Chief Executive Officer
And President
    
    September 17, 2003/s/ Victor H.M. Ting

Victor H.M. Ting
Vice President, Chief Financial Officer
and Principal Accounting Officer
    
    September 17, 2003/s/ Jason T. Adelman

Jason T. Adelman, Director
    
    September 17, 2003/s/ Richard M. Horowitz

Richard M. Horowitz, Director
    
    September 17, 2003


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CERTIFICATIONS

Exhibit 31.1

I, S. W. Yong, certify that:

1. I have reviewed this Annual Report on Form 10-K of Trio-Tech International,
a California corporation;

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

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

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

(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most
recent fiscal quarter (the registrants fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and

5. The registrants other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.

Date: September 25, 2003

/s/ S. W. YONG

S. W. Yong, Chief Executive
Officer and President (principal executive officer)


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Exhibit 31.2

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

1. I have reviewed this Annual Report on Form 10-K of Trio-Tech International,
a California corporation;

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

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

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

(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most
recent fiscal quarter (the registrants fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting;
and

5. The registrants other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrants auditors and the audit committee of the registrants board of
directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrants ability to record, process,
summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.

Date: September 25, 2003

/s/ VICTOR H.M. TING

Victor H.M. Ting, Chief Financia
Officer (principal accounting officer)


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Exhibit 32

CERTIFICATION PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

Each of the undersigned, S.W. Yong, President and Chief Executive Officer of
Trio-Tech International, a California corporation (the Company), and Victor
H.M. Ting, Vice President and Chief Financial Officer of the Company, do hereby
certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge (1) the
annual report on Form 10-K of the Company for the year ended June 30, 2003, as
filed with the Securities and Exchange Commission on the date hereof (the
Report), fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, and (2) the information
contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.

/s/ S. W. YONGName:
Title:
Date:
    
    S. W. Yong
President and Chief Executive Officer
September 25, 2003/s/ VICTOR H. M. TINGName:
Title:
Date:
    
    Victor H.M. Ting
Vice President and
Chief Financial Officer
September 25, 2003


A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature
that appears in typed form within the electronic version of this written
statement required by Section 906, has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.

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INDEPENDENT AUDITORS REPORT

Board of Directors
Trio-Tech International
Van Nuys, California:

We have audited the accompanying consolidated balance sheets of Trio-Tech
International and subsidiaries (the Company) as of June 30, 2003 and 2002,
and the related consolidated statements of operations and comprehensive (loss)
income, shareholders equity, and cash flows for the years ended June 30, 2003
and 2002. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Trio-Tech International and
subsidiaries as of June 30, 2003 and 2002, and the results of their operations
and their cash flows for the years ended June 30, 2003 and 2002 in conformity
with accounting principles generally accepted in the United States of America.

As
described in Note 2 to the financial statements, effective
July 1, 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets.

BDO International

/s/ BDO International

Singapore
September 9, 2003

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INDEPENDENT AUDITORS REPORT

Board of Directors
Trio-Tech International
Van Nuys, California:

We have audited the accompanying consolidated statements of operations and
comprehensive (loss) income, shareholders equity, and cash flows of Trio-Tech
International and subsidiaries (the Company) for the year ended June 30,
2001. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provided a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of the Trio-Tech
International and subsidiaries for the year ended June 30, 2001 in conformity
with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP
/s/ Deloitte & Touche LLP

Los Angeles, California
September 7, 2001

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES







CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

June 30,
    
    June 30,Note
    
    2003
    
    2002ASSETSCURRENT ASSETS:Cash
    
    
    2
    
    
    $
    1,495
    
    
    $
    1,007Short-term deposits
    
    
    2
    
    
    
    4,308
    
    
    
    6,027Investments in marketable securities
    
    
    2
    
    
    
    485
    
    
    
    554Trade accounts receivable, less allowance for doubtful accounts
of $157 in fiscal 2003 and $174 in fiscal 2002
    
    
    2
    
    
    
    3,643
    
    
    
    4,148Other receivables
    
    
    
    
    
    
    373
    
    
    
    527Inventories, less provision for obsolete inventory of $735 in
fiscal 2003 and $716 in fiscal 2002
    
    
    3
    
    
    
    1,049
    
    
    
    1,014Prepaid expenses and other current assets
    
    
    
    
    
    
    140
    
    
    
    128Total current assets
    
    
    
    
    
    
    11,493
    
    
    
    13,405PROPERTY, PLANT AND EQUIPMENT, Net
    
    
    4
    
    
    
    5,210
    
    
    
    5,593OTHER ASSETS, Net
    
    
    8
    
    
    
    77TOTAL ASSETS
    
    
    
    
    
    $
    16,711
    
    
    $
    19,075LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Lines of credit
    
    
    5
    
    
    $
    300
    
    
    $
    1,227Accounts payable
    
    
    
    
    
    
    1,080
    
    
    
    1,717Accrued expenses
    
    
    6
    
    
    
    2,096
    
    
    
    2,315Income taxes payable
    
    
    9
    
    
    
    56
    
    
    
    106Current portion of notes payable
    
    
    8
    
    
    
    632
    
    
    
    785Current portion of capitalized leases
    
    
    10
    
    
    
    302
    
    
    
    336Total current liabilities
    
    
    
    
    
    
    4,466
    
    
    
    6,486NOTES PAYABLE, net of current portion
    
    
    8
    
    
    
    492
    
    
    
    641CAPITALIZED LEASES, net of current portion
    
    
    10
    
    
    
    344
    
    
    
    345DEFERRED INCOME TAXES
    
    
    9
    
    
    
    711
    
    
    
    669TOTAL LIABILITIES
    
    
    
    
    
    
    6,013
    
    
    
    8,141COMMITMENTS AND CONTINGENCIES
    
    
    10MINORITY INTEREST
    
    
    
    
    
    
    2,108
    
    
    
    2,316SHAREHOLDERS EQUITY:Common stock; no par value, 15,000,000 shares authorized;
2,927,542 and 2,927,551 issued and outstanding shares
    
    
    11
    
    
    
    9,423
    
    
    
    9,423Additional Paid-in capital
    
    
    11
    
    
    
    284
    
    
    
    270Accumulated deficit
    
    
    11
    
    
    
    (739
    )
    
    
    (658
    )Unrealized gain on marketable securities
    
    
    11
    
    
    
    45
    
    
    
    24Foreign currency translation adjustment
    
    
    11
    
    
    
    (423
    )
    
    
    (441
    )Total shareholders equity
    
    
    
    
    
    
    8,590
    
    
    
    8,618Foreign currency translation adjustment
    
    
    11
    
    
    
    (423
    )
    
    
    (441
    )Total shareholders equity
    
    
    
    
    
    
    8,590
    
    
    
    8,618TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY
    
    
    
    
    
    $
    16,711
    
    
    $
    19,075


See notes to consolidated financial statements.

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES







CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(IN THOUSANDS, EXCEPT (LOSS) EARNINGS PER SHARE)

Note
    
    Year EndedJune 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001NET SALES
    
    
    
    
    
    $
    21,246
    
    
    $
    19,617
    
    
    $
    36,133COST OF SALES
    
    
    
    
    
    
    16,245
    
    
    
    15,926
    
    
    
    26,749GROSS PROFIT
    
    
    
    
    
    
    5,001
    
    
    
    3,691
    
    
    
    9,384OPERATING EXPENSES:General and administrative
    
    
    
    
    
    
    3,992
    
    
    
    4,141
    
    
    
    5,876Selling
    
    
    
    
    
    
    702
    
    
    
    1,200
    
    
    
    1,860Research and development
    
    
    
    
    
    
    121
    
    
    
    331
    
    
    
    216Impairment Loss
    
    
    
    
    
    
    358
    
    
    
    1,631
    
    
    
    (Gain) loss on disposal of property, plant & equipment
    
    
    
    
    
    
    115
    
    
    
    (33
    )
    
    
    49Total
    
    
    
    
    
    
    5,288
    
    
    
    7,270
    
    
    
    8,001(LOSS) INCOME FROM OPERATIONS
    
    
    
    
    
    
    (287
    )
    
    
    (3,579
    )
    
    
    1,383OTHER INCOME (EXPENSE)Interest expense
    
    
    
    
    
    
    (185
    )
    
    
    (207
    )
    
    
    (199
    )Other income
    
    
    15
    
    
    
    347
    
    
    
    306
    
    
    
    444Total
    
    
    
    
    
    
    162
    
    
    
    99
    
    
    
    245(LOSS) INCOME BEFOREINCOME TAXES AND MINORITY INTEREST
    
    
    
    
    
    
    (125
    )
    
    
    (3,480
    )
    
    
    1,628INCOME TAXES
    
    
    9
    
    
    
    94
    
    
    
    53
    
    
    
    355(LOSS) INCOME BEFORE MINORITY INTEREST
    
    
    
    
    
    
    (219
    )
    
    
    (3,533
    )
    
    
    1,273MINORITY INTEREST
    
    
    
    
    
    
    138
    
    
    
    (14
    )
    
    
    (110
    )NET (LOSS) INCOME ATTRIBUTABLE TO COMMON
SHARES
    
    
    
    
    
    
    (81
    )
    
    
    (3,547
    )
    
    
    1,163OTHER COMPREHENSIVE INCOME (LOSS) :Unrealized gain on investment
    
    
    
    
    
    
    21
    
    
    
    24
    
    
    
    Foreign currency translation adjustment
    
    
    
    
    
    
    18
    
    
    
    262
    
    
    
    (358
    )COMPREHENSIVE (LOSS) INCOME
    
    
    
    
    
    $
    (42
    )
    
    $
    (3,261
    )
    
    $
    805(LOSS) EARNINGS PER SHARE:Basic
    
    
    
    
    
    $
    (0.03
    )
    
    $
    (1.21
    )
    
    $
    0.40Diluted
    
    
    
    
    
    $
    (0.03
    )
    
    $
    (1.21
    )
    
    $
    0.39WEIGHTED AVERAGE NUMBER OF COMMON AND
POTENTIAL COMMON SHARES OUTSTANDINGBasic
    
    
    
    
    
    
    2,928
    
    
    
    2,928
    
    
    
    2,884Diluted
    
    
    
    
    
    
    2,928
    
    
    
    2,929
    
    
    
    3,006


See notes to consolidated financial statements.

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES







CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (IN THOUSANDS)

Accum-ulatedCommon Stock
    
    
    
    
    
    Retained
    
    OtherAdditional
    
    Earnings/
    
    Compre-Number of
    
    
    
    
    
    Paid-in
    
    Accumulated
    
    hensiveShares
    
    Amount
    
    Capital
    
    Deficit
    
    (Loss)
    
    TotalBalance, July 1, 2000
    
    
    2,837
    
    
    $
    9,067
    
    
    $
    
    
    
    $
    1,726
    
    
    $
    (345
    )
    
    $
    10,448Exercise of stock warrants
    
    
    43
    
    
    
    214
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214Exercise of stock options
    
    
    48
    
    
    
    142
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    142Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,163
    
    
    
    
    
    
    
    1,163Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (358
    )
    
    
    (358
    )Balance, June 30, 2001
    
    
    2,928
    
    
    
    9,423
    
    
    
    
    
    
    
    2,889
    
    
    
    (703
    )
    
    
    11,609Stock compensation due to
issuance of options
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    24Other
    
    
    
    
    
    
    
    
    
    
    246
    
    
    
    
    
    
    
    
    
    
    
    246Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,547
    )
    
    
    
    
    
    
    (3,547
    )Unrealized gain on investment (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    24Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262
    
    
    
    262Balance, June 30, 2002
    
    
    2,928
    
    
    
    9,423
    
    
    
    270
    
    
    
    (658
    )
    
    
    (417
    )
    
    
    8,618Stock compensation due to
issuance of options
    
    
    
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    14Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (81
    )
    
    
    
    
    
    
    (81
    )Unrealized gain on investment (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    21Translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    18Balance, June 30, 2003
    
    
    2,928
    
    
    $
    9,423
    
    
    $
    284
    
    
    $
    (739
    )
    
    $
    (378
    )
    
    $
    8,590


See notes to consolidated financial statements.

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES







CONSOLIDATED STATEMENTS OF CASH
FLOW (IN THOUSANDS)

---

INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS


Year EndedJune 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income
    
    $
    (81
    )
    
    $
    (3,547
    )
    
    $
    1,163Adjustments to reconcile (loss) net income to
net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    1,271
    
    
    
    1,705
    
    
    
    1,632Bad debt expense (recovery), net
    
    
    (17
    )
    
    
    41
    
    
    
    (25
    )Inventory provision
    
    
    19
    
    
    
    511
    
    
    
    34Impairment loss
    
    
    358
    
    
    
    1,631
    
    
    
    Stock Compensation
    
    
    14
    
    
    
    24
    
    
    
    Loss (Gain) on sale of property and equipment
    
    
    115
    
    
    
    (33
    )
    
    
    49(Gain) Loss on disposal of marketable securities
    
    
    (49
    )
    
    
    1
    
    
    
    14Deferred income taxes
    
    
    42
    
    
    
    20
    
    
    
    (71
    )Minority interest
    
    
    (138
    )
    
    
    14
    
    
    
    110Changes in operating assets and liabilities:Accounts receivable, net
    
    
    522
    
    
    
    300
    
    
    
    1,696Other receivables
    
    
    154
    
    
    
    (310
    )
    
    
    683Inventories
    
    
    (36
    )
    
    
    409
    
    
    
    804Prepaid expenses and other current assets
    
    
    (12
    )
    
    
    (25
    )
    
    
    320Accounts payable and accrued expenses
    
    
    (856
    )
    
    
    (2,396
    )
    
    
    (1,096
    )Income taxes payable
    
    
    (50
    )
    
    
    (62
    )
    
    
    (74
    )Net cash provided by (used in) operating activities
    
    
    1,256
    
    
    
    (1,717
    )
    
    
    5,239CASH FLOWS FROM INVESTING ACTIVITIES:Short term deposits
    
    
    1,719
    
    
    
    1,666
    
    
    
    (2,541
    )Capital expenditures
    
    
    (899
    )
    
    
    (448
    )
    
    
    (4,451
    )Purchases of marketable securities
    
    
    (537
    )
    
    
    (676
    )
    
    
    (302
    )Other assets
    
    
    69
    
    
    
    80
    
    
    
    (263
    )Proceeds from disposal of marketable securities
    
    
    665
    
    
    
    556
    
    
    
    302Proceeds from sale of property and equipment
    
    
    
    
    
    
    63
    
    
    
    53Net cash provided by (used in) investing activities
    
    
    1,017
    
    
    
    1,241
    
    
    
    (7,202
    )CASH FLOWS FROM FINANCING ACTIVITIES:Net payments and borrowings on lines of credit
    
    
    (932
    )
    
    
    1,205
    
    
    
    (241
    )Principal payments of debt and capitalized leases
    
    
    (1,284
    )
    
    
    (1,181
    )
    
    
    (892
    )Proceeds from long-term debt
    
    
    535
    
    
    
    72
    
    
    
    2,293Dividends paid to minority interest
    
    
    (70
    )
    
    
    (4
    )
    
    
    (162
    )Issuance of common stock, net
    
    
    
    
    
    
    
    
    
    
    356Net cash (used in) provided by financing activities
    
    
    (1,751
    )
    
    
    92
    
    
    
    1,354EFFECT OF EXCHANGE RATE CHANGES ON CASH
    
    
    (34
    )
    
    
    242
    
    
    
    (198
    )NET INCREASE/(DECREASE) IN CASH
    
    
    488
    
    
    
    (142
    )
    
    
    (807
    )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    1,007
    
    
    
    1,149
    
    
    
    1,956CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    1,495
    
    
    $
    1,007
    
    
    $
    1,149SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the year for:Interest
    
    $
    182
    
    
    $
    200
    
    
    $
    184Income taxes
    
    $
    102
    
    
    $
    95
    
    
    $
    134NON-CASH INVESTING AND FINANCING ACTIVITIES-Acquisition of property, plant and equipment under
capital finance lease
    
    $
    363
    
    
    $
    276
    
    
    $
    541


See notes to consolidated financial statements.

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TRIO-TECH INTERNATIONAL AND SUBSIDIARIES







NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2003, 2002 AND 2001 (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
fiscal 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 business segments: Testing Services, Manufacturing and
Distribution. TTI has subsidiaries in the U.S., Singapore, Malaysia, Thailand,
and Ireland as follows:

Ownership
    
    LocationExpress Test Corporation
    
    
    
    
    100
    %
    
    Van Nuys, CaliforniaTrio-Tech Reliability Services
    
    
    
    
    100
    %
    
    Van Nuys, CaliforniaKTS Incorporated, dba Universal Systems
    
    
    
    
    100
    %
    
    San Jose, CaliforniaEuropean Electronic Test Centre
    
    
    
    
    100
    %
    
    Dublin, IrelandTrio-Tech International Pte. Ltd.
    
    
    
    
    100
    %
    
    SingaporeTrio-Tech Test Services Pte. Ltd.
    
    
    
    
    100
    %
    
    SingaporeTrio-Tech Thailand
    
    
    
    
    100
    %
    
    Bangkok, ThailandTrio-Tech Bangkok
    
    
    
    
    100
    %
    
    Bangkok, ThailandTrio-Tech Malaysia
    
    
    
    
    55
    %
    
    Penang, MalaysiaTrio-Tech Kuala Lumpur 
    
    100% owned by
Trio-Tech Malaysia
    
    
    55
    %
    
    Selangor, MalaysiaPrestal Enterprise Sdn. Bhd
    
    
    
    
    76
    %
    
    Selangor, MalaysiaTrio-Tech (Suzhou) Co. Ltd.
    
    
    
    
    100
    %
    
    Suzhou, China


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation The consolidated financial statements are
prepared in accordance with accounting principles generally accepted in the
United States of America, which include the accounts of the Company and its
subsidiaries. All significant inter-company accounts and transactions have
been eliminated in consolidation. The consolidated financial statements are
presented in U.S. dollars.

Use of Estimates The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Among the more significant
estimates included in these financial statements are the estimated accounts
receivable allowance for doubtful accounts, reserve for obsolete inventory, and
the deferred income tax asset allowance. Actual results could materially
differ from those estimates.

Accounting Period The Companys fiscal reporting period coincides with the
52-53 week period ending on the last Friday in June. Fiscal 2003, 2002 and
2001 are a 52, 52 and 53-week reporting period, respectively. For simplicity
purposes the Company refers to its fiscal year end as June 30.

Revenue Recognition The Company has three business segments: manufacturing,
distribution, and testing services. Regarding manufacturing and distribution
businesses, revenue is recognized when products are shipped and the title and
risk and reward of ownership of the products shipped pass to the customer and
possible return of products has been reasonably estimated. The criteria to
meet this guideline are: 1) persuasive evidence of an arrangement exists, 2)
delivery has occurred or services have been rendered, 3) the price to the buyer
is fixed or determinable and 4) collectibility is reasonably assured. The
Company estimates an allowance for sales returns based on historical experience
with products returns. Regarding revenue from installation of the products
shipped, in general practice the process of allocating the revenue between the
product and installation is based on historical experience of the
relative fair value of the elements. Revenues from services are recognized at the time of
performance. Regarding testing services, revenue is recognized when the
services are rendered.

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Allowance for doubtful accounts Allowances for doubtful accounts are recorded
for estimated losses resulting from the inability of our customers to make
required payments. The allowance is based on our historical experience and our
analysis of the accounts receivable balance outstanding.

Warranty Costs The Company provides for the estimated costs that
may be incurred under its warranty program at the time the sale is
recorded. The Company estimates the warranty
costs based on the historical rates of warranty returns. The Company periodically assesses the adequacy of its recorded
warranty liability and adjusts the amounts as necessary. See Note 7 for the
change in the accrued warranty costs.

Short Term Deposits Short Term deposits consist of bank balances and interest
bearing deposits having maturity of 3 to 12 months. As of June 30, 2003,
approximately $806 of cash deposits are held in the Companys 55% owned
Malaysian subsidiary. $535 of this cash is denominated in the currency of
Malaysia. Out of the $535, $168 is currently available for movement to
overseas, as authorized by the Central Bank of Malaysia. There are additional
amounts available as dividends (after making deductions for income tax)
pursuant to Malaysian regulations in force from July 1, 2000.

Approximately $3,090 of cash deposits as of June 30, 2002 were held in the
Companys 55% owned Malaysian subsidiary. Of such amounts, $488 was
denominated in the currency of Malaysia. On September 2, 1998, the government
of Malaysia announced its intention to limit the movement of certain cash
balances denominated in Malaysian currency. During fiscal 2001, limits on the
movement of cash balances were removed. $1,442 was available for movement, as
the Central Bank of Malaysia had authorized $1,800 for movement and the Company
previously utilized $358 of this authorization. In addition, approximately
$3,161 is available as dividend (after making deductions for income tax)
pursuant to Malaysian regulations in force from July 1, 2000. There was an
additional amount of $2,083 that is used as collateral for the Singapore credit
facility.

Investments in Marketable Securities- Investments in marketable securities are
accounted for under the Statement of Financial Accounting Standards (SFAS) No.
115. Marketable equity securities are classified as available-for-sale.
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses, net of tax, reported in a separate component of shareholders
equity. Realized gains and losses and declines in value judged to be other
than temporary on available-for-sale securities are included in investment
income. Management has determined that all securities in the investment
portfolio are classified appropriately as available-for-sale. During the
fiscal years ended June 30, 2003, 2002, and 2001 the Company recognized
comprehensive income (net of tax) of $21, $24 and $0, respectively, based on
its proportionate interest in the subsidiary where the marketable securities
are recorded.

Inventories- Inventories consist principally of raw materials, work in
progress, and finished goods and are stated at the lower of cost, using the
first-in, first-out (FIFO) method, or market value.

Property, Plant and Equipment Property, plant and equipment are stated at
cost, less accumulated depreciation and amortization. Depreciation is provided
for over the estimated useful lives of the assets, using the straight-line
method. Amortization of leasehold improvements is provided for over the term of
the leases or the estimated useful lives of the assets, whichever is the
shorter, using the straight-line method. Capital grants from the Industrial
Development Authority in Ireland are accounted for when claimed by reducing the
cost of the related assets. The grants are amortized over the depreciable
lives of those assets. The Company reviews the carrying value of its fixed
assets for possible impairment annually and whenever events or changes in
circumstances indicate the carrying amount of the assets may not be
recoverable. Impairment losses are charged to operations when recognized.
During fiscal 2002 and 2003, the Company recorded an impairment loss against
the carrying value of fixed assets in the amount of $1,117 and $358
respectively.

Maintenance, repairs and minor renewals are charged directly to expense as
incurred. Additions and betterments to property and equipment are capitalized.
When assets are disposed of, the related cost and accumulated depreciation
thereon are removed from the accounts and any resulting gain or loss is
included in statement of operations.

Intangible Assets- In June 2001, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standard (SFAS) No. 141,
Business Combinations, and SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 141 requires that all business combinations initiated after
June 30, 2001 be accounted for under the purchase method and addresses the
initial recognition and measurement of goodwill and other intangible assets
acquired in a business combination.

Goodwill represented the excess of the purchase price over the fair value of
net-assets acquired and prior to Fiscal 2002, was amortized on a straight-line
basis over the expected period to be benefited and ranged from 20 to 25 years.
Patents and certifications are expenses that are amortized over the expected
period to be benefited and range between 7 years (for certifications) and 18
years (for patents).

In accordance with SFAS No. 142, as of July 1, 2001 we discontinued the
amortization of goodwill.

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SFAS No. 142 addresses the initial recognition and measurement of intangible
assets acquired outside of a business combination and the accounting for
goodwill and other intangible assets subsequent to their acquisition. This
accounting standard requires that goodwill and intangible assets with
indefinite lives be separately disclosed from other intangible assets in the
statement of operations, and no longer be amortized but tested for impairment
on an annual basis. A reconciliation of previously reported net income and
earnings per share to the amounts adjusted for the exclusion of goodwill
amortization, net of related income tax effect, is as follows:

June 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001Reported net (loss) income
    
    $
    (81
    )
    
    $
    (3,547
    )
    
    $
    1,163Add: Goodwill amortization, net
of tax
    
    
    
    
    
    
    
    
    
    
    37Adjusted net (loss) income
    
    
    (81
    )
    
    
    (3,547
    )
    
    
    1,200Basic (loss) earnings per share
on reported net income
    
    
    (0.03
    )
    
    
    (1.21
    )
    
    
    0.40Goodwill amortization, net of tax
    
    
    
    
    
    
    
    
    
    
    0.01Adjusted net (loss) income per share
    
    
    (0.03
    )
    
    
    (1.21
    )
    
    
    0.41Diluted earnings (loss) per share
on reported net income
    
    
    (0.03
    )
    
    
    (1.21
    )
    
    
    0.39Goodwill amortization, net of tax
    
    
    
    
    
    
    
    
    
    
    0.01Adjusted net (loss) income per share
    
    $
    (0.03
    )
    
    $
    (1.21
    )
    
    $
    0.40


In fiscal 2002 the Company assessed that the remaining goodwill of $393 and
patents and certifications of $121 could not be recovered from undiscounted
future net cash flows of the acquired assets, and as a result, the Company
recorded an impairment charge of $514 on intangible assets.

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

In the fiscal year ended June 30, 2002, the Company recorded an impairment loss
of approximately $1,631 based on its examination of future undiscounted cash
flows, which are generated by the subsidiaries where certain long-lived assets
(goodwill, patent, and certain fixed assets) were used.

The impairment of $1,631 consisted of (1) $393 in goodwill, related to the
Companys acquisition of manufacturing product lines in the United States; (2)
$121 in patents and certifications which were used in its manufacturing segment
(within the United States); and (3) $1,117 of fixed assets, consisting of
machinery and equipment, furniture and fixtures, leasehold improvements, and
demonstration (54% pertaining to Southeast Asia and 46% pertaining to the
United States). The Testing Segment has incurred an impairment charge of $603,
of which $534 of impairment was a write down because of obsolescence due to a
new generation of burn-in technology known as SBI. Impairment of $514 was
recorded primarily as a result of the decline in the technology industry in the
United States.

In the fiscal year ended June 30, 2003, the Company recorded an impairment loss
of approximately $358 based on its examination of future undiscounted cash
flows, which are generated by the subsidiaries where certain long-lived assets
(certain equipment and machinery) were used. This impairment mainly arose
from the testing segment in Southeast Asia due to obsolescence and a scale down
of operation.

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Comprehensive Income (loss)- The Company adopted Statement of Financial
Accounting Standard No. 130, Reporting Comprehensive Income, (SFAS No. 130)
issued by the FASB. SFAS No. 130 establishes standards for reporting and
presentation of comprehensive income (loss) and its components in a full set of
general-purpose financial statements. The Company has chosen to report
comprehensive income (loss) in the statements of operations and comprehensive
income (loss). Comprehensive income (loss) is comprised of net income (loss)
and all changes to shareholders equity except those due to investments by
owners and distributions to owners.

Foreign Currency Translation and Transactions Transaction gains and losses
result from a change in exchange rates between the functional currency and the
currency in which a foreign currency transaction is denominated. They
represent an increase or decrease in (a) the actual functional current cash
flows realized upon settlement of foreign currency transactions and (b) the
expected functional currency cash flows on unsettled foreign currency
transactions. All transaction gains and losses are included in other income or
expense.

Assets and liabilities of the Companys subsidiaries outside the U.S. are
translated into the US dollar at the prevailing exchange rate in effect at each
period end. Revenue and expenses are translated into the US dollar at the
average exchange rate during the reporting period. Any difference resulting
from using the current rate and average rate in determination of retained
earnings is accounted for as a translation adjustment and reported as part of
comprehensive income or loss in the equity section.

Income Taxes The Company accounts for income taxes using the liability method
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 taxes assets
and liabilities are recognized for the future tax consequence attributable to
the difference between the tax bases of assets and liabilities and their
reported amounts in the financial statements, which will result in taxable or
deductible amounts in future years. Further, the effects of enacted tax laws
or rate changes are included as part of deferred tax expenses or benefits in
the period that covers the enactment date. A valuation allowance is recognized
if it is more likely than not that some portion, or all of, a deferred tax
asset will not be realized.

For US income tax purposes, no provision has been made for US taxes on
undistributed earnings of oversea 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, or 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.

Retained earnings It is the intention of the Company to reinvest earnings of
its foreign subsidiaries in the operations of those subsidiaries. Accordingly,
no provision has been made for U.S. income and foreign withholding taxes that
would result if such earnings were repatriated. These taxes are undeterminable
at this time. The amount of earnings retained in subsidiaries was $6,918 at
June 30, 2003.

Research and Development Costs The Company incurred research and development
costs of $121 in fiscal 2003, $331 in fiscal 2002 and $216 in fiscal 2001 that
were charged to operating expenses as incurred.

Stock Based Compensation Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation (SFAS No. 123), establishes a fair
value method of accounting for stock-based compensation plans and for
transactions in which a company acquires goods or services from employees and
non-employees in exchange for equity instruments. SFAS No. 123 also gives the
option, with respect to employees only, to account for stock-based
compensation, utilizing the intrinsic method, in accordance with Accounting
Principles Board Opinion No. 25 (APB No. 25), Accounting for Stock issued to
Employees. The Company adopts APB No. 25 and FIN 44 for measurement and
recognition of employee stock-based compensation.

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.

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The following table illustrates the effect on net loss and loss per share as if
the Company had applied the fair value recognition provision of SFAS No. 123 to
stock-based employee compensation.

June 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001Net (loss) income: as reported
    
    $
    (81
    )
    
    $
    (3,547
    )
    
    $
    1,163Add: stock based employee compensation
included in reported income
    
    $
    14
    
    
    $
    24
    
    
    
    Deduct: total stock based employee compensation
expense determined under fair value method for
all awards
    
    
    (18
    )
    
    
    (186
    )
    
    
    (341
    )Pro forma net income (loss)
    
    $
    (85
    )
    
    $
    (3,709
    )
    
    $
    822Income (loss) per share  basicAs reported
    
    $
    (0.03
    )
    
    $
    (1.21
    )
    
    $
    0.40Pro forma
    
    $
    (0.03
    )
    
    $
    (1.27
    )
    
    $
    0.29Income (loss) per share  dilutedAs reported
    
    $
    (0.03
    )
    
    $
    (1.21
    )
    
    $
    0.39Pro forma
    
    $
    (0.03
    )
    
    $
    (1.27
    )
    
    $
    0.27


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 fiscal 2003, 2002, and 2001 was $2.25, $0.94, and
$5.40 per share and aggregate $18, $186, and $341 for total options granted by
using the Black-Scholes option pricing model with the assumptions listed below:

Year EndedJune 30, 2003
    
    June 30, 2002
    
    June 30, 2001Volatility
    
    
    
    
    
    
    37.2
    %
    
    
    45.9
    %
    
    
    56.7
    %Risk free interest rate
    
    
    
    
    
    
    2.27-2.93
    %
    
    
    2.37-3.16
    %
    
    
    4.50-4.97
    %Expected life (years)
    
    
    
    
    
    
    2.00
    
    
    
    2.17
    
    
    
    2.54


Earnings per Share The Company adopted SFAS No. 128, Earnings per Share
(EPS). Basic Earnings Per Share is computed by dividing net income available
to common shareholders (numerator) by the weighted average number of common
shares outstanding (denominator) during the period. Diluted EPS gives effect
to all dilutive potential common shares outstanding during a period. In
computing diluted EPS, the average price for the period is used in determining
the number of shares assumed to be purchased from exercise of stock options and
warrants.

Stock options to purchase 349,500 shares at prices ranging from $2.25 to
$6.69 per share were outstanding during fiscal 2003 and were excluded in the
computation of diluted EPS because their effect would have been antidilutive.

Stock options and warrants to purchase 656,165 shares at prices ranging from
$2.72 to $8.00 per share were outstanding during fiscal 2002 and were excluded
in the computation of diluted EPS because their effect would have been
antidilutive. Stock options and warrants to purchase 642,165 shares at a price
ranging from $3.67 to $8.00 per share were outstanding during fiscal 2001 and
were excluded in the computation of diluted EPS because their effect would have
been antidilutive.

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

June 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001Net (loss) income used to compute basic
and diluted earnings (loss) per share
    
    $
    (81
    )
    
    $
    (3,547
    )
    
    $
    1,163Weighted average number of common
shares outstanding  basic
    
    
    2,928
    
    
    
    2,928
    
    
    
    2,884Dilutive effect of stock options and warrants
    
    
    
    
    
    
    
    
    
    
    122Number of shares used to compute
earnings per share  diluted
    
    
    2,928
    
    
    
    2,928
    
    
    
    3,006


Fair Values of Financial Instruments- The carrying value of trade accounts
receivable and accounts payable approximate their fair value due to their
short-term maturities. The carrying values of the Companys lines of credit
and long-term debt are considered to approximate their fair value because the
interest rates are based on the interest rates that are currently available to
the Company for issuance of debt with similar terms and remaining maturities.

Concentration of credit risk- Financial instruments that subject the Company
to credit risk consists primarily of accounts receivable. Concentration of
credit risk with respect to accounts receivable is generally diversified due to
the number of entities composing the Companys customer base and their
geographic dispersion.The Company performs ongoing credit evaluations of its
customers for potential credit losses. The Company generally does not require
collateral. The Company believes that its credit policies do not result in
significant adverse risk and historically it has not experienced significant
credit related losses.

The following table represents the changes in the allowance for doubtful
accounts:

Year EndedJune 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001Beginning
    
    $
    174
    
    
    $
    174
    
    
    $
    221Additons charged to cost and expenses
    
    
    
    
    
    
    66
    
    
    
    60Recovered
    
    
    (17
    )
    
    
    (25
    )
    
    
    (85
    )Actual write-offs
    
    
    
    
    
    
    (41
    )
    
    
    (22
    )Ending
    
    $
    157
    
    
    $
    174
    
    
    $
    174


Adoption of SFAS No. 141 and No. 142-Effective July 1, 2002 the Company
adopted Statement of Financial Accounting Standards No. 141, Business
Combinations and No. 142, Goodwill and Other Intangible Assets. During the
fiscal year ended June 30, 2002, the Company wrote off all of the outstanding
balance of approximately $393 of goodwill. During the fiscal years ended June
30, 2003 and 2002, no goodwill amortization was recorded.

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

Adoption of SFAS No. 146 In June 2002, the Financial Accounting Standard
Board (FASB) issued Statement of Financial Acoounitng Standards No. 146,
Accounting for Costs Associated with Exit or Disposal Activities (SFAS No.
146), which addresses accounting for restructuring and similar costs. SFAS No.
146 supersedes previous accounting guidance, principally Emerging Issues Task
Force (EITF) Issue No. 94-3. SFAS No. 146 requires that the liability for
costs associated with an exit or disposal activity be recognized when the
liability is incurred. Under EITF No. 94-3, a liability for an exit cost was
recognized at the date of a companys commitment to an exit plan. SFAS No. 146 also
establishes that the liability should initially be measured and recorded at
fair value. Accordingly, SFAS No. 146 may affect the timing of recognizing
future restructuring costs as well as

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the amount recognized. The provisions of
SFAS 146 are to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. Adoption by the Company did not have any
immediate effect on its consolidated financial statements.

Adoption of FIN 45 In November 2002, the Financial Accounting Standards Board
(FASB) issued Interpretation No. 45 (FIN 45), Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, which disclosures are effective for financial
statements issued after December 15, 2002. The Company adopted the disclosure
requirements of FIN 45. The adoption of the measurement requirements of FIN 45
did not have a material impact on the Companys financial position or results
of operations.

Adoption of EITF 00-21 In November 2002, FASB Emerging Issues Task Force
(EITF) reached a consensus on Issue 00-21, Accounting for Revenue
Arrangements with Multiple Deliverables (EITF 00-21). EITF 00-21 governs
how to separate and allocate revenue to goods or services or both that are to
be delivered in a bundled sales arrangement. EITF 00-21 applies to revenue
arrangements entered into after June 30, 2003 and allows for either prospective
application or cumulative adjustment upon adoption. The Company applies the
guidance of EITF 00-21 on a prospective basis and the adoption of EITF 00-21
did not have a material impact on its results of operations and financial
condition.

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 Company expects that the adoption of SFAS
No. 150 will not have a material impact on its results of operations and
financial condition.

In January 2003, FASB issued Financial Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46). FIN 46 clarifies the application of
Accounting Research Bulletin No. 51, Consolidated Financial Statements to
those entities defined as Variable Interest Entities (more commonly referred
to as special purpose entities) in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 applies immediately
to all Variable Interest Entities created after January 31, 2003 and by the
beginning of the first interim or annual reporting period commencing after June
15, 2003 for Variable Interest Entities created prior to February 1, 2003. The
Company expects that the adoption of FIN 46 will not have a material impact on
its results of operations and financial condition.

Reclassification Certain reclassifications have been made to the previous
years financial statements to conform to current year presentation, with no
effect on previously reported net income.

3. INVENTORIES

Inventories consist of the following:

June 30,
    
    June 30,2003
    
    2002Raw materials
    
    $
    873
    
    
    $
    938Work in progress
    
    
    166
    
    
    
    287Finished goods
    
    
    745
    
    
    
    505Provision for obsolete inventory
    
    
    (735
    )
    
    
    (716
    )$
    1,049
    
    
    $
    1,014


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4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

Useful
    
    June 30,
    
    June 30,Life in years
    
    2003
    
    2002Building and improvements
    
    
    3-20
    
    
    $
    843
    
    
    $
    847Leasehold improvements
    
    
    3-27
    
    
    
    1,895
    
    
    
    1,677Machinery and equipment
    
    
    3-7
    
    
    
    3,461
    
    
    
    4,872Furniture and fixtures
    
    
    3-5
    
    
    
    350
    
    
    
    367Equipment under capital leases
    
    
    3-5
    
    
    
    1,896
    
    
    
    1,8078,445
    
    
    
    9,570Less:Accumulated depreciation and
amortization
    
    
    
    
    
    
    2,453
    
    
    
    3,402Accumulated depreciation on
equipment under capital leases
    
    
    
    
    
    
    782
    
    
    
    575$
    5,210
    
    
    $
    5,593


Depreciation and amortization expense during fiscal year ended June 30,
2003, 2002 and 2001 was $1,271, $1,705 and $1,632, respectively.

5. LINES OF CREDIT

June 30,
    
    June 30,2003
    
    2002Revolving line of credit denominated by Singapore dollars payable to a
commercial bank for working capital purposes, to borrow up to $2,561
with an interest rate at the banks prime rate (5.75% at June 30, 2003)
plus 1.25%. The line of credit expired in June 2003 and was renewed in July
2003 and is collateralized by a registered charge over fixed deposits,
corporate guarantee and registered fixed charge over power sub-station
    
    $
    
    
    
    $
    141Revolving line of credit denominated by Singapore dollars payable to a
commercial bank for working capital purposes, to borrow up to $4,554
with an interest rate at the banks prime rate (5.00% at June 30, 2003)
plus 1.13%. There is no renewal of line of credit which has expired in July
2003. This line of credit was previously collateralized by Trio-Tech International Pte. Ltd. accounts receivable
    
    
    
    
    
    
    711Revolving line of credit denominated by US dollars, payable to a
commercial bank for working capital purposes, to borrow up to $300
with an interest rate at banks prime rate (4.00% at June 30, 2003) plus
1.75%. The line will expire in September 2003, and is collateralized by
Trio-Tech International accounts receivable and inventories
    
    
    300
    
    
    
    375Lines of credit
    
    $
    300
    
    
    $
    1,227


The lines of credit have various financial covenants. The Company was in
compliance with all such debt covenants at June 30, 2003.

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6. ACCRUED EXPENSES

Accrued expenses consist of the following:

June 30,
    
    June 30,2003
    
    2002Payroll and related
    
    $
    967
    
    
    $
    948Commissions
    
    
    46
    
    
    
    205Customer Deposits
    
    
    24
    
    
    
    41Legal and audit
    
    
    109
    
    
    
    235Sales tax
    
    
    288
    
    
    
    311Utilities
    
    
    134
    
    
    
    95Warranty accrual
    
    
    165
    
    
    
    305Provision for sales volume rebate
    
    
    164
    
    
    
    Provision for building sinking fund
    
    
    17
    
    
    
    18Accrual for construction work performed
    
    
    28
    
    
    
    Rental provisions
    
    
    25
    
    
    
    8Other accrued expenses
    
    
    129
    
    
    
    149Total
    
    $
    2,096
    
    
    $
    2,315


7. WARRANTY ACCRUAL

June 30,
    
    June 30,2003
    
    2002Beginning
    
    $
    305
    
    
    $
    262Additions charged to cost and expenses
    
    
    1
    
    
    
    43Recovered
    
    
    (126
    )
    
    
    (4
    )Actual write-offs
    
    
    (15
    )
    
    
    4Ending
    
    $
    165
    
    
    $
    305


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8. NOTES PAYABLE

Notes payable consist of the following:

June 30,
    
    June 30,2003
    
    2002Note payable denominated by Singapore dollars to a commercial
bank for purchasing certain equipment, maturing in September 2003,
bearing interest at 6.5% per annum, payable in monthly installments
(including interest) of $46 through September 2003, collateralized by
the relevant equipment
    
    $
    210
    
    
    
    732Note payable denominated by Singapore dollars to a commercial
bank for purchasing certain equipment, maturing in February 2005,
bearing interest at the banks prime rate (5.75% at June 30, 2003
2002) plus 1.5% per annum, payable in monthly installments (including
interest) of $17 through February 2005, collateralized by the relevant
equipment, a fixed deposit and a corporate guarantee
    
    
    330
    
    
    
    516Note payable denominated by Singapore dollars to a commercial
bank for purchasing certain equipment, maturing in October 2005,
bearing interest at fixed rate (5.50% at June 30, 2003) per annum,
payable in monthly installments (including interest) of $16 through
October 2005, collateralized by majority of the accounts receivable
    
    
    413
    
    
    
    Mortgage note payable denominated in Irish Pounds to the Industrial
Credit Corporation for purchasing a building, maturing in July 2007,
bearing interest at the banks DIBOR rate (2.73% at June 30,
2003) plus 3.5% per annum, payable in monthly installments (including
interest) of $2 through July 2007, collateralized by the relevant building
    
    
    107
    
    
    
    99Mortgage note payable denominated by Irish Pounds to the Industrial
Credit Corporation for purchasing a building, maturing in May 2008,
bearing interest at the banks DIBOR rate (2.54% at June 30,
2003) plus 3% per annum, payable in monthly installments (including
interest) of $1 through May 2008, collateralized by the relevant building
    
    
    64
    
    
    
    791,124
    
    
    
    1,426Current portion
    
    
    (632
    )
    
    
    (785
    )Notes payable
    
    $
    492
    
    
    $
    641


Maturities of notes payable as of June 30, 2003 are as follows:

YearEndingJune 30,2004
    
    $
    6322005
    
    
    3732006
    
    
    652007
    
    
    402008
    
    
    14Thereafter
    
    
    $
    1,124


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9. INCOME TAXES

The Company generates taxable income and loss in the U.S., Singapore,
Thailand, Malaysia, and Ireland, respectively, and files income tax returns
in these countries. The summarized income or loss before income taxes in
the U.S. and foreign countries for the fiscal years ended June 30, 2003,
2002 and 2001 are as follows:

June 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001Domestic
    
    $
    (231
    )
    
    $
    (3,611
    )
    
    $
    (154
    )Foreign
    
    
    106
    
    
    
    131
    
    
    
    1,782$
    (125
    )
    
    $
    (3,480
    )
    
    $
    1,628


On a consolidated basis, the Companys net income tax provision (benefits)
are as follows:

June 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    1State
    
    
    4
    
    
    
    3
    
    
    
    Foreign
    
    
    48
    
    
    
    30
    
    
    
    42552
    
    
    
    33
    
    
    
    426Deferred:Foreign
    
    
    42
    
    
    
    20
    
    
    
    (71
    )$
    94
    
    
    $
    53
    
    
    $
    355


The reconciliation between the U.S. federal statutory tax rate and the
effective income tax rate is as follows:

June 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001Statutory federal tax rate
    
    
    (34
    )%
    
    
    (34
    )%
    
    
    34
    %State taxes, net of federal benefit
    
    
    (6
    )
    
    
    (6
    )
    
    
    6Impact of foreign tax rates
    
    
    28
    
    
    
    13
    
    
    
    (8
    )Other
    
    
    4
    
    
    
    2
    
    
    
    4Changes in valuation allowance
    
    
    83
    
    
    
    27
    
    
    
    (14
    )Effective rate
    
    
    75
    %
    
    
    2
    %
    
    
    22
    %


The Company has net operating loss carry forwards of approximately $4.7
million for federal income tax purposes (which will expire through fiscal
2022) and $0.2 million for state income tax purposes (which will expire
through fiscal 2006) at June 30, 2003. Management of the Company is
uncertain whether it is more likely than not these future benefits will be
realized. Accordingly, a full valuation allowance has been established.

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The components of deferred income tax assets (liabilities) are as follows:

June 30,
    
    June 30,2003
    
    2002Deferred tax assets:Net operating loss carry forward
    
    $
    1,632
    
    
    $
    1,375Fixed asset impairment
    
    
    
    
    
    
    206Inventory valuation
    
    
    254
    
    
    
    239Depreciation
    
    
    51
    
    
    
    14Provision for bad debts
    
    
    5
    
    
    
    5Accrued vacation
    
    
    17
    
    
    
    15Accrued expenses
    
    
    44
    
    
    
    46Other
    
    
    1
    
    
    
    Total deferred tax assets
    
    
    2,004
    
    
    
    1,900Deferred tax liabilities:Depreciation
    
    
    584
    
    
    
    432Other
    
    
    127
    
    
    
    237Total deferred income tax liabilities
    
    
    711
    
    
    
    669Subtotal
    
    
    1,293
    
    
    
    1,231Valuation allowance
    
    
    (2,004
    )
    
    
    (1,900
    )Net deferred tax liability
    
    $
    (711
    )
    
    $
    (669
    )


The valuation allowance increased (decreased) by $104, $935 and ($234)
in fiscal 2003, 2002 and 2001 respectively.

10. COMMITMENTS AND CONTINGENCIES

The Company leases certain of its facilities and equipment under long-term
agreements expiring at various dates through fiscal 2008. Certain of these
leases require the Company to pay real estate taxes and insurance and
provide for escalation of lease costs based on certain indices. Future
minimum payments under capital leases and non-cancelable operating leases
as of June 30, 2003 are as follows:

Capital
    
    OperatingYear ending June 30,
    
    Leases
    
    Leases2004
    
    $
    345
    
    
    $
    6252005
    
    
    224
    
    
    
    4872006
    
    
    108
    
    
    
    1762007
    
    
    38
    
    
    
    2008
    
    
    7
    
    
    
    Thereafter
    
    
    
    
    
    
    Total future minimum lease payments
    
    
    722
    
    
    $
    1,288Amount representing interest
    
    
    (76
    )Present value of net minimum lease payments
    
    
    646Current portion of capitalized lease obligations
    
    
    (302
    )Long-term obligations under capital leases
    
    $
    344


Total rental expense on all operating leases, both cancelable and
non-cancelable, amounted to $733 in fiscal 2003, $705 in fiscal 2002 and
$765 in fiscal 2001.

The Company is, from time to time, the subject of litigation claims and
assessments arising out of matters occurring in its normal business
operations. In the opinion of management, resolution of these matters will
not have a material adverse effect on the Companys financial statements.

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11. TRANSACTIONS IN SHAREHOLDERS EQUITY

Fiscal 2003

No
options were exercised in fiscal 2003.

Based on variable accounting method, the Company
determined that no additional stock compensation expense was recognized in
fiscal 2003 for the repricing transactions related to 45,000 options, which
occurred in fiscal 2000.

Fiscal 2002

On October 16, 2001, the Board of Directors granted options under the 1998
Plan, as defined in note 12 below, covering 116,000 shares of common stock
to 55 employees with an exercise price equal to the market price at the
grant date. These options have a five-year contractual life and vested 25%
on the grant date and then 25% on each anniversary date. According to APB
No. 25, no stock compensation was recognized for these 116,000 options. In
addition, the Board of Directors extended the life of 27,000 existing
options for one year. On the measurement date, there was no intrinsic
value on these options; therefore, no stock compensation was recognized for
this transaction during fiscal 2002.

Based on variable accounting method, the Company determined that no
additional stock compensation expense was recognized in fiscal 2002 for the
repricing transactions related to 45,000 options, which occurred in fiscal
2000.

Fiscal 2001

The option holders, under the Directors Plan, exercised 10,000 options with
an exercise price of $2.82 per share. Consequently, the Company issued
10,000 shares of common stock in exchange for aggregate proceeds of $28.

The option holders, under the 1998 Plan, exercised 38,000 options with an
exercise price of $3.00 per share. Consequently, the Company issued 38,000
shares of common stock in exchange for proceeds of $114.

The warrant holders exercised 43,000 warrants at $5.00 per share.
Consequently the Company issued 43,000 shares of common stock in exchange
for proceeds of $214.

Based on variable accounting method, the Company determined that no
additional stock compensation expense was recognized in fiscal 2001 for the
repricing transactions related to 45,000 options, which occurred in fiscal
2000.

12. STOCK OPTIONS AND WARRANTS

Fiscal 2003

On July 1, 2002, the Board of Directors granted to all directors options
covering 35,000 shares of Common Stock with an exercise price of $2.25 per
share, $0.40 lower than the market price of $2.65 at the grant date. These
options have a five-year contractual life and vested immediately.
Consequently, the Company recognized $14 of stock compensation expense in
June 30, 2003.

Fiscal 2002

On October 16, 2001, the Board of Directors granted 50,000 options to all
directors with an exercise price of $2.72 per share, $0.48 lower than the
market price of $3.20 at the grant date. These options have a five-year
contractual life and vested immediately. Consequently, the Company
recognized $24 of stock compensation expense in fiscal 2002.

On December 8, 1997, the Companys shareholders approved the Companys 1998
Stock Option Plan (the 1998 Plan) under which employees, officers,
directors and consultants receive options to purchase the Companys common
stock at a price that is not less than 100 percent of the fair market value
at the date of grant. Options under the 1998 Plan have a five-year
contractual life and vest at the rate of 25% at the grant date and 25% at
each anniversary after the granting date. There are 300,000 shares
authorized for grant under the 1998 Plan, and options to acquire 182,500
shares were outstanding as of June 30, 2003.

On December 8, 1997, the Companys shareholders approved the Directors
Stock Option Plan (the Directors Plan under which duly elected
non-employee Directors and the President (if he or she is a director of the
Company) of the Company (currently four individuals) receive options to
purchase the Companys common stock at a price of 100% of the fair market
value of the underlying shares on the date of grant. Each option granted
under Plan shall have a five-year

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contractual life and be exercisable
immediately commencing as of the date of grant. There are 300,000 shares
authorized for grant under the Directors Plan and options to acquire
167,000 shares were outstanding as of June 30, 2003.

The following tables summarize the stock option and warrant activities for
the three years ended June 30, 2001, 2002, 2003:

Number
    
    WeightedNumber
    
    Weighted
    
    of
    
    Averageof
    
    Average
    
    Options
    
    ExerciseOutstanding Options
    
    Options
    
    Price
    
    Exercisable
    
    PriceBeginning outstanding options at June 30, 2000
    
    
    383,188
    
    
    $
    4.82Granted
    
    
    86,000
    
    
    
    4.50Exercised
    
    
    (47,688
    )
    
    
    2.99Expired
    
    
    (13,500
    )
    
    
    5.97Total outstanding options at June 30, 2001
    
    
    408,000
    
    
    
    4.92
    
    
    
    334,000
    
    
    $
    4.66Granted
    
    
    166,000
    
    
    
    3.05Exercised
    
    
    Expired
    
    
    (99,500
    )
    
    
    4.93Total outstanding options at June 30, 2002
    
    
    474,500
    
    
    
    4.27
    
    
    
    347,750
    
    
    
    4.36Granted
    
    
    35,000
    
    
    
    2.25ExercisedExpired
    
    
    (160,000
    )
    
    
    4.49Total outstanding options at June 30, 2003
    
    
    349,500
    
    
    $
    3.96
    
    
    
    296,000
    
    
    $
    4.05


Year Ended June 30, 2003Options Outstanding
    
    Options ExercisableWeighted AverageGrant
    
    Number
    
    Remaining
    
    Weighted Average
    
    NumberPrice Range
    
    Outstanding
    
    Contractual Life
    
    Exercise Price
    
    Exercisable
    
    Exercise Price$2.25 - $3.69
    
    
    229,500
    
    
    
    2.78
    
    
    $
    3.11
    
    
    
    182,250
    
    
    $
    3.09$3.70 - $4.69
    
    
    12,000
    
    
    
    0.03
    
    
    $
    4.34
    
    
    
    12,000
    
    
    $
    4.34$4.70 - $5.69
    
    
    57,000
    
    
    
    2.11
    
    
    $
    5.48
    
    
    
    50,750
    
    
    $
    5.46$5.70 - $6.69
    
    
    51,000
    
    
    
    1.75
    
    
    $
    6.00
    
    
    
    51,000
    
    
    $
    6.00349,500
    
    
    
    2.23
    
    
    $
    3.96
    
    
    
    296,000
    
    
    $
    4.05


13. CONCENTRATION OF CUSTOMERS

The Company had two major customers that accounted for the following
accounts receivable and sales during the periods ended:

Years ended June 30,
    
    2003
    
    2002
    
    2001Sales- Customer A
    
    
    17
    %
    
    
    24
    %
    
    
    15
    %- Customer B
    
    
    32
    %
    
    
    31
    %
    
    
    25
    %Accounts Receivable- Customer A
    
    
    10
    %
    
    
    24
    %
    
    
    16
    %- Customer B
    
    
    28
    %
    
    
    24
    %
    
    
    25
    %


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14. UNUSED FINANCING FACILITIES

The Company has various credit facilities available to it. The following
table summarizes the credit facilities available to the Company and the
unutilized portion of the facilities at June 30, 2003:

Entity with Facility
    
    Type of
    
    Interest
    
    Credit
    
    UnusedTrio-Tech Malaysia
    
    Line of Credit
    
    
    7.00
    %
    
    $
    91
    
    
    $
    91Trio-Tech Bangkok
    
    Line of Credit
    
    
    6.50
    %
    
    
    47
    
    
    
    47Trio-Tech Singapore
    
    Line of Credit
    
    
    7.00
    %
    
    
    2,561
    
    
    
    2,561Trio-Tech Singapore
    
    Line of Credit
    
    
    6.13
    %
    
    
    4,554
    
    
    
    4,554Trio-Tech International
    
    Line of Credit
    
    
    5.75
    %
    
    
    300
    
    
    
    $
    7,553
    
    
    $
    7,253


15. OTHER INCOME

Other income consists of the following:

June 30,
    
    June 30,
    
    June 30,2003
    
    2002
    
    2001Interest income
    
    $
    83
    
    
    $
    182
    
    
    $
    222Rental income
    
    
    89
    
    
    
    90
    
    
    
    131Royalty income
    
    
    20
    
    
    
    25
    
    
    
    Dividend income
    
    
    25
    
    
    
    20
    
    
    
    54Exchange gain(loss)
    
    
    9
    
    
    
    (107
    )
    
    
    13Sales of other products
    
    
    52
    
    
    
    77
    
    
    
    Gain (loss) on disposal on marketable securities
    
    
    49
    
    
    
    (1
    )
    
    
    24Other miscellaneous income
    
    
    20
    
    
    
    20
    
    
    
    0Total
    
    $
    347
    
    
    $
    306
    
    
    $
    444


16. BUSINESS SEGMENTS

The Company operates principally in three industry segments, the testing
service industry (that performs structural and electronic tests of
semiconductor devices), the designing and manufacturing of equipment (that
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 $41 in
fiscal 2003, $38 in fiscal 2002, and $370 in fiscal 2001. Corporate assets
mainly consist of cash and prepaid expenses. Corporate expenses mainly
consist of salaries, insurance, professional expenses and directors fees.

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Business Segment Information:

Year
    
    
    
    
    
    Operating
    
    
    
    
    
    Depr.Ended
    
    Net
    
    Income
    
    
    
    
    
    and
    
    CapitalJun. 30,
    
    Sales
    
    (loss)
    
    Assets
    
    Amort.
    
    ExpendituresManufacturing
    
    FY 2003
    
    $
    4,674
    
    
    $
    (802
    )
    
    $
    2,494
    
    
    $
    88
    
    
    $
    5FY 2002
    
    
    5,022
    
    
    
    (4,013
    )
    
    
    2,939
    
    
    
    410
    
    
    
    217FY 2001
    
    
    18,468
    
    
    
    (231
    )
    
    
    6,898
    
    
    
    488
    
    
    
    163Testing Services
    
    FY 2003
    
    
    9,505
    
    
    
    803
    
    
    
    13,431
    
    
    
    1,068
    
    
    
    1,212FY 2002
    
    
    8,942
    
    
    
    680
    
    
    
    15,646
    
    
    
    1,187
    
    
    
    474FY 2001
    
    
    11,112
    
    
    
    742
    
    
    
    16,563
    
    
    
    1,051
    
    
    
    4,347Distribution
    
    FY 2003
    
    
    7,067
    
    
    
    (212
    )
    
    
    415
    
    
    
    109
    
    
    
    45FY 2002
    
    
    5,653
    
    
    
    (69
    )
    
    
    399
    
    
    
    104
    
    
    
    18FY 2001
    
    
    6,553
    
    
    
    441
    
    
    
    350
    
    
    
    92
    
    
    
    478Corporate and
    
    FY 2003
    
    
    
    
    
    
    (76
    )
    
    
    371
    
    
    
    6
    
    
    
    unallocated
    
    FY 2002
    
    
    
    
    
    
    (177
    )
    
    
    91
    
    
    
    4
    
    
    
    15FY 2001
    
    
    
    
    
    
    431
    
    
    
    339
    
    
    
    1
    
    
    
    4Total Company
    
    FY 2003
    
    $
    21,246
    
    
    $
    (287
    )
    
    $
    16,711
    
    
    $
    1,271
    
    
    $
    1,262FY 2002
    
    $
    19,617
    
    
    $
    (3,579
    )
    
    $
    19,075
    
    
    $
    1,705
    
    
    $
    724FY 2001
    
    $
    36,133
    
    
    $
    1,383
    
    
    $
    24,150
    
    
    $
    1,632
    
    
    $
    4,992


Geographic Area Information:

Elimin-Year
    
    
    
    
    
    
    
    
    
    
    
    
    
    ationsEnded
    
    United
    
    
    
    
    
    Southeast
    
    and
    
    TotalJun. 30,
    
    States
    
    Europe
    
    Asia
    
    Other
    
    CompanyNet sales to
    
    FY 2003
    
    $
    9,038
    
    
    
    943
    
    
    
    11,306
    
    
    
    (41
    )
    
    $
    21,246customers
    
    FY 2002
    
    $
    8,083
    
    
    
    1,479
    
    
    
    10,093
    
    
    
    (38
    )
    
    $
    19,617FY 2001
    
    $
    11,253
    
    
    
    6,761
    
    
    
    18,489
    
    
    
    (370
    )
    
    $
    36,133Operating
    
    FY 2003
    
    $
    (167
    )
    
    
    (140
    )
    
    
    96
    
    
    
    (76
    )
    
    $
    (287
    )Income (loss)
    
    FY 2002
    
    $
    (3,050
    )
    
    
    (480
    )
    
    
    128
    
    
    
    (178
    )
    
    $
    (3,579
    )FY 2001
    
    $
    5
    
    
    
    (120
    )
    
    
    1,067
    
    
    
    431
    
    
    $
    1,383Property, plant
    
    FY 2003
    
    $
    104
    
    
    
    446
    
    
    
    4,700
    
    
    
    (40
    )
    
    $
    5,210and equipment -
    
    FY 2002
    
    $
    160
    
    
    
    463
    
    
    
    5,010
    
    
    
    (40
    )
    
    $
    5,593net
    
    FY 2001
    
    $
    996
    
    
    
    259
    
    
    
    3,242
    
    
    
    
    
    
    $
    4,497


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17. QUARTERLY FINANCIAL DATA (UNAUDITED)

The Companys summarized quarterly financial data are as follows:

Year ended June 30, 2002
    
    Sep. 30,
    
    Dec. 31,
    
    Mar. 31,
    
    Jun. 30,Revenues
    
    $
    5,136
    
    
    $
    4,812
    
    
    $
    4,657
    
    
    $
    5,012Expenses
    
    
    5,509
    
    
    
    5,616
    
    
    
    4,973
    
    
    
    6,999
    (a)Loss before income taxes and minority interest
    
    
    (373
    )
    
    
    (804
    )
    
    
    (316
    )
    
    
    (1,987
    )Income taxes
    
    
    (42
    )
    
    
    (26
    )
    
    
    
    
    
    
    15Loss before minority interest
    
    
    (415
    )
    
    
    (830
    )
    
    
    (316
    )
    
    
    (1,972
    )Minority interest
    
    
    15
    
    
    
    38
    
    
    
    4
    
    
    
    (71
    )Net Loss
    
    $
    (400
    )
    
    $
    (792
    )
    
    $
    (312
    )
    
    $
    (2,043
    )Net loss per share:Basic
    
    $
    (0.14
    )
    
    $
    (0.27
    )
    
    $
    (0.11
    )
    
    $
    (0.70
    )Fully diluted
    
    $
    (0.14
    )
    
    $
    (0.27
    )
    
    $
    (0.11
    )
    
    $
    (0.70
    )


Year ended June 30, 2003
    
    Sep. 30,
    
    Dec. 31,
    
    Mar. 31,
    
    Jun. 30,Revenues
    
    $
    5,915
    
    
    $
    5,051
    
    
    $
    5,561
    
    
    $
    4,719Expenses
    
    
    5,789
    (b)
    
    
    4,996
    
    
    
    5,545
    (c)
    
    
    5,041
    (d)Income (loss) before income taxes and minority interest
    
    
    126
    
    
    
    55
    
    
    
    16
    
    
    
    (322
    )Income taxes
    
    
    (68
    )
    
    
    18
    
    
    
    (21
    )
    
    
    (23
    )Income (loss) before minority interest
    
    
    58
    
    
    
    73
    
    
    
    (5
    )
    
    
    (345
    )Minority interest
    
    
    (2
    )
    
    
    18
    
    
    
    33
    
    
    
    89Net Income (loss)
    
    $
    56
    
    
    $
    91
    
    
    $
    28
    
    
    $
    (256
    )Net income (loss) per share:Basic
    
    $
    0.02
    
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    (0.09
    )Fully diluted
    
    $
    0.02
    
    
    $
    0.03
    
    
    $
    0.01
    
    
    $
    (0.09
    )






| |  | 
| |  | 



|(a) |  | This includes an impairment of $1,631 consisting of (1) $393 on goodwill
(2) $121 on intangibles, and (3) $1,117 on fixed assets (43% pertaining to
the Southeast Asia testing segment, and 46% pertaining to the United
States Manufacturing Segment). In addition, there is an inventory write
off of $511, mainly attributed to the United States Manufacturing Segment.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) |  | The expenses include a loss on disposal of property, plant and machinery
of $112 derived from Singapore.
|--- |  | --------------------------------------------------------------------------------------------------------



|(c) |  | Cost of sales increased with the exceptionally high sales for the
distribution of low margin front-end products of $1.6 million.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------



|(d) |  | This includes an impairment of $358 consisting of machinery and
equipment, furniture and fixtures, and leasehold improvements (pertaining
to the Malaysia and Singapore Testing Segments).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18. SUBSEQUENT EVENTS

Subsequent to the year end, management made the decision to relocate one of
the manufacturing operations in the United States to Singapore. This
transition is anticipated to be completed in fiscal 2004.

The Company also incorporated a wholly owned subsidiary, Trio-Tech (Suzhou) Co.
Ltd, in the Peoples Republic of China, with a registered capital of
approximately $70.

58