10-K

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, 2002

OR

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

Commission File Number 0-13914

TRIO-TECH INTERNATIONAL

(Exact name of Registrant as specified in its Charter)

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

Registrant’s Telephone Number: 818-787-7000

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

Title of each class	Name of each exchange 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 with the Commission by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ  No ¨

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.  þ

The aggregate market value of voting stock held by non-affiliates of Registrant, as of September 6, 2002, was approximately $4 million (based upon the last sales price for shares of Registrant’s Common Stock as reported by the AMEX on September 6, 2002). 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 6, 2002 was 2,927,551.

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	24
Item 8	Financial statements and supplementary data	26
Item 9	Changes in and disagreements with accountants on accounting and financial disclosure	26
	Part III
Item 10	Directors and executive officers of the registrant	26
Item 11	Executive compensation	26
Item 12	Security ownership of certain beneficial owners and management, and related stockholder matters	26
Item 13	Certain relationships and related transactions	26
Item 14	Controls and procedures	26
	Part IV
Item 15	Exhibits, financial statement schedules, and reports on Form 8-K	26
Signatures		29
Certifications		30
Exhibits
	Independent Auditors’ Report for the year ended June 30, 2002	31
	Independent Auditors’ Report for the years ended June 30, 2001 and 2000	32
	Consolidated Balance Sheets as of June 30, 2002 and 2001	33
	Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years Ended June 30, 2002, 2001 and 2000	34
	Consolidated Statements of Shareholders’ Equity for the Years Ended June 30, 2002, 2001 and 2000	35
	Consolidated Statements of Cash Flows for the Years Ended June 30, 2002, 2001 and 2000	36
	Notes to Consolidated Financial Statements	37

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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 44 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 industry 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 test facilities, one in the United States, one in Europe and three in Southeast Asia. These facilities provide customers a comprehensive range of testing services, such as burn-in and product life testing for finished or packaged components.

We manufacture “wet” processing and cleaning stations used in the manufacture 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 operation. Additionally, the Southeast Asia business 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.

Company History

1958	Incorporated in California
1976	The Company formed Trio-Tech International Pte. Ltd. (TTI Pte) 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 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.

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, 2002, 2001 and 2000 and is included as part of this Form 10-K.

Background Technology

In 2001, the worldwide market for semiconductor devices was estimated at $138 billion, approximately 32% less than the year 2000, with shipments of $204 billion. Most forecasters see an industry turnaround during fiscal 2003 with shipments growing in the future. The Semiconductor Industry Association (SIA) expects the growth rate to accelerate to 23.2% in 2003 and 20.9% in 2004 with wireless and digital consumer products leading the growth of semiconductor sales.

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 $28 billion in 2001, a 41% year-over-year decline, the worst drop in sales on record. SEMI has projected that worldwide semiconductor equipment sales will decline by 3% in 2002, but the chip-making tool market will rebound and increase by 29% in 2003 and 23% in 2004

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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 estimates that the semiconductor equipment market is 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 test 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 especially 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 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 eight 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 where 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 46%, 31% and 29% of sales for the years ended June 30, 2002, 2001 and 2000 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.

Products

The Company designs, develops, manufactures and markets equipment for the manufacture and test of semiconductor wafers, devices and other electronic components. Revenue from the sale of products manufactured represented approximately 26%, 51% and 50% of sales for the years ended June 30, 2002, 2001 and 2000 respectively.

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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 that 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.

During 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) designed to perform precise, high-speed transfer of IC packages from 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 boards 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 conditioners (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.

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

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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 other 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 29%, 18% and 22% of sales for the years ended June 30, 2002, 2001 and 2000, 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 in products for the “Front End” and in developing new testing technology that allows us to offer more advanced processes. The Company incurred research and development costs of $331,000 in fiscal 2002, $216,000 in fiscal 2001 and $205,000 in fiscal 2000.

Testing Services

During 2000 through 2002, the Company developed new equipment and facilities to participate in a new generation of burn-in technology known as HBI (Hybrid Burn-in) and SBI (Smart Burn-in). This technology has been 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.

Artic Temperature Controlled Wafer Chucks

We continue to develop our range of Artic temperature controlled wafer chucks. In July 1999, the Company introduced its new range of TC3000 series chucks for production wafer probing applications. These new chucks offer high levels of mechanical stability under high probing loads. A triaxial guarding option is available which enables very precise electrical measurements on the wafer. This new generation of chucks has been expanded for use in all major production wafer probers and for new applications such as high power device testing. The Company has also applied this new technology to 300 mm chucks in the new TC31200 temperature chuck for the emerging 12 inch or 300mm wafers.

Wet Process Stations and Chemical Management Equipment

The Company is actively developing its line of wet process equipment. During 2001, we completed development of our Chemical Dispense Units (CDUs), which allows us to offer a complete wet process and chemical supply system. Chemical management equipment provides automatic dispensing and control of process chemicals for our own wet process equipment as well as other brands of wet stations.

In addition, the Company also produced several new systems that allow photo resist 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. Use of ozone injection eliminates the need for toxic chemicals.

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 25 in various foreign countries. Of the 41 sales representatives, 5 represent the Distribution Segment and the balance represent the Manufacturing Segment. Trio-Tech’s United States marketing efforts are coordinated from its California locations. Southeast Asia and European marketing efforts are assigned to its subsidiaries in Singapore and Ireland, respectively. 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 industries depend on the current and anticipated market demand for integrated circuits and products utilizing semiconductor devices. In fiscal 2002, 2001, and 2000, sales of

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equipment and services to our two largest customers (Catalyst Semiconductor and AMD) accounted for approximately 55%, 40%, and 28%, 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 year ended June 30, 2002, the Company had sales of $4,640,000 (24%) and $6,079,000 (31%) to Catalyst Semiconductor and AMD, respectively.

Backlog

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

	June 30, 2002		June 30, 2001
Manufacturing backlog	$	785	$	2,076
Testing service backlog		6,615		5,863
Distribution backlog		537		509
	$	7,937	$	8,448

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 current backlog, as of September 6, 2002 is $1,192, $5,174 and $251 for manufacturing, testing and distribution, respectively and totals $6,617.

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 testing laboratories in the areas in which the Company operates 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. Since the Company has sold and will continue to sell its products to competing laboratories and other test products are available from many other manufacturers, the Company’s competitors can offer the same testing capabilities. This 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 purchase of testing equipment by semiconductor manufacturers and users are potential threats to the Company’s future testing services revenues and earnings. Although these 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 more important than pricing factors in determining the Company’s position in the market.

The semiconductor equipment industry is highly competitive. The principal competitive factors in the industry are product performance, reliability, service and technical support, product improvements, price, established relationships with customers and product familiarity. The Company has competitors for its various products. However, the Company believes its products compete favorably with respect to each of these factors in the markets in which it operates. 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.

Patents

Trio-Tech 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. The capitalized cost of the patents was written off because of the impairment assessed by our management in fiscal 2002.

In the semiconductor industry it is typical for companies to receive notices from time to time alleging infringement of patents or other intellectual property rights of others. We can provide no assurance that we will not receive notices alleging infringement.

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Moreover, the cost of litigation of any claim or damages resulting from infringement of patents or other intellectual property could materially and adversely affect our business, financial condition and results of operations.

Employees

As of June 30, 2002, the Company had approximately 36 employees in the United States, 351 in Southeast Asia and 10 in Ireland for a total of approximately 397 employees. None of the Company’s employees are represented by a labor union. There are approximately 311 employees in the testing segment, 66 employees in the manufacturing segment and 20 in the distribution segment. Currently, as of September 6, 2002, there are approximately 391 employees.

ITEM 2— PROPERTIES

The Company believes that its existing facilities are adequate and suitable to meet the Company’s needs for the foreseeable future. From time to time contractual agreements arise and the Company believes that it has anticipated future needs.

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

Location	Principal Use/Segment	Approx. Sq. Ft. Occupied	Owned (O) or Leased (L) Expiration 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
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
HEX 03-01/03,	Testing/Manufacturing	2,959	(L) Sept. 2003
HEX 03-16/17,	Testing	1,983	(L) Jul. 2002 *2
HEX 01-08/15	Testing/Manufacturing	6,865	(L) Jan. 2003 *2
HEX 01-16/17	Testing	1,983	(L) Feb. 2004
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. 2003 *2
HEX 03-09/15,	Logistics	4,435	(L) Jan. 2003 *2
HEX 03-16/18,	Distribution	5,130	(L) Jan. 2003 *2
HEX 01-08,	Power Substation	603	(L) Jun. 2003 *1
HEX 07-17/18,	Testing	4,315	(L) Nov. 2003
HEX 07-01,	Testing	3,466	(L) Jan. 2004
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

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Lot No. B7, Kawasan MIEL	Manufacturing	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 June 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 FY 2003, 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.

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.

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 2001
September 30, 2000	7.00	5.50
December 31, 2000	6.25	3.00
March 31, 2001	4.50	3.13
June 30, 2001	3.70	3.00
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
July 1, 2002 to
September 6, 2002	2.65	1.90

There were approximately 609 shareholders of record of our common stock as of September 6, 2002. Approximately 2,115,528 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 determinations 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.

EQUITY COMPENSATION PLAN INFORMATION

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (c)
Equity compensation plans approved by security holders (1) Company's 1988 Stock Option Plan	27,000	$3.6670	-0-
(2) Company's 1998 Stock Option Plan	250,500	$4.5215	49,500
(3) Directors Stock Option Plan	197,000	$4.0253	103,000
Equity compensation plans not approved by security holders options granted outside of plan:	0	$0.0000	0
Total	474,500	$4.2668	152,500

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ITEM 6—SELECTED FINANCIAL DATA

	June 30, 2002			June 30, 2001		June 30, 2000		June 30, 1999			June 30, 1998
	(In thousands except share and per share amounts)
Consolidated Statements of Income
Net sales	$	19,617		$	36,133	$	26,943	$	21,181		$	21,852
Income (loss) from Operations		(3,609	)		1,072		1,310		(207	)		969
Net (Loss) Income		(3,547	)		1,163		1,034		195			831
Net income per share :
Basic		(1.21	)		0.40		0.37		0.07			0.34
Diluted		(1.21	)		0.39		0.36		0.07			0.33
Weighted average common shares outstanding
Basic		2,928			2,884		2,759		2,745			2,413
Diluted		2,928			3,006		2,895		2,757			2,484
Consolidated Balance Sheets
Current assets	$	13,405		$	15,501	$	17,279	$	12,723		$	14,036
Current liabilities		6,486			7,599		8,349		5,934			7,439
Working capital		6,919			7,902		8,930		6,789			6,597
Total assets		19,075			24,150		22,712		18,932			19,331
Long-term debt and capitalized leases		986			1,745		586		962			426
Shareholders' equity	$	8,618		$	11,609	$	10,448	$	9,051		$	8,763

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

The following discussion should be read in conjunction with the Company’s Consolidated Financial Statements, including the related notes thereto, and other financial information included herein. In addition, in order to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we hereby notify our readers that the factors set forth in “Note Concerning Forward-Looking Statements” prior to “Part I—Item 1—Business” on page 3 hereof and “Certain Factors that May Affect Our Future Results” as set forth below in this Item 7, as well as other factors, in the past have affected and in the future could affect our actual results, and could cause our results for future periods to differ materially from those expressed in any forward looking statements made by or on our behalf, including without limitation those made in this report. In addition, past operating results are not necessarily indicative of the results to be expected in future periods.

Overview

Founded in 1958, Trio-Tech International provides third-party semiconductor testing and burn-in services primarily through its laboratories in Southeast Asia. The Company 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 following table set forth our revenue components for the past three years

Revenue Components

	Year Ended
	June 30, 2002		June 30, 2001		June 30, 2000
Net Sales:
Testing	45.58	%	30.75	%	28.66	%
Manufacturing	25.60		51.11		49.68
Distribution	28.82		18.14		21.66
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 (who purchase our testing equipment.). Our revenue is heavily concentrated on two major customers (See Business section and Note 13 to the financial statements for reference).

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

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

Critical Accounting Policies

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of the consolidated financial statements

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. Actual results may differ materially from these estimates, which may impact the carrying values of assets and liabilities.

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Inventory Valuation

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

Revenue Recognition

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

Income Tax

We account for income taxes in accordance with Statement of Financial Accounting Standards No 109, “Accounting for Income Taxes” (“SFAS No. 109”). SFAS No. 109 requires an entity to recognize deferred tax liabilities and assets. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the difference between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.

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

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

Impairment of Long-Lived Assets

The Company reviews long-lived assets such as goodwill and fixed assets for possible impairment whenever, in managements’ estimate, circumstances indicate that the carrying amount may not be recoverable, in terms of SFAS No. 121. To the extent the carrying value of the asset exceeds its fair value, which is determined using undiscounted cash flows, a write down to fair value is made and a charge is recorded against operations.

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 2001 to $19,617 in 2002, due to the global downturn in the semiconductor industry and world economic conditions. However, we believe our backlog by quarter in 2002 indicates signs of possible recovery in the first half of our 2003 fiscal year.

Geographically, net sales into and within the United States decreased $3,170 or 28.2% from $11,253 in 2001 to $8,083 in 2002. The decrease was attributable to a downturn in sales of burn-in-boards, Artic Temperature Controlled Chucks and wet process benches. Net sales within Southeast Asia decreased $8,396 or 44.4% from $18,489 in 2001 to $10,093 in 2002 mainly due to lower manufacturing and distribution volumes. Net sales for Europe decreased $5,282 or 78.1% from $6,761 in 2001 to $1,479

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in 2002. This decrease was due primarily to a decline in demand for testing services, which occurred when several large customers moved from Europe to Southeast Asia. We have managed to recapture some of this business in Southeast Asia, due to the fact that our testing services were already established in regions to where the customers relocated.

The Manufacturing Segment sales decreased $13,446 or 72.8% from $18,468 in 2001 to $5,022 in 2002 due to conservative capital spending by OEM’s for the Artic Temperature Controlled Chunks, wet process benches and the COBIS-II Burn-in Board Systems. The Testing Services Segment sales, Company-wide, decreased $2,170 or 19.5% from $11,112 in 2001 to $8,942 in 2002 due to the further downturn in global economic conditions which has created a tough and competitive environment. However, even in this environment our Testing Segment was able to secure contracts for its newly developed Hybrid Burn-in (HBI) and Smart-Burn-In (SBI) technology in its new facilities in Singapore. The Distribution Segment decreased $900 or 13.7% from $6,553 in 2001 to $5,653 in 2002. This segment is dependent on the capital expenditure plans of our customers, which remains weak.

Cost of Sales

The Company’s cost of sales varies depending on the mix of sector and geographic sales and deceased $10,823 or 40.5% from $26,749 in 2001 to $15,926 in 2002. As a percentage of sales, the cost of sales increased 7.2% from 74% in 2001 to 81.2% in 2002. This increase in cost of sales, as a percentage of sales, was mainly due to an inventory write down of $511 and certain costs that remained fixed. The increase was also due to the decline in sales and change in the sales and product mix.

Operating Expenses

Operating expenses decreased by $1,012 or 12.2% from $8,312 in fiscal 2001 to $7,300 in fiscal 2002. As a percentage of total revenue, our operating expenses in fiscal 2002 increased from 23% in fiscal 2001 to 37% in fiscal 2002, due mainly to the decrease in our total revenue and recording of impairment losses relating to fixed assets and intangible assets.

General and Administrative

General and Administrative (“G&A”) expenses decreased by $1,998 or 32.6% from $6,136 in 2001 to $4,138 primarily due to the implementation of cost cutting measures and a reduction in amortization of intangibles through asset impairment. These cost-cutting measures consisted of (1) reducing headcount and related expenses such as payroll and payroll-related costs such as bonuses which has been accomplished through layoffs, reduction in management, shortened work weeks, salary reductions and periodical closures (2) reducing plant capacity by moving to smaller facilities and (4) reducing insurance, travel and other miscellaneous expenses. As a percentage of sales, G&A increased by 4.1% from 17% in 2001 to 21.1% in 2002 due to certain expenses that are fixed and thus do not decrease even though sales decreased.

Selling Expenses

Selling expenses decreased by $678 or 35.5% from $1,911 in 2001 to $1,233 in 2002 due to reduction in volume-related expenses such as commissions. As a percentage of sales, selling expenses increased 1% from 5.3% in 2001 to 6.3% in 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 2001 to $331 in 2002. This increase is 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 resist 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 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) 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 intangibles, used in its manufacturing segment (within the United States); and $1,117 of fixed assets, consisting of machinery and equipment, furniture and fixtures, leasehold improvements, and demonstration (54% pertaining to the Southeast Asia Testing Segment and 46% pertaining to the United States Manufacturing Segment). The Testing Segment incurred a one time impairment 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 HBI (Hybrid Burn-in) and SBI (Smart Burn-in).

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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 2001 to income of $33 in 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 $3,887 from a loss of $197 in fiscal 2001 to a loss of $4,084 in fiscal 2002, due to eroding margins and a decrease in sales of the Artic Temperature Controlled Chunks, Semi-automatic Wet Process Benches and the COBIS-II Burn-in Board. The Manufacturing Segment also included a one-time impairment charge of $1,028 to write down intangible assets and fixed assets based on the estimated undiscounted cash flow generated through where these intangible assets and fixed assets were used.

Income from operations in our Testing Services Segment increased by $28 or 3.8% from $743 in fiscal 2001 to $771 in 2002 due to the rapid implementation of cost saving measures during a decline in demand. The Testing segment also incurred a one-time impairment charge of $534 related to a write-down in fixed assets due to a new generation of burn-in technology.

Income (loss) from operations in our distribution segment decreased by $445 from income of $390 in 2001 to a loss of $55 in 2002 due to the tough and competitive environment, which reduced our sales and changed our product mix.

Corporate operating income was reduced from operating income of $136 in 2001 to an operating loss of $241 in 2002 due to the amount of overhead being charged on lower sales volumes.

Interest Expenses

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

Other Income (Expense)

Other income decreased by $419 or 55.5% from $755 in 2001 to $336 in 2002. Other income during 2002 was made up mainly of (1) interest income of $182, (2) rental income of $90, (3) royalties from sale of RTE product line of $25 and, (4) miscellaneous income for $39. The decrease in other income from 2001 to 2002 was due to lower interest, lower rental income and the Company’s reversal of an accrual of $295 during 2001 for the settlement of a civil action.

Income Tax

Current income tax expense for fiscal 2002 was approximately $33, a decrease of $393 compared to the current income tax expense of $426 for fiscal 2001. The decrease in current income tax expense for fiscal 2002 was due mainly to the net loss of $3,611 generated in the U.S. compared to the net loss of $154 in fiscal 2001 in the U.S., representing a significant increase in the loss of $3,457. Minor operating losses of $102 were incurred in Thailand and Ireland for fiscal 2002, whereas the income before income taxes of $283 in Singapore and Malaysia was offset by the loss of $50 resulting in income before income taxes of $131 generated by operations conducted in foreign countries, compared to the income before income taxes of $1,782 for fiscal 2001, representing a decrease of $1,651, a significant decrease in income before income taxes generated in foreign countries.

Regarding the deferred portion of income tax expense, we incurred a deferred income tax expense of $20 in Singapore for fiscal 2002 compared to a deferred income tax benefit of $71 available in Singapore for fiscal 2001. The deferred income tax expense in 2002 arose as a result of the timing differences related to the recording of depreciation expense for book and tax purposes.

Because the net loss incurred in the U.S did not offset the taxable income in Singapore and Malaysia, we still incurred a total income tax expense of $53 for fiscal 2002 including changes in deferred income tax assets and liabilities, comparing to a total income tax expense of $355 for fiscal 2001, a decrease of $302 or 85.1%. Due to the fact that we paid foreign income taxes and had a full valuation against our deferred tax assets, our effective tax rate decreased from 22% for fiscal 2001 to approximately 2% for fiscal 2002.

Net Loss

16

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% change. 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% change. 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.

Year Ended June 30, 2001 (“2001”) Compared to Year Ended June 30, 2000 (“2000”)

Sales

Net sales increased by $9,190 or 34.1% from $26,943 in 2000 to $36,133 in 2001, as we were able to stay ahead of the current downturn in the semiconductor cycle due to our established customer base.

Geographically, net sales in the United States decreased $3,179 or 22.0% from $14,432 in 2000 to $11,253 in 2001. The decrease was attributable to Wet Benches that were exported to Europe. Net sales for the Southeast Asia operations increased $8,368 or 82.7% from $10,121 in 2000 to $18,489 in 2001 due mainly to higher manufacturing and testing volumes. Net sales for Europe increased $3,868 or 133.7% from $2,893 in 2000 to $6,761 in 2001. The increase was due primarily (1) to an increase of $321 in testing and (2) an increase in Wet Bench exports.

The Manufacturing Segment sales increased $5,107 or 38.2% from $13,361 in 2000 to $18,468 in 2001 due to higher volumes of the Artic Temperature Controlled Chucks and the COBIS-II Burn-in Board Systems. The Testing Services Segment sales increased $3,389 or 43.9% from $7,723 in 2000 to $11,112 in 2001 due to the introduction of the new HBI technology and the achievement of the QS 9000 certification. The Distribution Segment increased $694 or 11.8% from $5,859 in 2000 to $6,553 in 2001 due to a slight increase in demand for test equipment and a change in selling emphasis between existing products.

Cost of Sales

The Company’s cost of sales varies depending on the mix of sector and geographic sales and increased $6,902 or 34.8% from $19,847 in 2000 to $26,749 in 2001. As a percentage of sales, it increased 0.3% from 73.7% in 2000 to 74% in 2001. The cost as a percentage of sales remained rather constant despite the significant increase in sales and change in the product mix. Various other factors including unit volumes, yield issues associated with production at factories, ramp of new technologies, variations in inventory valuation and mix of shipments will continue to affect the amount of cost of sales and the variability of gross margin percentages in future quarters.

Operating Expenses

Operating expenses increased by $2,526 or 43.7% from $5,786 in 2000 to $8,312 in 2001. This increase is consistent with the increase in our total revenue for fiscal 2001. As a percentage of revenue, our operating expense increased by 1.5% from 21.5% in 2000 to 23.0% in 2001 due to the increase on our total revenue in fiscal 2001.

General and Administrative

General and Administrative (“G&A”) expenses increased by $1,566 or 34.3% from $4,570 in 2000 to $6,136 primarily due to increases in headcount and related expenses such as payroll and payroll related costs, bonuses, travel and entertainment, insurance and increased depreciation on office equipment and vehicles. Other increases included the plant expansion in Southeast Asia and the relocation expenses related thereto. As a percentage of sales, G&A was consistent at 17% for fiscal 2001 and fiscal 2000.

Selling Expenses

Selling expenses increased by $91 or 5% from $1,820 in 2000 to $1,911 in 2001 due to increases in commissions along with the increase in our total revenue. As a percentage of total revenue, selling expenses decreased 1.5% from 6.8% in 2000 to 5.3% in 2001 due to the increase in total revenue.

Research and Development

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Research and Development increased by $11 or 5.4% from $205 in fiscal 2000 to $216 in fiscal 2001. This increase is primarily due to increased payroll and payroll related costs and supplies offset by decreased travel to Original Equipment Manufacturers (OEM’s).

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

The net loss on disposal of property, plant and equipment during fiscal 2001 was $49 and related to the sale of one of the Company’s Singapore facilities. The loss was immaterial compared to the net gain of $809 realized in fiscal 2000.

Income from Operations

For segment reporting purposes, income from operations from the manufacturing segment decreased by $315 or 266.9% from a profit of $118 in fiscal 2000 to a loss of $197 in fiscal 2001 due to a change in the product mix.

Income from operations in the testing services segment decreased $460 or 38.2% from $1,203 in fiscal 2000 to $743 in fiscal 2001 due to the closure of the testing facility in Kuala Lumpur.

Income from operations in the distribution segment increased by $712 or 221.1% from a loss of $322 in fiscal 2000 to income of $390 in fiscal 2001 due to a change in sales mix from lower margin equipment to more profitable new technology products.

Corporate operating profit was reduced by $175 or 56.3% from $311 in fiscal 2000 to $136 in fiscal 2001 due to reductions in overhead charged through to divisions and subsidiaries in order to afford divisions and all subsidiaries greater control locally.

Interest Expense

Interest expense increased in 2001 by $107 or 116.3%, from $92 in fiscal 2000 to $199 in fiscal 2001, due to increases in lines of credit, capitalized leases and financing activity for capital expenditures.

Other Income

Other income has increased by $448 or 145.9% from $307 in fiscal 2000 to $755 in fiscal 2001 primarily due to costs in 2000 associated with the closure of our Kuala Lumpur facility. The Company also reversed an accrued liability of $295 during 2001 that was held for the settlement of the civil action, in which the Company was named along with 106 other defendants that alleged that they may have caused or contributed to soil and underground contamination, which was subsequently dismissed

Income Tax

Current income tax expense for fiscal 2001 was approximately $426, an increase of $458 compared to the current income tax benefit of $32 for fiscal 2000. The increase in current income tax expense for fiscal 2001 was due mainly to the income before income taxes of $1,782 generated by foreign operations, compared to income before income tax of $1,254 generated by foreign operations in fiscal 2000 , representing a significant increase in the income before income taxes generated by foreign operations of $528. The operating loss of $154 incurred in the U.S. for fiscal 2001 decreased from income before income taxes of $271 in fiscal 2000 in the U.S., resulting in a decrease in income of $425, a significant decrease in income generated in the U.S.

Regarding the deferred portion of income tax expense, we reported a deferred income tax benefit of $71 in Singapore for fiscal 2001 compared to a deferred income tax expense of $138 incurred in Singapore for fiscal 2000 because the deferred income tax liability in Singapore was over-accrued in fiscal 2000 and reversed in fiscal 2001.

Because the net loss incurred in the U.S did not offset the taxable income in foreign countries, we still incurred a total income tax expense of $355 for fiscal 2001 including changes in deferred income tax assets and liabilities, comparing to a total income tax expense of $106 for fiscal 2000, an increase in the expense of $249 or 235%. Due to the fact that we paid foreign income taxes and had a full valuation against our deferred tax assets, our effective tax rate increased from 7% for fiscal 2000 to approximately 22% for fiscal 2001.

Net Income

As a result of all of the factors analyzed above, the net income attributable to common shares for fiscal 2001 was approximately $1,163, which represented an increase of $129 from net income of approximately $1,034 attributable to common shares for fiscal 2000, an 11% change. Consequently, basic earnings per share of $0.37 for fiscal 2000 increased to $0.40 for fiscal 2001, which represented an increase of $0.03, a 8% change. Diluted earnings per share increased by $0.03 or 8% from $0.36 per share for fiscal 2000 to $0.39 per share in fiscal 2001.

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Liquidity and Capital Resources

We had working capital (defined as current assets minus current liabilities) of approximately $6,919 as of June 30, 2002, which represented a decrease of approximately $983 compared with working capital of $7,902 as of June 30, 2001, a 12.4% decrease. Historically, the Company had positive working capital for the eight fiscal years prior to the fiscal year ended June 30, 2002. We believe that the Company has the ability to maintain positive working capital in the near future.

The Company’s credit rating provides ready and ample access to funds in global capital markets. At June 30, 2002, the Company had available short-term lines of credit totaling $7,668 of which $6,441 was unused.

Entity with Facility	Type of facility	Interest Rates		Credit Limit		Unused portion
Trio-Tech Malaysia	Line of Credit	6.80	%	$	40	$	40
Trio-Tech Kuala Lumpur	Line of Credit	6.80	%		50		50
Trio-Tech Singapore	Line of Credit	7.00	%		2,548		2,407
Trio-Tech Singapore	Line of Credit	6.25	%		4,530		3,819
Trio-Tech International	Line of Credit	5.75	%		500		125
				$	7,668	$	6,441

The above line of credit ($500 used and $125 unused at June 30, 2002) available to Trio-Tech International in the U.S. expired in December 2001. We applied to renew this line of credit with a commercial bank and the bank is still in the document processing stage as of the reporting date.

Even though the Company suffered a significant net loss in the fiscal year ended June 30, 2002, 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 $5.9 million (of which approximately $4.7 million is available immediately); (2) we had backlog of $7.9 million as of June 30, 2002 (current backlog of $6,617 at September 6, 2002); (3) our accounts receivable turnover ratio is approximately 4.6 times per year (78 days of sales in accounts receivable) in fiscal 2002; (4) our financing facilities available as of June 30, 2002 were approximately $6.3 million upon which we are able to draw at any time; and (5) our efforts in fiscal 2002 to cut costs and expenses were effective. These cost cutting measures consisted of (1) reducing headcount and related expenses such as payroll and payroll-related costs such as bonuses which has been accomplished through layoffs, reduction in management, shortened work weeks, salary reductions and periodical closures (2) reducing plant capacity by moving to smaller facilities and (4) reducing insurance, travel and other miscellaneous expenses. We anticipate that the costs and expenses in fiscal 2003 will be lower than those in fiscal 2002 and, accordingly, cash disbursement needs should be lower also. However, we cannot provide any assurance that costs and expenses in fiscal 2003 or thereafter will not be higher than those in fiscal 2002.

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
	Total		Less than 1 Year		1 - 3 Years		4 - 5 Years		After 5 Years
Lines of Credit	$	1,227	$	1,227	$	0	$	0	$	0
Notes Payable		1,426		785		567		65		9
Capital Leases		784		429		262		93		0
Operating leases		1,092		622		466		4		0
	$	4,529	$	3,063	$	1,295	$	162	$	9

Fiscal 2002

Net cash used in operating activities during the year ended June 30, 2002 was $1,718 compared to net cash of $5,062 provided by operating activities during the year ended June 30, 2001. The downward change of approximately $6,780 or 133.9% reflects the fact that our operating cash flow was significantly affected by the economic downturn and decrease in capital investment demand from semiconductor industry. The $1,718 of net cash used in operating activities in fiscal 2002 was primarily attributable to net loss of $3,547 and a decrease of $2,396 in accounts payable and accrued liabilities, respectively. The cash flow from our accounts receivable in fiscal 2002 was only $275 compared to $1,611 in fiscal 2001, a change of 82.9% reflecting

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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, the larger item for one-time non-cash item was attributed to impairment loss of $1,631, which did not incur in fiscal 2001.

Net cash provided by investing activities during fiscal 2002 was $1,106 compared to $7,202 used by investing activities in fiscal 2001. The change was a swing of $8,308, or 115.4%. The net cash provided by investing activities was due mainly to the decrease of $2,002 in short-term deposits, compared to the increase in short-term deposits of $2,541 in fiscal 2001, reflecting a swing of $4,543 or a change of 178.8%. In fiscal 2002, our capital expenditures were $919 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 $3,532 or by 79.4% as a result of economic downturn. We increased our investment in marketable securities by $120 in fiscal 2002 comparing to $0 in fiscal 2001.

Net cash provided by financing activities during fiscal 2002 was $371, reflecting a decrease of $1,145 or 75.5% compared to $1,516 provided by financing activities during fiscal 2001. The cash outflow in financing activities included $1,976 of payments on lines of credit, long-term debts and capital lease obligations which was offset by a cash inflow of $2,347 from additional borrowing under lines of credit and long term debt. In fiscal 2001 proceeds under long-term debt borrowings and the lines of credit were $2,858 compared to payments on lines of credit, long-term debt and capitalized lease obligations of $1,698 Additionally, $356 was received in fiscal 2001 from the issuance of common stock, of which there were no common stock issuances in fiscal 2002.

Approximately $3,090 of cash deposits are held in the Company’s 55% owned Malaysian subsidiary. $488 of this cash is denominated in the currency of Malaysia. On September 1, 1998, the government of Malaysia announced its intention to limit the movement of certain cash balances denominated in Malaysian currency. The $488 is currently available for movement, as the Central Bank of Malaysia has authorized $1,800 for movement and the Company has previously utilized $358 of this authorization. During 2001, limits on the movement of cash balances were removed. 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.

Fiscal 2001

Net cash provided by operating activities during the year ended June 30, 2001 was $5,062 compared to $1,164 provided by operating activities during the year ended June 30, 2000. The change was an increase of $3,898 and 334.9%. The cash flow provide by operating activities in fiscal 2001 was mainly related to net income of $1,163 and a decrease of $1,611 in accounts receivables, $804 in inventories and $683 in other receivables, respectively. Comparing to cash decrease of $1,677 in fiscal 2000, cash collection of $1,611 in accounts receivable in fiscal 2001 was much better reflecting a swing of $3,288 or a change of 196.1%. We built up our inventory in fiscal 2000 by an increase of $943 in the ending inventory whereas we reduced our inventory in fiscal 2001 by $804, reflecting a swing of $1,747 or a change of 185.3%. We reduced our other receivable by $683 in fiscal 2001 comparing to an increase of $563 in other receivable in fiscal 2000, reflecting a swing of $1,246 or a change of 213.7%. However, the largest cash outflow in fiscal 2001 was $1,096 in accounts receivable and accrued liabilities comparing to an increase of $2,437 in accounts payable and accrued liabilities in fiscal 2000, which indicated that we paid all accounts payable and liabilities in fiscal 2001 by using the ample cash inflow analyzed above.

Net cash used in investing activities during fiscal 2001 was $7,202 compared to $549 used in investing activities during fiscal 2000. The net cash used in investing activities was due mainly to two reasons: (1) capital expenditures of $4,451 which included a Power Sub-station and enhanced air conditioning for its new HBI Test facilities in Southeast Asia coupled with investment in the European Operations Test Equipment and U.S. Operations for Manufacturing equipment, and (2) an increase in cash deposits of $2,541. Comparing to capital expenditure of $1,327 in fiscal 2000, the capital expenditure of $4,451 in fiscal 2001, representing an increase of $3,124 or 235.4%, reflected the belief that management anticipated the increase in demand from semiconductor industry. The increase in short-term deposit in fiscal 2001 just presented that we had extra cash in hand, which would be used in fiscal 2002.

Net cash provided by financing activities during fiscal 2001 was $1,516 compared to $138 used in financing activities in fiscal 2000. The change was a swing of $1,654 or 1,198.6%. The cash outflow from financing activities included $1,698 of payments on lines of credit, long-term debts and capital lease obligations, and was offset by a cash inflow of $2,858 from additional borrowing under lines of credit and long-term debts compared to payments of $677 in fiscal 2000 and additional borrowings of $126 in fiscal 2001. In addition, certain option holders exercised their options in fiscal 2001. Consequently, we received proceeds of $356 in fiscal 2001 comparing to proceeds of $413 in fiscal 2000. Issuing shares of common stock provided us with additional cash sources in both fiscal 2001 and 2000.

Recently Issued Accounting Pronouncements

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In July 2001, the Financial Standards Board (“FASB”) issued Financial Accounting Standards (“SFAS”), No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 141 replaces Accounting Principles Board Opinion No. 16 (APB No. 16), “Business Combination,” and eliminates pooling-of-interests accounting prospectively. It also provides guidance on purchase accounting related to the recognition of intangible assets and accounting for negative goodwill. SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Under SFAS No. 142, goodwill will be tested annually and whenever events or circumstances occur indicating that goodwill might be impaired. Upon adoption of SFAS No. 142, amortization of goodwill recorded for business combinations consummated prior to July 1, 2001 ceased, and intangible assets acquired prior to July 1, 2001 that did not meet the criteria for recognition under SFAS No. 141 were required to be reclassified to goodwill. Companies are required to adopt SFAS No. 142 for fiscal years beginning after December 15, 2001. In connection with the adoption of SFAS No. 142, companies will be required to perform a transitional goodwill impairment assessment. The Company adopted SFAS No. 142 for the fiscal year commencing July 1, 2002. During the year ended June 30, 2002, the Company wrote off all of the outstanding balance of approximately $393 of goodwill. During the years ended June 30, 2002 and 2001, goodwill amortization totaled approximately $NIL and $34.

In June 2001, Financial Accounting Standard Board issued Statement of Financial Accounting Standards, No. 143, “Accounting for Asset Retirement Obligations,” (“SFAS No. 143”). FAS No. 143 is effective for fiscal years beginning after June 15, 2002. 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 Company believes the adoption of this statement will have no material impact on its consolidated financial statements.

In August 2001, Financial Accounting Standard Board issued Statement of Financial Accounting Standards, No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” (“SFAS No. 144”). SFAS No. 144 supersedes SFAS No. 121 and is effective for fiscal years beginning after December 15, 2001. SFAS No. 144 provides a single, comprehensive accounting model for impairment and disposal of long-lived assets and discontinued operations. The Company does not expect that the adoption of SFAS No. 144 will have significant impact on its consolidated financial statements.

In April 2002, Financial Accounting Standard Board issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. This statement eliminates the current requirement that gains and losses on debt extinguishment must be classified as extraordinary items in the income statement. Instead, such gains and losses will be classified as extraordinary items only if they are deemed to be unusual and infrequent, in accordance with the current GAAP criteria for extraordinary classification. In addition, SFAS 145 eliminates an inconsistency in lease accounting by requiring that modifications of capital leases that result in reclassification as operating leases be accounted for consistent with sale-leaseback accounting rules. The statement also contains other nonsubstantive corrections to authoritative accounting literature. The changes related to debt extinguishment will be effective for fiscal years beginning after May 15, 2002, and the changes related to lease accounting will be effective for transactions occurring after May 15, 2002. Adoption of this standard will not have any immediate effect on the Company’s consolidated financial statements. The Company will apply this guidance prospectively.

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

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, 2002 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

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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, factors 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;

• 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. Although through the fourth quarter of 2001 we had reported profits for twenty-eight consecutive quarters, we were not be able to sustain such profitability for the past four quarters.

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 for 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.

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Our dependence on international sales involves significant risk

Sales and services to customers outside the United States accounted for approximately 59%, 69% and 46% of our net revenues for fiscal 2002, 2001 and 2000, respectively. Approximately 51%, 51% and 38% of our net revenues in fiscal 2002, 2001 and 2000, 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 that region. 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 Ringitt and other currencies. Consequently, a portion of our costs, revenues and operating margins may be affected by fluctuations in exchange rates, primarily between the U.S. Dollar and such foreign currencies. We are also affected by fluctuations in exchange rates if there is a mismatch between our foreign currency denominated assets and liabilities. Foreign currency adjustments resulted in an increase of $262 to shareholders’ equity for fiscal 2002, a decrease of $358 to shareholders’ equity for fiscal 2001 and a decrease of $50 to shareholders’ equity for fiscal 2000.

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.

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 Arctic temperature test systems. Additionally, in 2001, we were granted patents for certain aspects of our new ranges of Arctic temperature chucks. However, generally we do not rely on patent or trade secret protection for our products or technology. Competitors may be able to copy and replicate our technology and designs. 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.

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 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 2002, 2001, and 2000, sales of equipment and services to our two largest customers accounted for approximately 55%, 40%, and 28%, 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 certain of our products and services

If our competitors or we sell testing equipment to semiconductor manufacturers and assemblers, the likelihood that they will make further purchases of such equipment, or that they will contract for testing services by our laboratories, may be affected. 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, 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.

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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 acquisition

We are not dependent on 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. We cannot assure you 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.

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, and 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 36.05% 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 and warrants

As of June 30, 2002, there were 656,165 shares of common stock reserved for issuance upon exercise of outstanding stock options and warrants. The outstanding options and warrants are currently exercisable at exercise prices ranging from $2.72 to $8.00 per share. We anticipate that the trading price of our common stock at the time of exercise of any such outstanding options or warrants will exceed the exercise price under those options and warrants. 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

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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 5.75% to 7.25% per annum. As of June 30, 2002, the outstanding principal balance on these loans was approximately $2,653. These interest rates are subject to change and we cannot predict any increase or decrease in rates, if any.

Period ending June 30,	2003			2004			2005			2006			2007			There -after			Total		Fair Value
Loans:
denominated by Singapore Dollars	$	541		$	191														$	732	$	732
Interest rate (fixed)		6.50	%		6.50	%
denominated by Singapore Dollars	$	203		$	188		$	125											$	516	$	516
Interest rate (variable)		7.25	%		7.25	%		7.25	%
denominated Irish Pound	$	14		$	20		$	22		$	24		$	17		$	2		$	99	$	99
Interest rate (variable)		6.94	%		6.94	%		6.94	%		6.94	%		6.94	%		6.94	%
denominated Irish Pound	$	27		$	10		$	11		$	12		$	12		$	7		$	79	$	79
Interest rate (variable)		6.44	%		6.44	%		6.44	%		6.44	%		6.44	%		6.44	%
Line of credit:
denominated by Singapore Dollars	$	141																	$	141	$	141
Interest rate (variable)		7.00	%
denominated by Singapore Dollars	$	711																	$	711	$	711
Interest rate (variable)		6.25	%
denominated by U.S. Dollars	$	375																	$	375	$	375
Interest rate (variable)		5.75	%
Total	$	2,012		$	409		$	158		$	36		$	29		$	9		$	2,653	$	2,653

Foreign Currency Exchange Rate Risk.    Although the majority of our sales, cost of manufacturing and marketing are transacted in U.S. dollars, significant portions of our revenues are denominated in Singapore, Malaysian and other currencies. Consequently, a portion of our costs, revenues and operating margins may be affected by fluctuations in exchange rates, primarily between the U.S. Dollar and such foreign currencies. We are also affected by fluctuations in exchange rates if there is a mismatch between our foreign currency denominated assets and liabilities. Foreign currency adjustments resulted in an increase of $262 to shareholders’ equity for fiscal 2002, a decrease of $358 to shareholders’ equity for fiscal 2001 and $50 to shareholders’ equity for fiscal 2000.

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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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 28 of this Annual Report on Form 10-K.

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

None

PART III

The information required by Items 10 through 13 of Part III of this Form 10-K 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 2002.

ITEM 14—CONTROLS AND PROCEDURES

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 28 hereof:

1.  Independent Auditors’ Report

2.  Consolidated Balance Sheets

3.  Consolidated Statements of Income and Comprehensive Income

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 did not file any reports on Form 8-K during the quarter ended June 30, 2002.

(c)  EXHIBITS:

Number	Description
3.1	Articles of Incorporation, as currently in effect. [Previously filed as Exhibit 3.1 to the Annual Report on Form 10-K for June 30, 1988.]
3.2	Bylaws, as currently in effect. [Previously filed as Exhibit 3.2 to the Annual Report on Form 10-K for June 30, 1988.]
4.1	Form of Redeemable Warrants to purchase Common Stock issued in May 2000.*
10.1	Credit Facility Letter dated January 4, 2001, between Trio-Tech International Pte. Ltd. and Standard Chartered Bank. [Previously filed as Exhibit 10.9 to the Annual Report on Form 10-K for June 30, 2001.]
10.2	1998 Stock Option Plan. [Previously filed as Exhibit 1 to the Company’s proxy statement filed under regulation 14A on October 27, 1997]. **
10.3	Directors Stock Option Plan. [Previously filed as Exhibit 2 to the Company’s proxy statement filed under regulation 14A on October 27, 1997]. **

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10.4	Real Estate Lease dated February 1, 1999 between Martinvale Development Company and Universal Systems. [Previously filed as Exhibit 10.12 to the Annual Report on Form 10-K for June 30, 1999.]
10.5	Real Estate Lease dated February 16, 2001 between JTC Corporation and Trio-Tech International PTE for Block 1004 Toa Payoh North #07-01/07 and #03-01/03. [Previously filed as Exhibit 10.13 to the 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 for Block 1004 Toa Payoh North #03-16/17. [Previously filed as Exhibit 10.14 to the 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 for Block 1004 Toa Payoh North #01-08/15. [Previously filed as Exhibit 10.15 to the 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 for Block 1004 Toa Payoh North #01-16/7. [Previously filed as Exhibit 10.16 to the 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 for Block 1008 Toa Payoh North #03-01/06. [Previously filed as Exhibit 10.17 to the 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 for Block 1008 Toa Payoh North #03-09/15 and #03-16/18. [Previously filed as Exhibit 10.18 to the 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 for Block 1008 Toa Payoh North #01-08. [Previously filed as 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 for Block 1008 Toa Payoh North #07-17/18. [Previously filed as Exhibit 10.20 to the 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 for Block 1008 Toa Payoh North #07-01. [Previously filed as Exhibit 10.21 to the 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 for Block 1004 Toa Payoh North #02-11/15. *
10.15	Real Estate Lease dated June 10, 2002 between JTC Corporation and Trio-Tech International PTE for Block 1004 Toa Payoh North #02-08/10. *
10.16	Credit Facility Letter dated November 16, 2001 and June 24, 2002, between Trio-Tech International Pte. Ltd. and Standard Chartered Bank. *
10.17	Credit Facility Letter dated July 24, 2002, between Trio-Tech International Pte. Ltd. and OCBC Bank. *
10.18	Credit Facility Letter dated May 21, 2002, between Trio-Tech (M) Sdn Bhd and HSBC Bank Malaysia Berhad *
10.19	Credit Facility Letter dated January 22, 2002, between Trio-Tech (KL) Sdn Bhd and Public Bank Berhad. *
10.20	Real Estate Lease dated November 8, 2001 between Elbar Investments, L.P. and Trio-Tech International for 14731 Califa Street, Van Nuys *
10.21	Amendment to the Directors Stock Option Plan * **
21.1	Subsidiaries of the Registrant (100% owned by the Registrant except as otherwise stated):
	Trio-Tech International Pte. Ltd., a Singapore Corporation

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	Trio-Tech Test Services Pte. Ltd., a Singapore Corporation
	Trio-Tech Reliability Services, a California Corporation
	Express Test Corporation, A California Corporation
	European Electronic Test Center, Ltd., A Cayman Islands Corporation
	Trio-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 Corporation
	Trio-Tech Thailand, a Thailand Corporation
	Prestal Enterprise Sdn. Bhd., a Malaysia Corporation (76% owned by the Registrant)
	KTS Incorporated, dba Universal Systems, a California Corporation
23.1	Independent Auditors’ Consent (BDO International) *
23.2	Independent Auditors’ Consent (Deloitte & Touche LLP) *
99.1	Section 906 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 INTERNATIONAL
By:	/s/    VICTOR H.M. TING
	VICTOR H.M. TING         Vice President and         Chief Executive Officer

Date:  October 8, 2002

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	October 8, 2002
/S/    S. W. YONG         S. W. Yong	Director Chief Executive Officer and President	October 8, 2002
/S/    VICTOR H.M. TING         Victor H.M. Ting	Vice President, Chief Financial Officer and Principal Accounting Officer	October 8, 2002
/S/    JASON T. ADELMAN         Jason T. Adelman	Director	October 8, 2002
/S/    RICHARD M. HOROWITZ         Richard M. Horowitz	Director	October 8, 2002
/S/    WILLIAM L. SLOVER         William L. Slover	Director	October 8, 2002

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CERTIFICATIONS

I, S. W. Yong, certify that:

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

2.  Based on my knowledge, this annual 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 annual report; and

3.  Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report.

Date:  October 8, 2002

S/    S. W. YONG        

S. W. Yong,        

Chief Executive Officer        

and President        

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

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

2.  Based on my knowledge, this annual 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 annual report; and

3.  Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report.

Date:  October 8, 2002

S/    VICTOR H.M. TING        

Victor H.M. Ting, Chief Financial Officer

(Principal Financial Officer)

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INDEPENDENT AUDITORS’ REPORT

Board of Directors

Trio-Tech International

Van Nuys, California:

We have audited the accompanying consolidated balance sheet of Trio-Tech International and subsidiaries (the “Company”) as of June 30, 2002, and the related consolidated statements of operations and comprehensive (loss) income, shareholders’ equity, and cash flows for the year ended June 30, 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 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 provides 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, 2002, and the results of their operations and their cash flows for the year ended June 30, 2002 in conformity with accounting principles generally accepted in the United States of America.

BDO INTERNATIONAL

/s/    BDO INTERNATIONAL      

Singapore

September 6, 2002

31

INDEPENDENT AUDITORS’ REPORT

Board of Directors

Trio-Tech International

Van Nuys, California:

We have audited the accompanying consolidated balance sheet of Trio-Tech International and subsidiaries (the “Company”) as of June 30, 2001 and the related consolidated statements of operations and comprehensive (loss) income, shareholders’ equity, and cash flows for the years ended June 30, 2001 and 2000. 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 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, 2001 and the results of their operations and their cash flows the years ended June 30, 2001 and 2000 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

32

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	Note	June 30, 2002			June 30, 2001
ASSETS
CURRENT ASSETS:
Cash	2	$	1,128		$	1,149
Short term deposits	2		5,906			7,693
Investments in marketable securities	2		554
Trade accounts receivable, less allowance for doubtful accounts of $174 in 2002 and 2001 respectively	2		4,148			4,432
Other receivables			527			162
Inventories, less provision for obsolete stock of $716 and $205 in 2002 and 2001 respectively	3		1,014			1,918
Prepaid expenses and other current assets			128			147
Total current assets			13,405			15,501
PROPERTY, PLANT AND EQUIPMENT, Net	4		5,593			7,534
INTANGIBLE ASSETS	5		—			526
OTHER ASSETS			77			589
TOTAL ASSETS		$	19,075		$	24,150
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Lines of credit	6	$	1,227			—
Accounts payable			1,717			2,646
Accrued expenses	7		2,315			3,689
Income taxes payable	9		106			168
Current portion of notes payable	8		785			698
Current portion of capitalized leases	10		336			398
Total current liabilities			6,486			7,599
NOTES PAYABLE, net of current portion	8		641			1,265
CAPITALIZED LEASES, net of current portion	10		345			480
DEFERRED INCOME TAXES	9		669			649
TOTAL LIABILITIES			8,141			9,993
COMMITMENTS AND CONTINGENCIES	10
MINORITY INTEREST			2,316			2,548
SHAREHOLDERS’ EQUITY:
Common stock; no par value, authorized, 15,000,000 shares; issued and outstanding 2,927,551 shares and 2,927,596 (2002 and 2001) respectively	11		9,423			9,423
Additional paid-in capital	11		270
(Accumulated deficit ) retained earnings	11		(658	)		2,889
Accumulated other comprehensive income-marketable securities	11		24
Accumulated other comprehensive loss-foreign currency	11		(441	)		(703	)
Total shareholders’ equity			8,618			11,609
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	19,075		$	24,150

See notes to consolidated financial statements.

33

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(In thousands, except per share amounts)

	Year Ended
	June 30, 2002			June 30, 2001			June 30, 2000
NET SALES	$	19,617		$	36,133		$	26,943
COST OF SALES		15,926			26,749			19,847
GROSS PROFIT		3,691			9,384			7,096
OPERATING EXPENSES:
General and administrative		4,138			6,136			4,570
Selling		1,233			1,911			1,820
Research and development		331			216			205
Impairment loss		1,631			—			—
(Gain)/loss on disposal of property, plant and equipment		(33	)		49			(809	)
Total		7,300			8,312			5,786
(LOSS) INCOME FROM OPERATIONS		(3,609	)		1,072			1,310
OTHER INCOME (EXPENSE)
Interest expense		(207	)		(199	)		(92	)
Other income (expense)		336			755			307
Total		129			556			215
(LOSS) INCOME BEFORE INCOME TAXES AND MINORITY INTEREST		(3,480	)		1,628			1,525
INCOME TAXES		53			355			106
(LOSS) INCOME BEFORE MINORITY INTEREST		(3,533	)		1,273			1,419
MINORITY INTEREST		14			110			385
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHARES		(3,547	)		1,163			1,034
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gain on investment		24			—			—
Foreign currency translation adjustment		262			(358	)		(50	)
COMPREHENSIVE (LOSS) INCOME	$	(3,261	)	$	805		$	984
(LOSS) EARNINGS PER SHARE
Basic	$	(1.21	)	$	0.40		$	0.37
Diluted	$	(1.21	)	$	0.39		$	0.36
WEIGHTED AVERAGE NUMBER OF COMMON AND POTENTIAL COMMON SHARES OUTSTANDING
Basic		2,928			2,884			2,759
Diluted		2,928			3,006			2,895

See notes to consolidated financial statements.

34

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (IN THOUSANDS)

	Common Stock
	Number of Shares	Amount		Additional Paid-in Capital		Retained Earnings/ Accumulated Deficit			Accumulated Other Comprehensive (Loss)			Total
Balance, July 1, 1999	2,741	$	8,654	$	0	$	692		$	(295	)	$	9,051
Exercise of stock options	21		45										45
Exercise of stock warrants	74		368										368
Net income							1,034						1,034
Translation adjustment										(50	)		(50	)
Balance, June 30, 2000	2,836		9,067		0		1,726			(345	)		10,448
Exercise of stock warrants	43		214										214
Exercise of stock options	48		142										142
Net income							1,163						1,163
Translation adjustment										(358	)		(358	)
Balance, June 30, 2001	2,927		9,423		0		2,889			(703	)		11,609
Stock compensation due to issuance of options					24								24
Other					246								246
Net loss							(3,547	)					(3,547	)
Unrealized gain on investment (net of tax)										24			24
Translation adjustment										262			262
Balance, June 30, 2002	2,927	$	9,423	$	270	$	(658	)	$	(417	)	$	8,618

See notes to consolidated financial statements.

35

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

	Year Ended
	June 30, 2002		June 30, 2001		June 30, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(3,547)	$	1,163	$	1,034
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		1,705		1,632		1,523
Bad debt expense		66		60		34
Inventory provision		511		34		(14)
Impairment loss		1,631		—		—
Stock compensation		24		—		—
(Gain)/loss on sale of property and equipment		(33)		49		(809)
Deferred income taxes		20		(71)		138
Minority interest, net		14		(53)		210
Changes in operating assets and liabilities:
Accounts receivable, net		275		1,611		(1,677)
Other receivables		(310)		683		(563)
Inventories		409		804		(943)
Prepaid expenses and other current assets		(25)		320		(377)
Accounts payable and accrued expenses		(2,396)		(1,096)		2,437
Income taxes payable		(62)		(74)		171
Net cash (used in) provided by operating activities		(1,718)		5,062		1,164
CASH FLOWS FROM INVESTING ACTIVITIES:
Short term deposits		2,002		(2,541)		(653)
Marketable securities		(120)
Capital expenditures		(919)		(4,451)		(1,327)
Other assets		80		(263)		(363)
Proceeds from sale of property and equipment		63		53		1,794
Net cash provided by (used in) investing activities		1,106		(7,202)		(549)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on lines of credit		(783)		(806)		(246)
Borrowings under lines of credit		2,275		565		126
Principal payments of debt and capitalized leases		(1,193)		(892)		(431)
Proceeds from long-term debt		72		2,293
Issuance of common stock		—		356		413
Net cash provided by (used in) financing activities		371		1,516		(138)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		220		(183)		(114)
NET (DECREASE)/INCREASE IN CASH		(21)		(807)		363
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		1,149		1,956		1,593
CASH AND CASH EQUIVALENTS, END OF YEAR	$	1,128	$	1,149	$	1,956
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	$	200	$	184	$	126
Income taxes	$	95	$	134	$	161

See notes to consolidated financial statements.

36

TRIO-TECH INTERNATIONAL AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2002, 2001 and 2000

(In thousands, except per share and share amounts)

1.    ORGANIZATION AND BASIS OF PRESENTATION

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

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

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 intercompany 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 2002, 2001 and 2000 are a 52, 53 and 52-week reporting period, respectively. For simplicity purposes the Company refers to its fiscal year end as June 30.

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

Cash and Cash Equivalents—The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash.

Short Term Deposits—Short Term deposits consist of bank balances and amounts invested in interest earning instruments having maturity of 3 to12 months. Approximately $3,090 of cash deposits are held in the Company’s 55% owned Malaysian subsidiary. $488 of this cash is denominated in the currency of Malaysia. On September 1, 1998, the government of Malaysia announced its intention to limit the movement of certain cash balances denominated in

37

Malaysian currency. The $488 is currently available for movement, as the Central Bank of Malaysia has authorized $1,800 for movement and the Company has previously utilized $358 of this authorization. During 2001, limits on the movement of cash balances were removed. 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.

Investments in Marketable Securities—Investments in marketable securities are accounted for under Statements 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, 2002, 2001, and 2000 the Company recognized comprehensive income (net of tax) of $24, $0 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 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 the year ended June 30, 2002, the Company recorded an impairment loss against the carrying value of fixed assets in the amount of $1,117.

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—Goodwill, which represents the excess of purchase price over the fair value of net-assets acquired, is 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). The Company assesses the recoverability of intangible assets by determining whether the amortization over the remaining life can be recovered through undiscounted future net cash flows of the acquired assets. 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.

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 is comprised of net income 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.

38

Impairment of Long-lived Assets—Statement of the Financial Accounting Standards No. 121 “Accounting for the Impairment of Long-Lived Assets and for the Long-Lived Assets to be disposed of” (SFAS No. 121) establishes guidelines regarding when impairment losses on long-lived assets, which include plant and equipment, and certain identifiable intangible assets, should be recognized and how impairment losses should be measured. The Company reviews such assets for possible impairment whenever circumstances indicate that the carrying amount may not be recoverable. To the extent the carrying value of the asset exceeds its fair value, which is determined using undiscounted cash flows, a write down to fair value is made. In the fiscal year ended June 30, 2002, the Company recorded an impairment loss of approximately $1,631 based on its examination of future 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 $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 incurred a one-time impairment 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 HBI (Hybrid Burn-in) and SBI (Smart Burn-in). Impairment of $519 was recorded primarily as a result of the decline in the technology industry in the United States.

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 $9,267 at June 30, 2002.

Research and Development Costs—The Company incurred research and development costs of $331 in 2002, $216 in 2001 and $205 in 2000 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.

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.

39

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

	Year Ended
	June 30, 2002			June 30, 2001		June 30, 2000
Net (loss) income used to compute basic and diluted earnings per share	$	(3,301	)	$	1,163	$	1,034
Weighted average number of common shares outstanding—basic		2,928,000			2,884,000		2,759,000
Dilutive effect of stock options and warrants					122,000		136,000
Number of shares used to compute earnings per share—diluted		2,928,000			3,006,000		2,895,000

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

Stock options and warrants to purchase 612,165 shares at prices ranging from $3.67 to $8.00 per share were outstanding during 2001 and were excluded in the computation of diluted EPS because their effect would have been antidilutive. Stock options and warrants to purchase 36,870 shares at a price of $8.00 per share were outstanding during 2000 and were excluded in the computation of diluted EPS because their effect would have been antidilutive.

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 subject to change with the market interest rates.

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 its credit policies do not result in significant adverse risk and historically has not experienced significant credit related losses.

	Year Ended
	June 30,			June 30,			June 30,
	2002			2001			2000
Beginning	$	174		$	221		$	219
Additions charged to cost and expenses		66			60			34
Recovered		(25	)		(85	)		(32	)
Actual write-offs		(41	)		(22	)		—
Ending	$	174		$	174		$	221

Recently Issued Accounting Pronouncements—In July 2001, the Financial Standards Board (“FASB”) issued Financial Accounting Standards (“SFAS”), No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 141 replaces Accounting Principles Board Opinion No. 16 (APB No. 16), “Business Combination,” and eliminates pooling-of-interests accounting prospectively. It also provides guidance on purchase accounting related to the recognition of intangible assets and accounting for negative goodwill. SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-only approach. Under SFAS No. 142, goodwill will be tested annually and whenever events or circumstances occur indicating that goodwill might be impaired. Upon adoption of SFAS No. 142, amortization of goodwill recorded for business combinations consummated prior to July 1, 2001 ceased, and intangible assets acquired prior to July 1, 2001 that did not meet the criteria for recognition under SFAS No. 141 were required to be reclassified to goodwill. Companies are required to adopt SFAS No. 142 for fiscal years beginning after December 15, 2001. In connection with the adoption of SFAS No. 142, companies will be

40

required to perform a transitional goodwill impairment assessment. The Company adopted SFAS No. 142 for the fiscal year commencing July 1, 2002. During the year ended June 30, 2002, the Company wrote off all of the outstanding balance of approximately $393 of goodwill. During the years ended June 30, 2002 and 2001, goodwill amortization totaled approximately $NIL and $34.

In June 2001, Financial Accounting Standard Board issued Statement of Financial Accounting Standards, No. 143, “Accounting for Asset Retirement Obligations,” (“SFAS No. 143”). FAS No. 143 is effective for fiscal years beginning after June 15, 2002. 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 Company believes the adoption of this statement will have no material impact on its financial statements.

In August 2001, Financial Accounting Standard Board issued Statement of Financial Accounting Standards, No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” (“SFAS No. 144”). SFAS No. 144 supersedes SFAS No. 121 and is effective for fiscal years beginning after December 15, 2001. SFAS No. 144 provides a single, comprehensive accounting model for impairment and disposal of long-lived assets and discontinued operations. The Company does not expect that the adoption of SFAS No. 144 will have significant impact on its consolidated financial statements.

In April 2002, Financial Accounting Standard Board issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. This statement eliminates the current requirement that gains and losses on debt extinguishment must be classified as extraordinary items in the income statement. Instead, such gains and losses will be classified as extraordinary items only if they are deemed to be unusual and infrequent, in accordance with the current GAAP criteria for extraordinary classification. In addition, SFAS 145 eliminates an inconsistency in lease accounting by requiring that modifications of capital leases that result in reclassification as operating leases be accounted for consistent with sale-leaseback accounting rules. The statement also contains other nonsubstantive corrections to authoritative accounting literature. The changes related to debt extinguishment will be effective for fiscal years beginning after May 15, 2002, and the changes related to lease accounting will be effective for transactions occurring after May 15, 2002. Adoption of this standard will not have any immediate effect on the Company’s consolidated financial statements. The Company will apply this guidance prospectively.

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

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, 2002			June 30, 2001
Raw materials	$	938		$	1,369
Work in progress		287			327
Finished goods		505			427
Less: provision for obsolete inventory		(716	)		(205	)
	$	1,014		$	1,918

4.    PROPERTY, PLANT AND EQUIPMENT

41

Property, plant and equipment consist of the following:

	Useful Life in years	June 30, 2002		June 30, 2001
Building and improvements	3-20	$	847	$	1,059
Leasehold improvements	3-27		1,677		2,524
Machinery and equipment	3-7		4,872		7,113
Furniture and fixtures	3-5		367		766
Equipment under capital leases	3-5		1,807		2,003
			9,570		13,465
Less:
Accumulated depreciation and amortization			3,402		4,825
Accumulated amortization on equipment under capital leases			575		1,106
		$	5,593	$	7,534

Depreciation and amortization expense during fiscal year ended June 30, 2002, 2001 and 2000 was $1,685, $1,548 and $1,443 respectively.

5.    INTANGIBLE ASSETS

Intangible assets consist of the following:

	June 30, 2002		June 30, 2001
Goodwill, net of accumulated amortization of  $0 (2002) and $730 (2001)	$	—	$	393
Patent net of accumulated amortization of $0 (2002) and $86 (2001)		—		133
Total	$	0	$	526

42

6.    LINES OF CREDIT

	June 30, 2002		June 30, 2001
Revolving line of credit denominated by Singapore dollars payable to a commercial bank for working capital purposes, to borrow up to $2,548 with an interest rate at the bank's prime rate (5.75% at June 30, 2002) plus 1.25%. The line of credit is renewable in June 2003 and is collateralized by a registered charge over fixed deposits, corporate gaurantee andregistered fixed charge over power sub-station.	$	141	$
Revolving line of credit denominated by Singapore dollars payable to a commercial bank for working capital purposes, to borrow up to $4,530 with an interest rate at the bank's prime rate (5.25% at June 30, 2002) plus 1.00%. The line of credit is renewable annually at fiscal year end and collaterilized by Trio-Tech International Pte. Ltd. accounts receivable.		711
Revolving line of credit denominated by United States dollars, payable to a commercial bank for working capital purposes, to borrow up to $500 with an interest rate at the bank's prime rate (4.0% at June 30, 2002) plus 1.75%. The line of credit expired in December 2001 and the bank is still under the document processing stage at September 6, 2002. The line is collateralized by Trio-Tech Intenternational accounts receivable and inventories.		375
Lines of credit	$	1,227	$	0

The lines of credit have various financial covenants. The Company was in compliance with all such debt covenants at June 30, 2002.

7.    ACCRUED EXPENSES

Accrued expenses consist of the following:

	June 30, 2002		June 30, 2001
Payroll and related	$	948	$	1,751
Commissions		205		338
Customer deposits		41		215
Legal and audit		235		150
Sales tax		311		27
Utilities		95		473
Warranty		305		262
Other accrued expenses		175		473
Total	$	2,315	$	3,689

43

8.    NOTES PAYABLE

Notes payable consist of the following:

	June 30, 2,002		June 30, 2,001
Note 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 of $43 through September 2003, collateralized by the relevant equipment.	$	732		1,186
Note 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% and 6.25% at June 30, 2002 and 2001) plus 1.5% per annum, payable in monthly installments of $17 through February 2005, collateralized by the relevant equipment, a fixed deposit and a corporate guarantee.		516		601
Mortgage note payable denominated by Irish Pounds to the Industrial Credit Corporation for purchasing a building, maturing in July 2007, bearing interest at the bank's prime rate (3.44% and 4.88% at June 30, 2002 and 2001) plus 3.5% per annum, payable in monthly installments of $2.2 through July 2007, collateralized by the relevant building.		99		112
Mortgage 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 prime rate (3.44% and 4.88% at June 30, 2002 and 2001) plus 3% per annum, payable in monthly installments of $1.2 through May 2008, collateralized by the relevant building.		79		64
		1,426		1,963
Less current portion		785		698
Notes payable	$	641	$	1,265

Maturities of notes payable as of June 30, 2002 are as follows

Year Ending June 30,	Amount
2003	$  785
2004	409
2005	158
2006	36
2007	29
Thereafter	9
	$1,426

44

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, 2002, 2001 and 2000 are as follows:

	June 30, 2002			June 30, 2001			June 30, 2000
Domestic	$	(3,611	)	$	(154	)	$	271
Foreign		131			1,782			1,254
	$	(3,480	)	$	1,628		$	1,525

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

	June 30, 2002		June 30, 2001			June 30, 2000
Current:
Federal	$	—	$	1		$	73
State		3
Foreign		30		425			(105	)
		33		426			(32	)
Deferred:
Federal
State
Foreign		20		(71	)		138
	$	53	$	355		$	106

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

	June 30, 2002		June 30, 2001		June 30, 2000
Statutory federal tax rate	(34	)%	34	%	34	%
State taxes, net of federal benefit	(6	)	6		6
Foreign tax rate reduction	13		(8	)	(12	)
Other	2		4		4
Change in valuation allowance	27		(14	)	(25	)
Effective rate	2	%	22	%	7	%

The Company has net operating loss carry forwards of approximately $4.3 million for federal income tax purposes (which will expire through 2021) and $1.7 million for state income tax purposes (which will expire through 2005) at June 30, 2002. 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.

45

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

	June 30, 2002			June 30, 2001
Deferred tax assets:
Net operating loss carry forward	$	1,375		$	809
Fixed asset impairment		206
Inventory valuation		174
Depreciation		14			6
Provision for bad debts		5			61
Reserve for obsolescence		65			72
Accrued vacation		15
Accrued expenses		46
Other					17
Total deferred tax assets		1,900			965
Deferred tax liabilities:
Depreciation		432			415
Other		237			234
Total deferred income tax liabilities		669			649
Subtotal		1,231			316
Valuation allowance		(1,900	)		(965	)
Net deferred tax liability	$	(669	)	$	(649	)

The valuation allowance increased (decreased) by $935, ($234) and ($391) in fiscal 2002, 2001 and 2000 respectively.

10.    COMMITMENTS AND CONTINGENCIES

The Company leases certain of its facilities and equipment under long-term agreements expiring at various dates through 2007. 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 noncancellable operating leases as of June 30, 2002 are as follows:

Year ending June 30,	Capital Leases			Rental Commitments
2003	$	429		$	622
2004		163			362
2005		99			104
2006		48			4
2007		45			—
Thereafter		—			—
Total future minimum lease payments		784		$	1,092
Less amount representing interest		(103	)
Present value of net minimum lease payments		681
Less current portion of capital lease obligations		(336	)
Long-term obligations under capital leases	$	345

Total rental expense on all operating leases, both cancelable and noncancellable, amounted to $705 in 2002, $765 in 2001 and $543 in 2000. Total rental income under sublease agreements was $90 in 2002, $118 in 2001, and $169 in 2000.

On August 24, 1995, the Company was named in a civil action brought against 106 defendants alleging that they may have caused or contributed to soil and groundwater contamination that required the defendants to pay $3,750 to the Federal Environmental Protection Agency to settle. On April 6, 2001, the Company was dismissed from this action.

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.

46

11. TRANSACTIONS IN SHAREHOLDERS’ EQUITY

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 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 will vest 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.

Approximately $3,090 of cash deposits are held in the Company’s 55% owned Malaysian subsidiary. $488 of this cash is denominated in the currency of Malaysia. On September 1, 1998, the government of Malaysia announced its intention to limit the movement of certain cash balances denominated in Malaysian currency. The $488 is currently available for movement, as the Central Bank of Malaysia has authorized $1,800 for movement and the Company has previously utilized $358 of this authorization. During 2001, limits on the movement of cash balances were removed. 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.

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.

Fiscal 2000

The option holders exercised 21,000 options with an exercise price of $2.17 per share. Consequently, the Company issued 21,000 shares of common stock in exchange for proceeds of $45.

The warrant holders exercised 73,740 warrants at $5.00 per share. Consequently the Company issued 73,740 shares of common stock in exchange for proceeds of $368.

On December 7, 1999, the Company changed the exercise price of 45,000 options granted on September 30, 1997 from original exercise price of $7.00 per share to $5.00 per share. The Company adopted FASB Interpretation No. 44 (FIN 44) and accounted for this repricing transaction by using variable accounting method. No additional stock compensation expense was recognized for the fiscal year ended June 30, 2000.

12. STOCK OPTIONS AND WARRANTS

The Company has three stock option plans under which officers, directors and employees are eligible to receive options to purchase shares of the Company’s common stock. One of these plans, adopted in 1988, has been terminated except for outstanding options, which are still exercisable, to purchase an aggregate of 27,000 shares. Additionally, the Board of Directors issues non-qualified options at their discretion at a price not less than fair market value at the date of grant.

47

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 250,500 options have been granted as of June 30, 2002.

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 six individuals) receive options to purchase the Company’s common stock at a price of 85% of the fair market value of the underlying shares on the date of grant. Each option granted under Plan shall have a five-year 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 197,000 options have been granted as of June 30, 2002.

The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its Plans. Accordingly, stock compensation based on the intrinsic value of these options granted Had compensation cost for the Company’s Plan been determined based upon the fair value at the grant date for awards under this Plan consistent with the methodology prescribed under SFAS No. 123, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

	Year Ended
	June 30, 2002			June 30, 2001		June 30, 2000
Net (Loss) Income:
As Reported	$	(3,547	)	$	1,163	$	1,034
Pro forma	$	(3,733	)	$	822	$	699
Basic Earnings per Share:
As Reported	$	(1.21	)	$	0.40	$	0.37
Pro forma	$	(1.27	)	$	0.29	$	0.25
Diluted Earnings per Share:
As Reported	$	(1.21	)	$	0.39	$	0.36
Pro forma	$	(1.27	)	$	0.27	$	0.24

The fair value of options granted during fiscal 2002, 2001, and 2000 was $0.94, $5.40, and $4.95 per share and aggregate $186, $341, and $335 for total options granted by using the Black-Scholes option pricing model with the assumptions listed below:

	Year Ended
	June 30, 2002		June 30, 2001		June 30, 2000
Volatility	45.9	%	56.7	%	52.6	%
Risk free interest rate	3.16	%	4.97	%	6.18	%
Expected life (years)	2.17		2.54		2.93

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

48

	Number of Options		Weighted Average Price		Number of Options Exercisable	Weighted Average Exercise Price
Outstanding Options
Beginning outstanding options at June 30, 1999	269,813		$	4.77
Granted	134,000			4.95
Exercised	(20,625	)		2.17
Total outstanding options at June 30, 2000	383,188			5.89	307,938	$	4.32
Granted	86,000			5.40
Exercised	(47,688	)		3.33
Canceled	(13,500	)		5.41
Total outstanding options at June 30, 2001	408,000			4.83	334,000		4.66
Granted	166,000			2.84
Exercised	0
Canceled	(99,500	)		4.93
Total outstanding options at June 30, 2002	474,500		$	4.27	347,750	$	4.36
	Number of Warrants		Weighted Average Price		Number of Warrants Exercisable	Weighted Average Exercise Price
Outstanding Warrants
Beginning outstanding warrants at June 30, 1999	536,980		$	7.15
Granted	36,870			8.00
Exercised	(73,740	)		5.00
Total outstanding warrants at June 30, 2000	500,110			5.20	500,110	$	5.20
Granted	9,915			8.00
Exercised	(42,830	)		5.00
Canceled	(233,030	)		5.00
Total outstanding warrants at June 30, 2001	234,165			5.56	234,165		5.56
Canceled	(52,500	)		4.81
Total outstanding warrants at June 30, 2002	181,665		$	5.77	181,665	$	5.77

The following tables summarize information concerning outstanding and exercisable options and warrants at June 30, 2002:

June 30, 2002
Options Outstanding				Options Exercisable
Grant Price Range	Number Outstanding	Remaining Contractual Life	Weighted Average Exercise Price	Number Exercisable	Exercise Price
$2.70–$3.69	263,000	1.76	$3.2874	176,000	$3.3306
$3.70–$4.69	14,500	0.03	4.3400	14,500	4.3400
$4.70–$5.69	126,000	0.57	5.3270	104,000	5.2600
$5.70–$6.69	71,000	0.30	6.0000	53,250	6.0000
	474,500	2.65	$4.2700	347,750	$4.3600

June 30, 2002
Warrants Outstanding				Warrants Exercisable
Grant Price Range	Number Outstanding	Remaining Contractual Life	Weighted Average Exercise Price	Number Exercisable	Exercise Price
$4.70–$5.69	134,880	0.34	$5.0000	134,880	$5.0000
$5.70–$8.00	46,785	0.34	8.0000	46,785	8.0000
	181,665	0.34	$5.7700	181,665	$5.7700

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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,	2002		2001		2000
Sales
—Customer A	24	%	15	%	15	%
—Customer B	31	%	25	%	13	%
Accounts Receivable
—Customer A	24	%	16	%
—Customer B	24	%	25	%

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, 2002:

Entity with Facility	Type of facility	Interest Rates		Credit Limit		Unused portion
Trio-Tech Malaysia	Line of Credit	6.80	%	$	40	$	40
Trio-Tech Kuala Lumpur	Line of Credit	6.80	%		50		50
Trio-Tech Singapore	Line of Credit	7.00	%		2,548		2,407
Trio-Tech Singapore	Line of Credit	6.25	%		4,530		3,819
Trio-Tech International	Line of Credit	5.75	%		500		125
				$	7,668	$	6,441

15.    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 intersegment sales are sales from the manufacturing segment to the testing and distribution segment. Total intersegment sales were $38 in 2002, $370 in 2001, and $503 in 2000. Corporate assets mainly consist of cash and prepaid expenses. Corporate expenses mainly consist of salaries, insurance, professional expenses and directors’ fees.

50

Business Segment Information:

		Net Sales		Operating Income (loss)			Assets		Depr. and Amort.		Capital Expenditures
Manufacturing	2002	$	5,022	$	(4,084	)	$	2,932	$	410	$	217
	2001	$	18,468	$	(197	)	$	6,898	$	488	$	163
	2000	$	13,361	$	118		$	9,020	$	450	$	436
Testing Services	2002		8,942		771			15,654		1,187		474
	2001		11,112		743			16,563		1,051		3,806
	2000		7,723		1,203			11,553		924		654
Distribution	2002		5,653		(55	)		399		104		18
	2001		6,553		390			350		92		478
	2000		5,859		(322	)		2,081		149		237
Corporate and	2002				(241	)		90		4		15
unallocated	2001				136			339		1		4
	2000				311			58
Total Company	2002	$	19,617	$	(3,609	)	$	19,075	$	1,705	$	724
	2001	$	36,133	$	1,072		$	24,150	$	1,632	$	4,451
	2000	$	26,943	$	1,310		$	22,712	$	1,523	$	1,327

Geographic Area Information:

		United States			Europe		Southeast Asia	Eliminations and Other		Total Company
Net sales to	2002	$	8,083		1,479		10,093	(38	)	$	19,617
customers	2001	$	11,253		6,761		18,489	(370	)	$	36,133
	2000	$	14,432		2,893		10,121	(503	)	$	26,943
Operating	2002	$	(3,428	)	(153	)	213	(241	)	$	(3,609	)
Income (loss)	2001	$	(484	)	64		1,356	136		$	1,072
	2000	$	132		27		840	311		$	1,310
Property, plant	2002	$	160		463		5,010	(40	)	$	5,593
and equipment—	2001	$	869		424		6,241			$	7,534
net	2000	$	996		259		3,242			$	4,497

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16.    QUARTERLY FINANCIAL DATA (UNAUDITED)

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

Year ended June 30, 2001	Sep. 30,			Dec. 31,			Mar. 31,			Jun. 30,
Net Sales	$	9,158		$	12,035		$	7,877		$	7,063
Expenses		8,875			11,133			7,797			6,700
Income before income taxes and minority interest		283			902			80			363
Income taxes		(68	)		(211	)		35			(111	)
Income before minority interest		215			691			115			252
Minority interest		(31	)		(53	)		(2	)		(24	)
Net Income	$	184		$	638		$	113		$	228
Net income per share:
Basic	$	0.06		$	0.22		$	0.04		$	0.08
Diluted	$	0.06		$	0.22		$	0.04		$	0.08

Year ended June 30, 2002	Sep. 30,			Dec. 31,			Mar. 31,			Jun. 30,
Net Sales	$	5,136		$	4,812		$	4,657		$	5,012
Expenses		5,509			5,616			4,973			6,999
Loss before income taxes and minority interest		(373	)		(804	)		(316	)		(1,987	)
Income taxes		(42	)		(26	)		—			15
Loss 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	)
Diluted	$	(0.14	)	$	(0.27	)	$	(0.11	)	$	(0.70	)

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EX-4.1

                                   EXHIBIT 4.1

                             TRIO-TECH INTERNATIONAL
                   REDEEMABLE WARRANT TO PURCHASE COMMON STOCK

         This certifies that _________________________________ is entitled at
any time up to and including 5:00 p.m. California Time on the date 36 months
following the date of the Final Closing (the "Expiration Date") to purchase from
Trio-Tech International, a California corporation (hereinafter called the
"Company), fully paid and nonassessable shares of Common Stock of the Company at
a price ("Exercise Price") of Seven Dollars ($7.00) per share upon the surrender
hereof to the Company at its office at 355 Parkside Drive, San Fernando,
California 91340, during its usual business hours of any business day, with
simultaneous payment therefor in lawful money of the United States of the
purchase price set forth above.

         This Warrant is one of a series of substantially identical warrants
(the "Warrants") that are being sold and issued as part of Units (the "Units")
consisting of Common Stock and Warrants of the Company in a private placement
offering (the "Offering") being made by Paragon Capital Corporation, as
Placement Agent.

         Exercise of Warrant. Subject to the terms and conditions hereof, this
Warrant may be exercised in whole or in part, at any time during normal business
hours prior to the Expiration Date, by (i) delivery of a written notice, in the
form of the Notice of Exercise attached hereto, of such holder's election to
exercise this Warrant, which notice shall specify the number of shares to be
purchased upon exercise hereof, (ii) payment to the Company of an amount equal
to the Exercise Price multiplied by the number of shares as to which this
Warrant is being exercised (plus any applicable issue or transfer taxes) in cash
or by bank check, and (iii) the surrender of this Warrant at the principal
office of the Company. If this Warrant is being exercised only in part, the
Company shall issue a new Warrant identical in all respects to this Warrant
except that it shall represent the right to purchase the number of shares as to
which this Warrant is not then being exercised. The Company has the right at its
sole discretion to extend the Expiration Date by notice given to all Warrant
holders. No fractional share shall be issued upon the exercise of rights to
purchase hereunder.

         Antidilution Adjustment. If the number of outstanding shares of capital
stock of the Company are increased or decreased by a stock split, reverse stock
split, stock dividend, stock combination, recapitalization or the like, the
Exercise Price and the number of shares purchasable pursuant to this Warrant
shall be adjusted proportionately so that the ratio of (i) the aggregate number
of shares purchasable by exercise of this Warrant to (ii) the total number of
shares outstanding immediately following such stock split, reverse stock split,
stock dividend, stock combination, recapitalization or the like shall remain
unchanged, and the aggregate purchase price of shares issuable pursuant to this
Warrant shall remain unchanged. No adjustment shall be made for any issuances of
shares other than as described above.

         Registration of Underlying Common Stock. Prior to the Company giving a
notice of redemption of Warrants hereunder, the Company must file a Registration
Statement with the Securities and Exchange Commission ("SEC") to register, under
the Securities Act of 1933, as amended (the "Securities Act"), the resale of the
Common Stock issuable upon exercise of this Warrant and all other Warrants, and
such Registration Statement must have become effective. The Company shall
maintain the effectiveness thereof until all shares registered thereunder have
been

                                       1.



disposed of or are freely tradeable under Rule 144(k) under the Securities Act.

         Redemption of Warrants. The Company may call the Warrants for
redemption in whole or in part at a price of $.10 for each share issuable upon
exercise of the Warrants, by written notice specifying the redemption date, such
notice to be mailed at least 30 days before such redemption date, to the Warrant
holders at their respective addresses as they appear on the books of the
Company; provided, however, that such notice may only be mailed within 10 days
following any period of 20 consecutive trading days during which the closing bid
price for the Common Stock on the Nasdaq Small Cap Market (or such other trading
market as the Common Stock may then be trading) has equalled or exceeded $9.00
per share on each such day (subject to adjustment for any stock dividends, stock
splits, reverse stock splits or similar events that shall have occurred between
the date of issuance of this Warrant and the date of such notice). If the
Company elects to redeem part, but not all, of the Warrants, then such
redemption shall be made pro rata with respect to all of the Warrants. This
Warrant may be exercised at any time prior to the close of business on the date
prior to the redemption date, and if not then exercised will terminate and be
cancelled.

         Restrictions on Transfer of Warrants. Until such time as the resale of
the Common Stock issuable upon exercise of this Warrant has become registered
under the Securities Act, this Warrant may not be sold or transferred to any
Person except to other Persons who are registered owners of the Warrants. The
term "Person" means an individual or a corporation, partnership, trust, limited
liability company, incorporated or unincorporated association, joint venture, or
other entity of any kind.

         Notice of Adjustment of Exercise Price and Number of Warrant Shares.
Upon any adjustment of the Exercise Price of this Warrant or the number of
shares issuable hereunder, the Company shall give notice thereof to the
registered holder of this Warrant which shall set forth the new Exercise Price
in effect after such adjustment and the increase or decrease, if any, in the
number of shares issuable upon exercise of this Warrant. All such notices shall
set forth in reasonable detail the method of calculation and the facts upon
which such calculation is based.

         Notice of Certain Events. In case at any time (a) there shall be any
reorganization or reclassification of the capital stock of the Company or
consolidation or merger of the Company with, or sale of all or substantially all
of its assets to, another corporation or entity; or (b) there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give notice to the
registered holder of this Warrant of the date on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place. Such notice shall be given not less than 20 days
prior to the action in question.

         No Rights as Shareholder. Prior to the exercise of this Warrant the
holder of this Warrant shall not be entitled to any rights of a shareholder of
the Company, including, without limitation, the right to vote, to receive
dividends or other distributions, or to receive notice of meetings of
shareholders.

         Lost, Stolen, Mutilated or Destroyed Warrants. If this Warrant is lost,
stolen, mutilated or destroyed, the Company shall, on such terms as to indemnity
or otherwise as it may in its discretion impose (which in the case of a
mutilated Warrant shall include the surrender thereof), issue a new Warrant of
like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.

         Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the Person
or holder hereof against which

                                       2.



enforcement of such change, waiver, discharge or termination is sought. The
headings in this Warrant are for purposes of reference only and shall not limit
or otherwise affect the meaning hereof.

         IN WITNESS WHEREOF, the Company has executed this Warrant as of the day
and year first above written.

Dated:  __________________                   TRIO-TECH INTERNATIONAL





                                             By_________________________________
                                                  A. Charles Wilson, Chairman

                                       3.



                               NOTICE OF EXERCISE

                     TO BE EXECUTED BY THE REGISTERED HOLDER
                        IN ORDER TO EXERCISE THIS WARRANT

                             TRIO-TECH INTERNATIONAL


         The undersigned hereby exercises the right to purchase
_____________________________ shares of Common Stock covered by this Warrant
according to the conditions thereof and herewith makes payment of
$______________________________, the aggregate Exercise Price of such shares of
Common Stock.


                                        [Print or type name(s) of Holder. If
                                        Holder is a trust, partnership,
                                        corporation or other entity, print name
                                        and title of authorized signatory.]





                                        Signature(s) of Holder or authorized
                                        signatory

                                       4.

EX-10.14

Exhibit 10.14 Real Estate Lease dated February 26, 2002 between JTC Corporation
and Trio-Tech International PTE for Block 1004 Toa Payoh North #02-11/15.

                                                                     LOS ANGELES
                                                                     SAN JOSE

TRIO-TECH                                                            DUBLIN
PRIVATE LIMITED
                                                                     SINGAPORE
                                                                     PENANG
                                                                     BANGKOK

28 February 2002                                  BOTH BY HAND AND FAX

Marketing Department
JTC Corporation
The JTC Summit
8 Jurong Town Hall Road
Singapore 609434

Attn: Mr Ang Yee Kwan                      T

ACCEPTANCE  OF OFFER OF TENANCY  FOR THE  PREMISES  AT BLK 1004 TOA PAYOH  NORTH
#02-11 TO #02-15 TOA PAYOH  INDUSTRIAL  ESTATE SINGAPORE 318995

1        We refer to your letter of offer dated 26 February 2002 for the Tenancy
         and hereby confirm our acceptance of all the covenants, terms and
         conditions stipulated therein.

2.       We are currently on GIRO/opting to pay by GIRD, thus, we enclose
         herewith a cheque for the amount of S$5,713.93 and a Banker's/Insurance
         Guarantee for the amount of S$10,673.57 (2 months' rental and service
         charge) as security deposit as confirmation of our acceptance.

3.       We also enclose herewith a duly completed GIRO authorisation form.

/s/: Lee Siew Kuan
___________________________

Mrs Lee Siew Kuan
Directors of Logistics

For and on behalf of
TRIO-TECH INTERNATIONAL PTE LTD

In the presence of:

/s/: Betty Ang
___________________________

Miss Betty Ang
NRIC No.: S6945849A



JTC(L)3729/199 Temp 4
                                                      DID: 68833427
                                                      FAX: 68855899
                                                      Email: yeekwan@jtc.gov.sg

13 May, 2002

TRIO-TECH INTERNATIONAL PTE LTD
Blk 1004 Toa Payoh North                              JTC Corporation
#02-11 to #02-15                  REGISTERED          The JTC Summit
Singapore 318995                                      8 Jurong Town Hall Road
                                                      Singapore 609434
(Attn: Mrs Lee Siew Kuan)                             telephone ( 65) 5600056
                                                      facsimile (65) 565 5301
                                                      web site www.jtc.gov.sg
Dear Sirs

OFFER OF TENANCY FOR FLATTED FACTORY SPACE AT BLK 1004 TOA PAYOH NORTH #02-11 TO
#02-15 TOA PAYOH INDUSTRIAL ESTATE

1      Thank you for your letter of acceptance dated 28 February 2002, payment
       of $5,713.93 and your Banker's Guarantee. We enclose herewith the
       original stamped letter of acceptance for your retention and safe
       keeping. Kindly address all future correspondence concerning payments of
       rental and other charges direct to our Billing & Collection Department,
       (Customer Services Group, East Zone) at Blk 25 Kallang Avenue #05-01
       Kallang Basin Industrial Estate Singapore 339416.

2.     Please submit your factory layout, air-conditioning system and other
       plans to the Controller, BCU(JTC Corporation) for endorsement in
       accordance with sub-paragraph 1. 11 of our letter of offer of tenancy
       dated 26 February 2002. If you have any enquiries on the preparation and
       submission of your plans for JTC Corporation endorsement, please do not
       hesitate to contact Mr Foo See Keong at Tel No.: 68855169.

       In addition, you are also required to engage registered consultants
       and/or competent contractors to submit your fire protection system plans,
       internal partitioning plans and sprinkler system plans to our BCU(JTC
       Corporation ) for approval in accordance with sub-paragraph 8.06 of our
       said offer. Please contact Mr Chua Tong Liang of Tel No.: 68855160 or Mr
       Jimmy Tan at Tel No.: 68855150 should you need further clarification.

 3.    You are required to engage registered consultants and/or competent
       contractors to submit your electrical plans to our Zone Office, (Customer
       Services Group, East Zone) at Blk 25 Kallang Avenue #05-01 Kallang Basin
       Industrial Estate Singapore 339416 for endorsement and approval. Please
       contact Ms Cham at Tel No.: 68854278 for enquiries and clarification on
       the submission of the electrical plans.

 4.    In addition, please send us a copy each of your Power Supply & PUB
       Agreement Cards in respect of electrical and/or water accounts
       respectively within two weeks from the date hereof.

 5.    We will appreciate it if you could inform us of your latest corresponding
       address, telephone and facsimile numbers (if any).




 6.   Thank you again for your support. If you encounter any problems during
      your tenancy, please do not hesitate to contact myself or Mr Eric Lim
      (Senior Officer Lease Management Officer) at Tel No. 68854197.

 7.   We also attach herewith a copy of the minute dated 6 March 2002 from the
      Chief Engineer, Central Building Plan Unit, Pollution Control Department
      for your strict compliance with the requirements stipulated therein.

 Yours Faithfully,

 /s/: Ang Yee Kwan
 _____________________
 ANG YEE KWAN
 MARKETING DEPARTMENT INDUSTRIAL PARKS DEVELOPMENT GROUP JTC CORPORATION

 Attd 1) Original Stamped letter of acceptance
      2) Letter from PCD



                                                   MINISTRY OF THE ENVIRONMENT
                                                   CENTRAL BUILDING PLAN UNIT
                                                   POLLUTION CONTROL DEPARTMENT

PLEASE QUOTE OUR REF IN YOUR REPLY
Your Ref JTC(L)3729/199 Temp 4

Our Ref : CBPU 95/6/107/ A9317-14376/RO

Date      : 6 Mar 2002

Director
Marketing & Sales Department
Industrial Parks Development Group
JTC Corporation
The JTC Summit
8 Jurong Town Hall Road
Singapore 609434
Attn: Mr. Ang Yee Kwan

PROPOSED ALLOCATION OF PREMISES KNOWN AS SITE A4551(t) AT BLK 1004 TOA PAYOH
NORTH #02-11 TO #02-15 TOA PAYOH INDUSTRIAL ESTATE (AREA: 362.80 SQ M) OF JTC
CORPORATION FLATTED FACTORY BUILDING TO M/S TRIO-TECH INTERNATIONAL PTE LTD FOR
BURN-IN SERVICES ONLY

     Please refer to your minute dated 26 Feb 2002.

2    We have in-principle no objection to the above proposal subject to the
     following conditions

     a)   No manufacturing of PCBs or electroplating of parts shall be carried
          out within the premises.

     b)   Pollution control equipment (e.g. activated carbon filter or
          after-burner etc.) shall be installed to control the fugitive
          fumes/solvent vapour emissions, if any, from the proposed operations.

     c)   The bum-in equipment shall use electricity as proposed.

     d)   Noise abatement measure, if required, shall be provided to ensure that
          the noise level at the factory boundary generated from the production
          activities, does not exceed the noise limits stipulated in the
          Environmental Pollution Control (Boundary Noise limits For Factory
          Premises) Regulations, 1999.

3    Technical details of the pollution control equipment shall be submitted to
     Head, Pollution Control Department for approval prior to installation.
     Pollution control equipment / facilities should be installed prior to
     commencement of operation.

4    The proposed activity will not impose any health & safety buffers or height
     restriction based on the company declaration in the application form (Form
     IA) submitted.

/s/: Tan Kheng Kim
__________________
TAN KHENG KIM
for CHIEF ENGINEER
CENTRAL BUILDING PLAN UNIT
POLLUTION CONTROL DEPARTMENT

cc

M/s Trio-Tech International Pte Ltd                   CE(Inspectorate), PCD
Blk 1008 Toa Payoh North #03-09                       Attn: Mdm. Chua Gek Yong
Singapore 318996



JTC(L)3729/199 Temp 4                                 DID : 68833427
                                                      FAX: 68855899
                                                      Email: yeekwan@jtc.gov.sg

26 February 2002

TRIO-TECH INTERNATIONAL PTE LTD
Blk 1008 Toa Payoh North
#03-09
Singapore 318996
                                                             BY LUM

(Attn: Mrs Lee Siew Kuan)

Dear Sirs

PROPERTY TAX REBATE AND SPECIAL RENTAL PACKAGE IN RESPECT OF THE FACTORY SPACE
KNOWN AS PRIVATE LOT A4551(t) AT BLOCK 1004 TOA PAYOH NORTH #02-11 TO #02-15 TOA
PAYOH INDUSTRIAL ESTATE SINGAPORE 318995

1    We refer to our letter of offer of tenancy for the above mentioned
     premises.

2    In response to the current economic condition, we will reduce, as an off
     budget measure, the security deposit from 3 months to 2 months to ease cash
     flow, credit lines and reduce business costs. This measure is only
     available to companies on GIRO.

3    We are pleased to inform you that subject to your valid acceptance of our
     offer, you will enjoy

          .  a 3 % property tax rebate effective from 1 Jul 2001 to 31 Dec
             2002

          .  a 30 % reduction in the stamp duly payable effective from 13 Oct
             2001 to 31 Dec 2002

4    Our Statement of Account in the Letter of Offer of tenancy has reflected
     the above reduction in property tax, security deposit and the stamp duty.
     Please be informed that the reduction in property tax, security deposit and
     stamp duty do not vary any other terms or stipulations in the Letter of
     Offer and the Memorandum of Tenancy.

5    Please contact me should you need further clarifications.


Yours Faithfully,

/s/: Ang Yee Kwan
____________________
ANG YEE KWAN
MARKETING DEPARTMENT
INDUSTRIAL PARKS DEVELOPMENT GROUP
JTC CORPORATION

Attd




JTC(L)3729/199 Temp 4

                                                       DID: 8833427
26 February 2002                                       FAX: 8855899
                                                       Email: yeekwan@jtc.gov.sg

TRIO-TECH INTERNATIONAL PTE LTD
Blk 1008 Toa Payoh North
#03-09
Singapore 318996

                                     BY LUM

(Attn: Mrs Lee Siew Kuan)

Dear Sirs,

OFFER OF TENANCY FOR FLATTED FACTORY SPACE

1.   We are pleased to offer a tenancy of the Premises subject to the following
     covenants, terms and conditions in this letter and in the annexed
     Memorandum of Tenancy ("the Offer"):

     1.01 Location:

          Pte Lot A4551(t), Blk 1004 ("the Building") Toa Payoh North #02-11 to
          #02-15, Toa Payoh Industrial Estate Singapore 318995 ("the Premises")
          as delineated and edged in red on the plan attached to the Offer.

     1.02 Term of Tenancy:

          3 years ("the Term") with effect from 1 May 2002 ("the Commencement
          Date").

     1.03 Tenancy Agreement:

          Upon due acceptance of the Offer in accordance with clause 2 of this
          letter, you shall have entered into a tenancy agreement with us ("the
          Tenancy") and will be bound by the covenants, terms and conditions
          thereof.

          In the event of any inconsistency or conflict between any covenant,
          term or condition of this letter and the Memorandum of Tenancy, the
          relevant covenant, term or condition in this letter shall prevail.

     1.04 Area:

          Approximately 362.80 square metres (subject to survey).

     1.05 Rent and Service Charge:

          For Discounted Rent:

          (a)       Discounted rate of Dollars $12.61 per square metre per month
                    for so long as the Tenant shall occupy by way of tenancy an
                    aggregate floor area of 1000 square metres in the Building
                    or in the various flatted factories belonging to the
                    Landlord, and



          (b)   Normal rate of Dollars $13.00 per square metre per month in the
                event that the said aggregate floor area occupied is at any time
                reduced to below 1000 square metre (when the discount shall be
                totally withdrawn) with effect from the date of reduction in the
                said aggregate floor,

          ("Rent") to be paid without demand and in advance without deduction on
          the lst day of each month of the year (i.e. 1st of January, February,
          March, etc.). The next payment shall be made on 1 June 2002.

          Service charge:

          $2.10 per square metre per month, ("Service Charge") as charges for
          services rendered by us, payable without demand on the same date and
          in the same manner as the Rent, subject to our revision from time to
          time.

     1.06 Security Deposit/Banker's Guarantee:

          You will at the time of acceptance of the Offer be required to place
          with us a deposit equivalent to 3 months' Rent (at the discounted
          rate) and Service Charge ("Security Deposit") as security against any
          breach of the covenants, terms and conditions in the Tenancy.

          The Security Deposit may be in the form of cash and/or acceptable
          Banker's Guarantee in the form attached (effective from 1 March 2002
          to 31 July 2005 ) and/or such other form of security as we may in our
          absolute discretion permit or accept.

          The Security Deposit must be maintained at the same sum throughout the
          Term and shall be repayable to you without interest or returned to you
          for cancellation, after the termination of the Term (by expiry or
          otherwise) or expiry of the Banker's Guarantee, as the case may be,
          subject to appropriate deductions or payment to us for damages or
          other sums due under the Tenancy.

          If the Rent at the discounted rate is increased to the normal rate or
          Service Charge is increased or any deductions are made from the
          Security Deposit, you are to immediately pay the amount of such
          increase or make good the deductions so that the Security Deposit
          shall at all times be equal to 3 months' Rent and Service Charge.

     1.07 Mode of Payment:

          [Note: You have an existing account with us from which we will deduct
          the aforesaid payments. You are therefore not required to submit a
          duly completed GIRO form as part of the Mode of Acceptance herein
          unless you wish to have a separate GIRO account to meet the aforesaid
          payments.]

     1.08 Permitted Use:



          (a)       Subject to clause 1.12 of this letter, you shall commence
                    full operations within four (4) months of the Commencement
                    Date for the purpose of burn in services only and for no
                    other purpose whatsoever ("the Authorised Use").

          (b)       Thereafter, you shall maintain full and continuous
                    operations and use and occupy the whole of the Premises for
                    the Authorised Use.

          (c)       Subject to clauses (a) and (b) above, you shall use and
                    occupy at least sixty percent (60%) of the gross floor area
                    of the Premises for industrial activities and ancillary
                    stores, and use and occupy the remaining gross floor area,
                    if any, for offices, neutral areas, communal facilities and
                    such other uses as may be approved in writing by us and the
                    relevant governmental and statutory authorities
                    PROVIDED THAT you shall not use and occupy the Premises for
                    the purpose of commercial office and storage unrelated to
                    the Authorised Use.

1.09      Approvals

          The Tenancy is subject to approvals being obtained from the relevant
          government and statutory authorities:

1.10      Possession of Premises:

          (a)       Keys to the Premises will be given to you two (2) months
                    prior to the Commencement Date subject to due acceptance of
                    the Offer ("Possession Date").

          (b)       From the Possession Date until the Commencement Date, you
                    shall be deemed a licensee upon the same terms and
                    conditions in the Tenancy.

          (c)       if you proceed with the Tenancy after the Commencement Date,
                    the licence fee payable from the Possession Date to the
                    Commencement Date shall be waived ("Rent-Free Period").
                    Should you fail to so proceed, you shall:

                    (i)       remove everything installed by you;
                    (ii)      reinstate the Premises to its original state and
                              condition; and
                    (iii)     pay us a sum equal to the prevailing market rent
                              payable for the period from the Possession Date up
                              to the date the installations are removed and
                              reinstatement completed to our satisfaction,

                    without prejudice to any other rights and remedies we may
                    have against you under the Tenancy or at law.

1.11      Preparation and Submission of Plans:


          (a)       No alteration, addition, improvement, erection, installation
                    or interference to or in the Premises or the fixtures and
                    fittings therein is permitted without Building Control Unit
                    [BCU(JTC Corporation)] prior written consent. Your attention
                    is drawn to clauses 2.10 to 2.19 and 2.34 of the Memorandum
                    of Tenancy.

          (b)       You will be required to prepare and submit floor layout
                    plans of your factory and plans of the air-conditioning
                    works in accordance with the terms of the



          tenancy and the `Guide' attached. It is important that you should
          proceed with the preparation and submission of the plans in accordance
          with the procedures set out in the said `Guide'.

     (c)  Should there be alteration of existing automatic fire alarm and
          sprinkler system installation, alteration plans shall be submitted to
          Building Control Unit [BCU(JTC Corporation)] for approval on fire
          safety aspects. - All air-conditioning, fire alarm & sprinkler system
          plans must be signed by a relevant Professional Engineer, registered
          with the Professional Engineers Board of Singapore.

     (d)  Upon due acceptance of the Offer, a copy of the floor and elevation
          plans (transparencies) will be issued to you to assist in the
          preparation of the plans required herein.

     (e)  No work shall commence until the plans have been approved by Building
          Control Unit [BCU(JTC Corporation)].

1.12 Final inspection:

     You shall ensure that final inspection by us of all installations is
     carried out and our approval of the same is obtained before any
     operations in the Premises may be commenced.

1.13 Special Conditions:

     (1)  Normal (Ground & Non-ground) Floor Premises

     You shall comply and ensure compliance with the following restrictions:

          (a)   maximum loading capacity of the goods lifts in the Building; and

          (b)   maximum floor loading capacity of 15.00 kiloNewtons per square
                metre of the Premises on the 2nd storey of the Building PROVIDED
                THAT any such permitted load shall be evenly distributed.

     We shall not be liable for any loss or damage that you may suffer from any
     subsidence or cracking of the ground floor slabs and aprons of the
     Building.

(2)  Option for renewal of tenancy:


          (a)    You may within 3 months before the expiry of the Term make a
                 written request to us for a further term of tenancy.

          (b)    We may grant you a further term of tenancy of the Premises upon
                 mutual terms to be agreed between you and us subject to the
                 following:

                  (i)    there  shall be no breach  of your  obligations  at the
                         time you make your  request-for a further term;




          (ii)      our determination of revised rent, having regard to the
                    market rent of the Premises at the time of granting the
                    further term, shall be final;

          (iii)     we shall have absolute discretion to determine such
                    covenants, terms and conditions, but excluding a covenant
                    for renewal of tenancy; and

          (iv)      there shall not be any breach of your obligations at the
                    expiry of the Term.

2.   Mode of Acceptance:

     The Offer shall lapse if we do not receive the following by 28 February
     2002:-

     .    Duly signed letter of acceptance (in duplicate) of all the covenants,
          terms and conditions in the Tenancy in the form enclosed at the
          Appendix.
          (Please date as required in the Appendix)

     .    Payment of the sum set out in clause 4.

     .    Duly completed GIRO authorization, form.

3.   Please note that payments made prior to your giving us the other items
     listed above may be cleared by and credited by us upon receipt. However, if
     the said other items are not forthcoming from you within the time
     stipulated herein, the Offer shall lapse and there shall be no contract
     between you and us arising hereunder. Any payments received shall then be
     refunded to you without interest and you shall have no claim of whatsoever
     nature against us.



4.    The total amount payable is as follows:



                                                                Amount                  +3 % GST
                                                                               
   Rent at $12.61 per square metre per
   month on 362.80 square metres for the
   period 1 May 2002 to 31 May 2002                $ 4,574.91

   Less:
   3% PROPERTY TAX REBATE                          $   137.25
   -                                               -------------
                                                   $ 4,437.66

   Service Charge at $2.10 per square
   metre per month on 362.80 square
   metres for the period I May 2002 to 31
   May 2002                                        $   761.88       $ 5,199.54          $155.99
                                                   -------------

   Deposit equivalent to three months'
   rent and service charge (or Banker's
   Guarantee provided in accordance with           $16,010.36
   sub-paragraph 1.06 above)

   Less:

   Deposit equivalent to one month's rent          $5,336.79        $10,673.57
                                                   -------------
   and service charge (Off-budget
   Measures)

   Stamp fee payable on Letter of
   Acceptance which will be stamped by                              $   358.40
   JTC Corporation on your behalf

        Sub-Total Payable                                           $16,231.51          $155.99

   Add: GST @ 3%                                                    $   155.99
                                                                    ----------
        Total Payable inclusive of GST                              $16,387.50
                                                                    ==========


5.      Rent-Free Period:

        As the Commencement Date will not be deferred, we advise you to accept
        the Offer as soon as possible and to collect the keys to the Premises
        on the scheduled date in order to maximize the Rent-Free Period
        referred to in clause 1. 10 (c) of this letter.



6.        Variation to the Tenancy

          This letter and the Memorandum of Tenancy constitute the full terms
          and conditions governing the Offer and no terms or representation or
          otherwise, whether express or implied, shall form part of the Offer
          other than what is contained herein. Any variation, modification,
          amendment, deletion, addition or otherwise of the covenants, terms and
          conditions of the Offer shall not be enforceable unless agreed by both
          parties and reduced in writing by us.

7.        Car-Parking Scheme:

          (a)       The car park for Blk 1004 Toa Payoh North is currently
                    managed by:

                    (i)  have to contribute towards all the operational and
                         management costs, if any, incurred in connection with
                         the car parks;

                    (ii) observe and be bound by all the rules and regulations
                         governing the use and operation of the car park. A copy
                         of the Tenant Committee's current rules and regulations
                         is obtainable from the Tenants' Committee. You are
                         required to contact:

                         Wilson Parking (S) Pte Ltd
                         32, Sultan Gate
                         Singapore 198480
                         Ms Jasmine Lim
                         Ms Karin Toh
                         Tel: 2966600
                         Fax:2987814

                         a member of the Committee, on your use of the car park.

         (b)        The Corporation shall not be liable for any loss, damage,
                    injury, liabilities, claim or action you may sustain or
                    suffer in the use of the car park and the tenants shall
                    fully indemnify the Corporation against any loss, claims,
                    penalties, demands, damage arising from the private
                    management and operations of the car park by the tenants.

8.       Application for Approvals, Utilities etc.

         Upon your acceptance of the covenants, terms and conditions of the
         Offer, you are advised to proceed expeditiously as follows:

         8.01     Preliminary Clearance:

                    Co m-ply with the requirements of the Chief Engineer
                    (Central Building Plan Unit), Pollution Control Department
                    and/or other departments pursuant to your application/s for
                    preliminary clearance. (Please note that we have referred
                    your application to the relevant department/s).



         8.02     Discharge of Trade Effluence:

                  Complete the attached Application for Permission to
                  Discharge Trade Effluent into Public Sewer and return the
                  application form direct to the Head, Pollution Control
                  Department, Ministry of Environment, Environment Building, 40
                  Scotts Road. Singapore 228231 (Telephone No. 7327733).

         8.03     Electricity:

                  Engage a registered electrical consultant or competent
                  contractor to submit three sets of electrical single-line
                  diagrams to and in accordance with the requirements of our
                  Property Support Department (PSD), Customer Services Group,
                  JTC East Zone Office for endorsement before an application is
                  made to the Power Supply Pte Ltd to open an account for
                  electricity connection. Please contact our Property Support
                  Department (PSD) at Blk 25 Kallang Avenue #05-01 Kallang Basin
                  Industrial Estate Singapore 339416 direct for their
                  requirements.

         8.04     Water:

                  Submit four copies of sketch plans, prepared by a licensed
                  plumber, showing the section and layout of the plumbing, to
                  our Building Control Unit [BCU (JTC Corporation)] for approval
                  prior to the issue of a letter to Water Conservation
                  Department, Public Utilities Board to assist you in your
                  application for a water sub-meter.

         8.05     Telephone:

                  Apply direct to Singapore Telecommunications Ltd for all
                  connections.

         8.06     Automatic Fire Alarm System (Incorporating Heat Detector)

                  Engage a registered electrical consultant/professional
                  engineer to submit two sets of fire alarm drawings, indicating
                  the existing fixtures if any, the proposed modifications of
                  the fire alarm and the layout of machinery, etc to and in
                  accordance with the requirements of our Building Control Unit
                  [BCU (JTC Corporation)]. Please contact our Building Control
                  Unit [BCU (JTC Corporation)] at The JTC Summit, One-stop
                  Centre (1stt level) 8 Jurong Town Hall Road Singapore 609434
                  direct for further requirements.



         8.07     Factory Inspectorate

                  Complete and return direct to Chief Inspector of Factories the
                  attached form, "Particulars to be submitted by occupiers or
                  Intending Occupiers of Factories".

Yours Faithfully,


/s/: Ang Yee Kwan
_________________

ANG YEE KWAN
MARKETING DEPARTMENT
INDUSTRIAL PARKS DEVELOPMENT GROUP
JTC CORPORATION

Encl

EX-10.15

10.15 Real Estate Lease dated June 10, 2002 between JTC Corporation and
      Trio-Tech International PTE for Block 1004 Toa Payoh North #02-08/10.


JTC(L)3729/199 Temp 5                                  DID: 68833427
                                                       FAX: 68855899
                                                       Email: yeekwan@jtc.gov.sg

10 June 2002

TRIO-TECH INTERNATIONAL PTE LTD
Blk 1008 Toa Payoh North
#03-09
Singapore 318996                                         BY LUM

(Attn: Ms Betty Ang)

Dear Sirs

PROPERTY TAX REBATE AND SPECIAL RENTAL PACKAGE IN RESPECT OF THE FACTORY SPACE
KNOWN AS PRIVATE LOT A4551(u) AT BLOCK 1004 TOA PAYOH NORTH #02-08 TO #02-10 TOA
PAYOH INDUSTRIAL ESTATE SINGAPORE 318995

1    We refer to our letter of offer of tenancy for the above mentioned
     premises.

2    In response to the current economic condition, we will reduce, as an off
     budget measure, the security deposit from 3 months to 2 months to ease cash
     flow, credit lines and reduce business costs. This measure is only
     available to companies on GIRO.

3    We are pleased to inform you that subject to your valid acceptance of our
     offer, you will enjoy

     .    a 3 % property tax rebate effective from 1 Jul 2001 to 31 Dec 2002
     .    a 30 % reduction in the stamp duty payable effective from 13 Oct 2001
          to 31 Dec 2002

     4    Our Statement of Account in the Letter of Offer of tenancy has
          reflected the above reduction in property tax, security deposit and
          the stamp duty. Please be informed that the reduction in property tax,
          security deposit and stamp duty do not vary any other terms or
          stipulations in the Letter of Offer and the Memorandum of Tenancy.

     5    Please contact me should you need further clarifications.


Yours faithfully

/s/: Ang Yee Kwan

ANG YEE KWAN
MARKETING DEPARTMENT
INDUSTRIAL PARKS DEVELOPMENT GROUP
JTC CORPORATION

Attd



JTC(L)3729/199 Temp 5

                                                       DID: 68833427
10 June 2002                                           FAX: 68855899
                                                       Email: yeekwan@jtc.com.sg

TRIO-TECH INTERNATIONAL PTE LTD
Blk 1008 Toa Payoh North
#03-09
Singapore 318996                                       BY LUM

(Attn: Ms Betty Ang)

Dear Sirs,

OFFER OF TENANCY FOR FLATTED FACTORY SPACE

1    We are pleased to offer a tenancy of the Premises subject to the following
     covenants, terms and conditions in this letter and in the annexed
     Memorandum of Tenancy ("the Offer"):

     1.01 Location:

          Pte Lot A4551(u), Blk 1004 ("the Building") Toa Payoh North #02-08 to
          #02-10, Toa Payoh Industrial Estate Singapore 318995 ("the Premises")
          as delineated and edged in red on the plan attached to the Offer.

     1.02 Term of Tenancy:

          3 years ("the Term") with effect from 16 August 2002 ("the
          Commencement Date").

     1.03 Tenancy Agreement:

          Upon due acceptance of the Offer in accordance with clause 2 of this
          letter, you shall have entered into a tenancy agreement with us ("the
          Tenancy") and will be bound by the covenants, terms and conditions
          thereof.

          In the event of any inconsistency or conflict between any covenant,
          term or condition of this letter and the Memorandum of Tenancy, the
          relevant covenant, term or condition in this letter shall prevail.

     1.04 Area:

          Approximately 274.90 square metres (subject to survey).



     1.05 Rent and Service Charge:

          For Discounted Rent:

          (a)  Discounted rate of Dollars $12.61 per square metre per month for
               so long as the Tenant shall occupy by way of tenancy an aggregate
               floor area of 1000 square metres in the Building or in the
               various flatted factories belonging to the Landlord, and

          (b)  Normal rate of Dollars $13.00 per square metre per month in the
               event that the said aggregate floor area occupied is at any time
               reduced to below 1000 square metre (when the discount shall be
               totally withdrawn) with effect from the date of reduction in the
               said aggregate floor,

          ("Rent") to be paid without demand and in advance without deduction on
          the 1st day of each month of the year (i.e. 1st of January, February,
          March, etc.). The next payment shall be made on I September 2002.

          Service charge:

          $2.10 per square metre per month, ("Service Charge") as charges for
          services rendered by us, payable without demand on the same date and
          in the same manner as the Rent, subject to our revision from time to
          time.

     1.06 Security Deposit/Banker's Guarantee:

          You will at the time of acceptance of the Offer be required to place
          with us a deposit equivalent to 3 months' Rent (at the discounted
          rate) and Service Charge ("Security Deposit") as security against any
          breach of the covenants, terms and conditions in the Tenancy.

          The Security Deposit may be in the form of cash and/or acceptable
          Banker's Guarantee in the form attached (effective from 16 June 2002
          to 15 November 2005) and/or such other form of security as we may in
          our absolute discretion permit or accept.

          The Security Deposit must be maintained at the same sum throughout the
          Term and shall be repayable to you without interest or returned to you
          for cancellation, after the termination of the Term (by expiry or
          otherwise) or expiry of the Banker's Guarantee, as the case may be,
          subject to appropriate deductions or payment to us for damages or
          other sums due under the Tenancy.



          If the Rent at the discounted rate is increased to the normal rate or
          Service Charge is increased or any deductions are made from the
          Security Deposit, you are to immediately pay the amount of such
          increase or make good the deductions so that the Security Deposit
          shall at all times be equal to 3 months' Rent and Service Charge.

     1.07 Mode of Payment:

          [Note: You have an existing account with us from which we will deduct
          the aforesaid payments. You are therefore not required to submit a
          duly completed GIRO form as part of the Mode of Acceptance herein
          unless you wish to have a separate GIRO account to meet the aforesaid
          payments.]

     1.08 Permitted Use:

          (a)  Subject to clause 1.12 of this letter, you shall commence full
               operations within four (4) months of the Commencement Date for
               the purpose of burn in services only and for no other purpose
               whatsoever ("the Authorised Use").

          (b)  Thereafter, you shall maintain full and continuous operations and
               use and occupy the whole of the Premises for the Authorised Use.

          (c)  Subject to clauses (a) and (b) above, you shall use and occupy at
               least sixty percent (60%) of the gross floor area of the Premises
               for industrial activities and ancillary stores, and use and
               occupy the remaining gross floor area, if any, for offices,
               neutral areas, communal facilities and such other uses as may be
               approved in writing by us and the relevant governmental and
               statutory authorities PROVIDED THAT you shall not use and occupy
               the Premises for the purpose of commercial office and storage
               unrelated to the Authorised Use.

     1.09 Approvals

          The Tenancy is subject to approvals being obtained from the relevant
          government and statutory authorities.



1.10 Possession of Premises:

     (a)  Keys to the Premises will be given to you two (2) months prior to the
          Commencement Date subject to due acceptance of the Offer ("Possession
          Date").

     (b)  From the Possession Date until the Commencement Date, you shall be
          deemed a licensee upon the same terms and conditions in the Tenancy.

     (c)  If you proceed with the Tenancy after the Commencement Date, the
          licence fee payable from the Possession Date to the Commencement Date
          shall be waived ("Rent-Free Period"). Should you fail to so proceed,
          you shall:

          (i)   remove everything installed by you;
          (ii)  reinstate the Premises to its original state and condition; and
          (iii) pay us a sum equal to the prevailing market rent payable for the
                period from the Possession Date up to the date the installations
                are removed and reinstatement completed to our satisfaction,

          without prejudice to any other rights and remedies we may have against
          you under the Tenancy or at law.

1.11 Preparation and Submission of Plans:

     (a)  No alteration, addition, improvement, erection, installation or
          interference to or in the Premises or the fixtures and fittings
          therein is permitted without Building Control Unit [BCU(JTC
          Corporation)] prior written consent. Your attention is drawn to
          clauses 2.10 to 2.19 and 2.34 of the Memorandum of Tenancy.

     (b)  You will be required to prepare and submit floor layout plans of your
          factory and plans of the air-conditioning works in accordance with the
          terms of the tenancy and the `Guide' attached. It is important that
          you should proceed with the preparation and submission of the plans in
          accordance with the procedures set out in the said `Guide'.

     (c)  Should there be alteration of existing automatic fire alarm and
          sprinkler system installation, alteration plans shall be submitted to
          Building Control Unit [BCU(JTC Corporation)] for approval on fire
          safety aspects. All air-conditioning, fire alarm & sprinkler system
          plans must be signed by a relevant Professional Engineer, registered
          with the Professional Engineers Board of Singapore.



     (d)  Upon due acceptance of the Offer, a copy of the floor and elevation
          plans (transparencies) will be issued to you to assist in the
          preparation of the plans required herein.

     (e)  No work shall commence until the plans have been approved by Building
          Control Unit [BCU(JTC Corporation)].

1.12 Final inspection:

     You shall ensure that final inspection by us of all installations is
     carried out and our approval of the same is obtained before any operations
     in the Premises may be commenced.

1.13 Special Conditions:

     (1)  Normal (Ground & Non-ground) Floor Premises

          You shall comply and ensure compliance with the following
          restrictions:

          (a)  maximum loading capacity of the goods lifts in the Building; and

          (b)  maximum floor loading capacity of 15.00 kiloNewtons per square
               metre of the Premises on the 2nd storey of the Building PROVIDED
               THAT any such permitted load shall be evenly distributed.

          We shall not be liable for any loss or damage that you may suffer from
          any subsidence or cracking of the ground floor slabs and aprons of the
          Building.

     (2)  Option for renewal of tenancy:

          (a)  You may within 3 months before the expiry of the Term make a
               written request to us for a further term of tenancy.

          (b)  We may grant you a further term of tenancy of the Premises upon
               mutual terms to be agreed between you and us subject to the
               following'.

               (i) there shall be no breach of your obligations at the time you
               make your request for a further term;

               (ii) our determination of revised rent, having regard to the
               market rent of the Premises at the time of granting the further
               term, shall be final;



                    (iii) we shall have absolute discretion to determine such
                    covenants, terms and conditions, but excluding a covenant
                    for renewal of tenancy-, and

                    (iv) there shall not be any breach of your obligations at
                    the expiry of the Term.

          (3)  Third Party Rights:

               A person who is not a party to the Tenancy shall have no right
               under the Contracts (Rights of Third Parties) Act (as amended or
               revised from time to time) to enforce any of its covenant, term
               or condition.

2.   Mode of Acceptance:

     The Offer shall lapse if we do not receive the following by 15 June 2002:-

     .    Duly signed letter of acceptance (in duplicate) of all the covenants,
          terms and conditions in the Tenancy in the form enclosed at the
          Appendix.
          (Please date as required in the Appendix)

     .    Payment of the sum set out in clause 4.

     .    Duly completed GIRO authorization form.

3.   Please note that payments made prior to your giving us the other items
     listed above may be cleared by and credited by us upon receipt. However, if
     the said other items are not forthcoming from you within the time
     stipulated herein, the Offer shall lapse and there shall be no contract
     between you and us arising hereunder. Any payments received shall then be
     refunded to you without interest and you shall have no claim of whatsoever
     nature against us.



4.   The total amount payable is as follows:

                                                Amount                  +3 % GST
Rent at $12.61 psm per month on
274.90 sqm for the period 16 August
2002 to 15 September 2002                $ 3,466.49

Less:
3% Off-budget Property Tax Rebate
(valid from 01/07/2001 to 31/12/2002)    $   103.99
                                         ----------
                                         $ 3,362.50

Service Charge at $2.10 psm per
month on 274.90 sqm for the period 16
August 2002 to 15 September 2002         $   577.29    $ 3,939.79        $118.19
                                         ----------

Deposit equivalent to three (3) months'
rent and service charge (or Banker's
Guarantee provided in accordance with
sub-paragraph 1.06 above)                $12,131.34

Less:
Deposit equivalent to one (1) month's
rent and service (Off-budget Measure)    $ 4,043.78    $ 8,087.56
                                         ----------

Stamp fee payable on Letter of
Acceptance which will be stamped by
JTC Corporation on your behalf                         $   273.00

Sub-Total Payable                                      $12,300.35        $118.19

Add: GST @ 3%                                          $   118.19
- ---                                                    ----------

Total Payable inclusive of GST                         $12,418.54
                                                       ==========


5.   Rent-Free Period:

     As the Commencement Date will not be deferred, we advise you to accept the
     Offer as soon as possible and to collect the keys to the Premises on the
     scheduled date in order to maximize the Rent-Free Period referred to in
     clause 1.10(c) of this letter.



6.   Variation to the Tenancy

     This letter and the Memorandum of Tenancy constitute the full terms and
     conditions governing the Offer and no terms or representation or otherwise,
     whether express or implied, shall form part of the Offer other than what is
     contained herein. Any variation, modification, amendment, deletion,
     addition or otherwise of the covenants, terms and conditions of the Offer
     shall not be enforceable unless agreed by both parties and reduced in
     writing by us.

7.   Car-Parking Scheme:

     (a)  The car park for 1311k 1004 Toa Payoh North is currently managed by
          P-Parking International Pte Ltd and you will have to observe and be
          bound by all the rules and regulations governing the use and operation
          of the car park. You are requested to contact:

          P-Parking International Pte Ltd
          736B Geylang Road
          Singapore 389647
          Contact person: Mr Johnson Tan
          Tel: 67494119

          on your use of the car park.

     (b)  The Corporation shall not be liable for any loss, damage, injury,
          liabilities, claim or action you may sustain or suffer in the use of
          the car park and the tenants shall fully indemnify the Corporation
          against any loss, claims, penalties, demands, damage arising from the
          private management and operations of the car park by the P-Parking
          International Pte Ltd.

8.   Application for Approvals, Utilities etc.

     Upon your acceptance of the covenants, terms and conditions of the Offer,
     you are advised to proceed expeditiously as follows:

     8.01 Preliminary Clearance:

          Comply with the requirements of the Chief Engineer (Central Building
          Plan Unit), Pollution Control Department and/or other departments
          pursuant to your application/s for preliminary clearance. (Please note
          that we have referred your application to the relevant department/s),

     8.02 Discharge of Trade Effluence:

          Complete the attached Application for Permission to Discharge Trade
          Effluent into Public Sewer and return the application form direct to
          the Head, Pollution Control Department, Ministry of Environment,
          Environment Building, 40 Scotts Road. Singapore 228231 (Telephone No.
          67327733).





     8.03 Electricity:

          Engage a registered electrical consultant or competent contractor to
          submit three sets of electrical single-line diagrams to and in
          accordance with the requirements of our Property Support Department
          (PSD~, Customer Services Group, JTC East Zone Office for endorsement
          before an application is made to the Power Supply Pte Ltd to open an
          account for electricity connection. Please contact our Property
          Support Department (PSD) at Blk 25 Kallang Avenue #05-01 Kallang Basin
          Industrial Estate Singapore 339416 direct for their requirements.

     8.04 Water:

          Submit four copies of sketch plans, prepared by a licensed plumber,
          showing the section and layout of the plumbing, to our Building
          Control Unit [BCU (JTC Corporation)] for approval prior to the issue
          of a letter to Water Conservation Department, Public Utilities Board
          to assist you in your application for a water sub-meter.

     8.05 Telephone:

          Apply direct to Singapore Telecommunications Ltd for all connections.

     8.06 Automatic Fire Alarm System (incorporating Heat Detector)

          Engage a registered electrical consultant/professional engineer to
          submit two sets of fire alarm drawings, indicating the existing
          fixtures if any, the proposed modifications of the fire alarm and the
          layout of machinery, etc to and in accordance with the requirements of
          our Building Control Unit [BCU (JTC Corporation)]. Please contact our
          Building Control Unit [BCU (JTC Corporation)] at The JTC Summit,
          One-Stop Centre (1st level) 8 Jurong Town Hall Road Singapore 609434
          direct for further requirements.

     8.07 Factory Inspectorate

          Complete and return direct to Chief Inspector of Factories the
          attached form, "Particulars to be submitted by occupiers or Intending
          Occupiers of Factories".

Yours faithfully


/s/: Ang Yee Kwan
- -----------------
ANG YEE KWAN
MARKETING DEPARTMENT
INDUSTRIAL PARKS DEVELOPMENT GROUP
JTC CORPORATION

Encl

EX-10.16

10.16 Credit Facility Letter dated June 24, 2002, between Trio-Tech
      International Pte. Ltd. and Standard Chartered Bank.

Date              24.June 2002                                          Standard
Our Ref           C&I/CDT/CFS/LG/AH/TRITI 1                            Chartered

PRIVATE & CONFIDENTIAL

Trio-Tech International Pte Ltd
1008 Toa Payoh North
#03-09/18
Toa Payoh Industrial Estate
Singapore 318996

Attn:-  Mr Victor Ting
        Chief Financial Officer

                                                          Telephone No. 65303505

Dear Sirs,

BANKING ARRANGEMENTS

Further to the Facility Letter dated 19 November 2001, Standard Chartered Bank
(the "Bank") is pleased to advise that condition no. 2) under the paragraph
"CONDITIONS" has been amended as outlined below. All other Facilities, security,
terms and conditions as mentioned in the Facility Letter dated 19 November 2001
remain unchanged.

CONDITION

2)  The Customer is to maintain a minimum networth of SGD7,000,000 at all times.

    Networth is defined as the aggregate of paid-up capital and revenue
    reserves, excluding revaluation reserves and deducting any loans made to the
    directors in their personal capacities or to the parent company, Trio-Tech
    International USA directly and indirectly or other related companies and
    other intangible assets.

ACCEPTANCE

If the amendment is acceptable, please return the attached duplicate copy of
this Supplementary Facility Letter duly signed in acceptance and in accordance
with your board resolution passed on 29 June 2001 to:

                             Standard Chartered Bank
                             Corporate & Institutional
                             Credit Operations
                             CPF Tampines Building #03-00
                             1 Tampines Central 5
                             Singapore 529508

                             Attention    : Ms Anna Hee

Standard Chartered Bank
Corporate & Institutional
Credit Operations
1 Tampines Central 5, CPF Tampines Building #03-00
Singapore 529508                                           Tel(65) 6225 8888

Robinson Road P. 0. Box 1901, Singapore 903801                Fax (65) 6260 2513

Incorporated in England with limited liability by Royal Charter 1853
The Principal Office of the Company is situated in England at 1 Aidermanbury
Square London EC2V 7SB Reference Number ZC18



We are pleased to be of continuing assistance to your company.

Yours faithfully
For and on behalf of
Standard Chartered Bank

/s/: Laurence Goh

___________________________

Laurence Goh
Deputy Head
Corporate Financial Services

We confirm the Customer's acceptance of the amendment on the terms and
conditions outlined in this Supplemental Facility Letter dated 24 June 2002:-

/s/: Yong Siew Wai

____________________________________________________

For and on behalf of Trio-Tech International Pte Ltd




10.16  Credit Facility Letter dated November 19, 2002, between Trio-Tech
       International Pte. Ltd. and Standard Chartered Bank.

                                                   Standard Chartered

                                                   Standard Chartered Bank

Date          :       19 November 2001             Corporate & Institutional
                                                   Credit Operations
                                                   CPF Tampines Building #03-00
                                                   1 Tampines Central 5
Our Ref       :       C&I/CDT/CFS/LG/AH            Singapore 529508

                                                   Postal Address:
                                                   Robinson Road P. 0. Box 1901
PRIVATE AND CONFIDENTIAL                           Singapore 903801
Trio-Tech International Pte Ltd                    Telephone +65 225 8888
1008 Toa Payoh North                               Facsimile +65 260 2513
#03-09/18                                          Telegrams STANCHART
Toa Payoh Industrial Estate                        Telex RS 24290
Singapore 318996

Attn:-    Mr Victor Ting
          Chief Financial Officer

Dear Sirs

BANKING ARRANGEMENTS

Standard Chartered Bank (the "Bank") is pleased to confirm its willingness to
continue to make available to Trio-Tech International Pte Ltd (the "Customer")
the banking facilities (the "Facilities") outlined below on the following terms
and conditions, subject to the Bank's Standard Terms and Conditions, as set out
in Form 338-1198 attached hereto, and to the satisfactory completion of
documentation:-

BANKING FACILITIES

AMOUNT                      DESCRIPTION AND PRICING

1)       SGD500,000         Overdraft in current account, repayable upon demand,
                            to assist with working capital requirements.
                            Interest at prime plus 1.25% p.a. payable monthly in
                            arrears to the debit of the Customer's current
                            account.

1a)      (USD200,000)       Overdraft in United States Dollar (USD) current
                            account, repayable upon demand, to assist with
                            working capital requirements.

                            Interest at USD prime plus 1% p.a. payable monthly
                            in arrears to the debit of the Customer's USD
                            current account.

1b)      (SGD250,000)       Short term loan in Singapore Dollar for period of 1,
                            2 or 3 months.

                            Interest at cost of funds plus 1.75% p.a. during the
                            term of each Singapore Dollar bill.

                            Note:-

                            Interavailability between the overdraft facility and
                            the short term money market loans is at the sole
                            discretion of the Bank.

                            The Bank may at any time at its sole discretion
                            suspend the availability of prime-based funds by
                            reason or circumstances affecting the money market
                            including but not limited to volatile rate
                            fluctuations or tight liquidity.




                                                    Standard Chartered

                            Drawings under both limits 1), 1a) and 1b) must not
                            exceed SGD500,000 at any time.

 2a)     SGD2,000,000       For opening irrevocable letters of credit, drafts at
                            sight and/or at usance for period up to 120 days,
                            covering the import of electronic test equipment and
                            accessories into Singapore and/or Malaysia.

2b)      (SGD1,000,000)     Loans against trust receipts and/or acceptance
                            against trust receipts for period up to 120 days,
                            covering the release of goods imported under and
                            complementary to limit 2a).

                            Interest at SBFR plus 1.25% p.a. during the term of
                            each trust receipt.

2c)      (SGD1,000,000)     Shipping guarantees may be issued to secure the
                            release of goods imported under letters of credit or
                            collection bills routed through the Bank.

2d)      (SGD1,000,000)     For opening irrevocable letters of credit, drafts at
                            sight and/or at usance for period up to 120 days,
                            covering the import of electronic test equipment and
                            accessories in favour of Singapore or Malaysian
                            suppliers.

                            Note:

                            Combined outstandings under limits 2a) to 2d) must
                            not exceed SGD2,000,000 at any one time.

2e)      (SGD500,000)       Loans against imports by way of promissory notes
                            covering collection DA and DP bills for period up to
                            120 days, including original usance period.
                            Financing of approved suppliers' invoices are also
                            permitted but at the sole discretion of the Bank
                            and pricing is at 0.25% flat for commission.

                            Interest at SBFR plus 1.25% p.a. during the term of
                            each bill.

                            Condition

                            Proceeds of invoice financing are to be paid direct
                            to suppliers and not credited to the Customer's
                            account.

3)       SGD2,000,000       For issuing standby letters of credit for a period
                            of 365 days in favour of suppliers in consideration
                            of credits terms granted to the Customer.

3a)      (SGD2,000,000)     For issuing customs and other non-shipping
                            guarantees for period not exceeding twelve months.

                            Counter indemnities to be held.

3b)      (SGD2,000,000)     For issuing advance payment guarantees / performance
                            bonds retention bonds for period not exceeding
                            twelve months.

                            Counter indemnities to be held.




                                                   Standard Chartered

3c)      (SGD1,000,000)     For issuing tender bonds for period not exceeding
                            six months.

                            Counter indemnities to be held.

4)       SGD1,126,470       Paid down balance of a 4-year term loan to assist
                            the Customer in financing construction of a high
                            tension power sub-station. (Finance 80% of the
                            original amount of SGD1,615,000)

                            Interest at prime plus 1.5% p.a. payable monthly in
                            arrears to the debit of the Customer's current
                            account.

                            Tenor
                            4 years from date of first drawdown.

                            Drawdown
                            Drawdown in tranches against contractors invoices &
                            architect's certification. 3 days notice is to be
                            given to the Bank before drawdown. Loan to be fully
                            drawn by 31 December 2001.

                            Repayment
                            Repayable in 48 monthly (excluding interest).

                            First drawndown of SGD904,400 (80% of SGD1,130,500)
                            on 1 March 2001.

                            Monthly instalments of SGD18,841 each (excluding
                            interest) with effect from 31 March 2001 and a final
                            instalment of SGD18,873 (excluding interest) on 28
                            February 2005.

                            Second drawndown of SGD258,400 (80% of SGD323,000)
                            on 26 March 2001.

                            Monthly instalments of SGD5,383 each (excluding
                            interest) with effect from April 2001 to October
                            2001, thereafter monthly instalment of SGD5,517
                            (excluding interest) with effect from 30 November
                            2001 and a final instalment of SGD5,556 (excluding
                            interest) on 28 February 2005.

                            Third drawndown of SGD64,600 (80% of SGD80,750) on
                            31 August 2001.

                            Monthly instalments of SGD1,345 each (excluding
                            interest) with effect from 3 October 2001,
                            thereafter monthly instalment of SGD1,547 (excluding
                            interest) with effect from 5 December 2001 and a
                            final instalment of SGD1,577 (excluding interest) on
                            28 February 2005.

                            Amount not drawdown: SGD64,600.

                            Prepayment
                            Partial repayments will be applied in inverse order
                            of maturity and may not be redrawn. The Customer is
                            to give at least 30 days written notice before such
                            repayment is effected.

                            Cancellation Fee
                            A fee of 1% flat on the amount prepaid if full
                            prepayment is made within one year from the date of
                            first drawndown.



                                                 Standard Chartered

                            Condition for Limit 4)

                            The term loan must be fully repaid in the event the
                            lease of the land known as Private Lots No. A4551 J
                            and No. A4551 K Mukirn No. 17 on which the high
                            tension power sub-station is built on is not
                            renewed.

                            Condition: For limits 1), 1a) and 4)

                            In the event that the Bank's prime rate is lower
                            than its 1-month cost of funds rate, the Bank
                            reserves the right to convert the prime rate to its
                            1 -month cost of funds rate.

                            Note:-

                            I)   Combined outstandings under limits 1) to 1b)
                                 must not exceed SGD500,000 at any one time.

                            ii)  The Bank may at any time at its sole discretion
                                 suspend the availability of prime-based funds
                                 by reason or circumstances affecting the money
                                 market including but not limited to volatile
                                 rate fluctuations or tight liquidity.

PURPOSE OF FACILITIES

The Customer shall use the Facilities solely for its working capital funding
requirements. For purposes of compliance with the provisions of Notice 757
issued by the Monetary Authority of Singapore ("MAS"), if the Customer is not a
Singapore resident (as defined in MAS Notice 757), the Customer shall inform the
Bank in advance if the Customer intends to use any of the Facilities for any of
the following purposes

..   To use Singapore dollar proceeds of any of the Facilities offshore

..   To use Singapore dollar proceeds of any of the Facilities for investment in
    S$ financial assets or real estate in Singapore.

..   To transact a Singapore dollar FX swap or cross currency swap for the
    purpose of hedging any investment in S$ financial assets or real estate in
    Singapore.

..   To transact any S$ cross currency swap or S$ currency option otherwise than
    for hedging its exchange rate and/or interest rate risks arising from trade
    with, or economic and financial activities in, Singapore

Use of the Facilities for any such purpose will be subject to further conditions
in accordance with MAS Notice 757.

SECURITY

Security for the above Facilities and for facilities which may be extended by
the Bank to the Customer from time to time :-

1)   Registered charge over fixed deposits of SGD2,000,000 or its equivalent in
     the name of the Customer and supported by a board resolution.

2)   Existing corporate guarantee for SGD2,500,000 executed by Trio-Tech
     International USA and supported by a board resolution.

3)   Existing registered fixed charge over high tension power sub-station
     located at Mukim No. 17 Lots No. A4551 J and No. A4551 K.



                                                        Standard Chartered

     Fire insurance policy covering the above asset for the full reinstatement
     value with the Bank's interest indicated as mortgagee thereon including
     mortgagee, non-cancellation and reinstatement value clauses and premium
     paid receipt are to be lodged with the Bank.

 CONDITIONS

1    Loans to parent company Trio-Tech International USA (directly and
     indirectly) and associated companies must not exceed SGD3,500,000 at all
     times.

2)   The Customer is to maintain a minimum networth of SGD6,000,000 at all
     times.

     Networth is defined as the aggregate of paid-up capital and revenue
     reserves, excluding revaluation reserves and deducting any loans made to
     the directors in their personal capacities or to the parent company,
     Trio-Tech International USA directly and indirectly or other related
     companies and other intangible assets.

3)   Gearing ratio of Trio-Tech International Pte Ltd (Singapore) is not to
     exceed 1. Gearing ratio is defined as total external debts : networth.

4)   Any dividends to be declared are subject to prior written consent from the
     Bank which will not be unreasonably withheld.

5)   The Customer is to submit to the Bank its quarterly management accounts and
     its operating subsidiaries including Trio-Tech International (M) Sdn Bhd,
     Trio-Tech (KL) Sdn Bhd and Trio Tech International (Bangkok) Co. Ltd.

6)   The Customer is to submit to the Bank its quarterly lists of stocks and
     ageing debtors (trade and non-trade, including related company debts) and
     stocks are subject to periodic inspection by the Bank's officers.

INTEREST

The Bank's Singapore Dollar and United States Dollar prime lending rates are
currently 5.75% p.a. and 6% p.a. respectively and are subject to fluctuation
without prior notice but the rates and any changes thereto are notified in the
press and are featured in the Bank's statements of account and on notices
displayed at the Bank's branches.

The Bank's Standard Bills Finance Rate (SBFR) for all Trade Finance related
loans is also subject to fluctuation without prior notice and will be determined
by the Bank according to market forces but the prevailing rate and any changes
thereto are featured in the Bank's Trade Finance statements and are available on
request from our Trade Customer Services Centre. The SBFR for Singapore Dollar
denominated Trade loans is currently 5.75% p.a. and for Foreign Currency Trade
loans is the respective currency's local inter-bank offer rate or Cost of Funds
(i.e. SIBOR) for three months or such other period as the Bank in its discretion
may consider appropriate.

DISCLOSURE

The Customer hereby consent to Standard Chartered Bank, Singapore, its officers
and agents disclosing information relating to the Customer and the Customer's
account or dealing relationship with the Bank, including but not limited to
details of the Customer's Facilities, any security taken, transactions
undertaken and balances and positions with the Bank, to (i) the head office of
the Bank, any of its representative and branch offices in any jurisdiction,
related corporations and its agents and independent contractors who are under a
duty of confidentiality to the Bank; (ii) any potential assignee of the Bank or
other participant in any of its rights and/or obligations in relation to the
Customer's Facilities and (iii) any guarantors, third party pledgors or security
providers.



                                                        Standard Chartered

MAS NOTICE 757

Pursuant to MAS Notice 757, S$ credit facilities extended to non-residents and
S$ financial derivatives transacted with non residents are subject to
conditions. The following is a summary of the main conditions under MAS Notice
757.

1.   S$ dollar credit facilities must not be used to speculate in S$ in the
     currency markets.

2.   Proceeds of credit facilities extended in Singapore dollars that exceed S$5
     million in aggregate are subject to the following conditions:

     (a)  where the S$ proceeds are to be used offshore, the proceeds must be
          swapped into foreign currency upon drawdown. The proceeds may not be
          sold outright in the spot or forward market.

     (b)  where the S$ proceeds are to be used to finance (or, in the case of FX
          swaps or cross currency swaps, to hedge) investments in financial
          assets or real estate the relevant facility must be repaid (or, in the
          case of FX swaps or cross currency swaps, the relevant transaction
          must be closed out) if the investments are in any way converted into
          S$ cash proceeds.

3.   cross currency swaps under which the Customer borrows Singapore dollars may
     only be entered into for the purpose of hedging the Customer's S$ exchange
     rate and interest rate risks arising from trade with, or economic and
     financial activities in, Singapore

4.   S$ currency options may only be entered into for the purpose of hedging the
     Customer's S$ exchange rate risks arising from trade with, or economic and
     financial activities in, Singapore and are subject to the following
     additional conditions:

     (a)  each option must have cashflows matching the S$/foreign currency flows
          upon exercise and the Customer must provide documentary evidence of
          such cashfiows; and

     (b)  options must not be combined with a spot or any other transaction to
          constitute a S$ credit facility that would not be permitted under MAS
          Notice 757.

Any transactions that do not comply with the conditions set out above must be
approved in advance by the MAS

For the purposes of MAS Notice 757, "credit facilities" includes, without
limitation, loans, bank guarantees or other contingent lines, FX swaps, cross
currency swaps and repurchase agreements.

For the purposes of MAS Notice 757 a company is a Singapore resident only if:

(1)  it is at least 50% owned by Singapore citizens (irrespective of its place
     of incorporation); or

(2)  it is a financial institution operating in Singapore and is governed under
     MAS Notice 757 or its equivalent

The Customer undertakes to notify the Bank immediately in the event of any
change, whether direct or indirect, in its shareholding, ownership or control
that may affect its residence status for the purposes of MAS Notice 757and
covenants that it will comply with the above conditions at all times.

ACCEPTANCE

This offer will remain open for acceptance for a period of thirty days from the
date of this letter, after which time it will lapse unless an extension has been
agreed by the Bank in writing.



                                                        Standard Chartered

To confirm your acceptance of this offer, please return the attached duplicate
copy of this letter duly signed in acceptance and in accordance with the board
resolution passed on 29 June 2001 to:

                    Standard Chartered Bank
                    Corporate & Institutional
                    Credit Operations
                    I Tampines Central 5
                    #03-00 CPF Tarnpines Building
                    Singapore 529508

                    Attention           :    Ms Anna Hee

This Facility letter supersedes all previous Facility letters.

AVAILABILITY

In accordance with normal banking practice, the Facilities are made available
solely at the discretion of the Bank and are subject to repayment on demand by
the Bank.

Without prejudice to this obligation of the Customer, the Facilities shall be
subject to review by the Bank from time to time.

We are pleased to make this offer of banking arrangements and look forward to
receiving your formal acceptance in due course.

Yours faithfully
For and on behalf of
Standard Chartered Bank


/s/ Laurence Goh
- ----------------------------
Laurence Goh
Deputy Head
Corporate Financial Services

We confirm the Customer's acceptance of the Facilities on the terms and
conditions outlined in this letter dated 19 November 2001:-


/s/ Yong Siew Wai

____________________________________________________
for and on behalf of Trio-Tech International Pte Ltd

EX-10.17

10.17    Credit Facility Letter dated July 24, 2002, between Trio-Tech
         International Pte. Ltd. and OCBC Bank.

                Oversea-Chinese Banking      Tel (65) 6535 7222
                Corporation Limited          Fax (65) 6533 7955
                65 Chulia Street             www.ocbc.com
                OCBC Centre
                Singapore 049513

OCBC Bank

    Our Ref : LKW/in/Trio-Tech/Jul 02

    24 July 2002

   Trio-Tech International Pte Ltd                        PRIVATE & CONFIDENTIAL
   1008 Toa Payoh North
   #03-09
   Singapore 318996

   Dear Sir

   BANKING FACILITIES

   Following a review of your account, we are pleased to advise that
   Oversea-Chinese Banking Corporation Limited (hereinafter called "The Bank")
   has agreed to extend to your company the revised credit facilities totalling
   S$8,000,000/- (Singapore Dollars Eight Million Only) (hereinafter called "the
   Facilities") as stated below, subject to satisfactory completion of
   documentation, legal or otherwise and upon the following terms and
   conditions: -

   1 .      LIMITS/QUANTUM

   (a)      Overdraft                                   S$1,000,000/

   (b)      Letter of Credit                            S$1,000,000/-
            (For establishing irrevocable sight and/or usance Letters of Credit
            up to 60 days or such other period as notified by the Bank to the
            Borrower)

            Within Letter of Credit Limit : S$1,000,000/-

            Trust Receipts (S$1,000,000/-) under LC and collection bills (For
            issuing Trust Receipts up to 120 days. The combined tenor for usance
            Letters of Credit and Trust Receipts issued thereunder shall not
            exceed 120 days or such other period as notified by the Bank to the
            Borrower)

            Shipping Guarantee                          (S$1,000,000/-)
            under LC and collection bills/
            Airway Bill

            Draft Loan (S$1,000,000/-) (For financing of collection bills and
            invoices up to 120 days or such other period as notified by the Bank
            to the Borrower)

   (c)     Account Receivables Financing -             S$4,500,000/-
           (Tenor : up to 90 days or such other period as notified by the Bank
           to the Borrower)

   (d)      Foreign Exchange                           S$5,000,000/-
           (For spot and forward contracts up to 6 months or such other period
           as notified by the Bank to the Borrower.)

   (e)     Term Loan                                   S$1,000,000/-
           (Tenor : 3 years)



OCBC Bank                                                                      2

    Trio-Tech International Pte Ltd              PRIVATE & CONFIDENTIAL
    OUR REF: LWK/in/Trio-Tech/Jul 02

    2.      PURPOSE

            OD /LC/TRC/             -  For your working capital requirements and
                                       trade financing requirements.
            SGC/AWB/DL/
            ARF

            TL                      -  To finance Trio-Tech International Pte
                                       Ltd's purchase of 30 units of cooling
                                       systems and other equipment supplies for
                                       testing and Advance Micro Device ("AMD")
                                       chips, K8.

    3.      PRICING

    (a)     Overdraft               -  1. 125% p.a. over the Bank's prevailing
                                       prime lending rate calculated on daily
                                       balance with monthly rests.

    (b)     Letter of Credit        -  Letter of Credit commission at 1/8% per
                                       month, minimum 2 months on the amount of
            Letter of Credit for amount less than or equal to S$200,000/- or at
            1/16% per month, minimum 2 months on the  amount of Letter of Credit
            for amount more than S$200,000/-.

    (c)     Trust Receipts          - (i)    0.625% per annum over the Bank's
                                             prevailing prime lending rate
                                             under LC and calculated on daily
                                             balance with monthly rests for
                                             Singapore collection bills/ Dollars
                                             financing.

            Draft Loan                (ii)   2.5% per annum above the Bank's
                                             prevailing Singapore Interbank
                                             Offered Rate (SIBOR) as determined
                                             by the Bank for Foreign Currencies
                                             financing.

   (d)      Shipping Guarantee - As per the Bank's Schedule of Charges under LC
            and collection bills/Airway Bill

   (e)      Accounts                   (i)   0.625% per annum over the Bank's
                                             prevailing prime lending rate
            Receivable Financing             calculated on daily balance with
                                             monthly rests for Singapore Dollars
                                             financing.
                                       (ii)  2.5% per annum above the Bank's
                                             prevailing Singapore Interbank
                                             Offered Rate (SIBOR) as determined
                                             by the Bank for Foreign Currencies
                                             financing.

   (f)      Term Loan                  0.5% p.a. over the Bank's prevailing
            prime lending rate calculated on daily balance with monthly rests.


   4.       SECURITY/SUPPORT (collectively "the Security")

            The Facilities and all monies owing shall be secured by existing
            charge over all the company's accounts receivables excluding
            Catalyst Semiconductor, present and future. [Registered].



OCBC Bank                                                                      3

     Trio-Tech International Pte Ltd               PRIVATE & CONFIDENTIAL
     OUR REF: LWK/in/Trio-Tech/Jul 02


     5.   AVAILABILITY OF FACILITIES AND DRAWDOWN

     5.1  The Facilities will be available for your use upon completion of all
          matters and documentation to the satisfaction of the Bank, and upon
          receipt of the following (where applicable) in form and substance
          acceptable to the Bank, including but not limited to:

     (a)  Copy of your Certificate of Incorporation and Memorandum and Articles
          of Association and that of the guarantors, mortgagors, third party
          depositors and any persons (other than you) providing security for the
          Facilities (collectively "the Surety"), certified as a true copy by a
          Director or the Company Secretary.

     (b)  Copy of your Board Resolutions and that of the Surety, if a
          corporation, in the Bank's prescribed format and duly certified as a
          true copy by a Director or the Company Secretary

     (c)  All security documents duly executed and duly stamped (where
          applicable).

     (d)  Term Loan Agreement duly executed.

     (e)  The Foreign Exchange facility is subject to foreign exchange
          availability which is determined solely by the Bank. Before a forward
          contract is rolled over on maturity, you will cover the unrealised
          loss, if any. The Bank reserves the right to deliver funds only upon
          receipt of funds by the Bank.

     (f)  The Bank's margin of advance will be 80% of the respective net invoice
          values for approved debtors.

     5.2  You shall provide any other document(s) as may be required by the Bank
          from time to time and adhere to and abide by all other conditions
          precedent as the Bank may in its sole discretion impose.


      6.  REPAYMENT

     (a)  The Term Loan Facility is to be repaid by 36 equal monthly principal
          instalments of S$30,195-90 each. The first principal instalment shall
          commence on the first day of the following month from the date of
          first disbursement of the loan. Interest is to be serviced monthly.

     (b)  The Overdraft is subject to monthly or such other periodic interest
          servicing as the Bank may specify and is repayable on demand.

     7.   PREPAYMENT

          If the Term Loan Facility is fully repaid within the first 24 months,
          a prepayment fee of 1 % flat will be charged on the amount prepaid in
          addition to any break funding cost. The prepayment fee will be waived
          if prepayment occurs after 24 months, source of repayment is from new
          private equity funds raised and with evidence satisfactory to the
          Bank.



OCBC Bank

                                                                               4

   Trio-Tech International Pte Ltd                    PRIVATE & CONFIDENTIAL
   OUR REF: LWK/in/Trio-Tech/Jul 02

   8.      OTHER FEES

           A cancellation fee of 0.125% flat will be charged on the unused
           portion of the Term Loan Facility and payable at the end of the Term
           Loan Facility availability period. Any portion of the Term Loan
           Facility not utilised by the end of the Term Loan Facility
           availability period shall be cancelled.

   9.      DEFAULTINTEREST

           Default interest shall be payable at the rate of 4.75% over the
           Bank's prime rate prevailing from time to time or such other rates as
           may be determined by the Bank in its sole discretion on the
           following:-

   (a)     any part of the Facilities that is not paid on due date or upon
           demand, as the case may be; and

   (b)      any utilisation in excess of the approved limit of the Facilities.



   10.     FINANCIAL COVENANTS

   (a)     Negative Pledge

           Save for charges, assignments or encumbrances which are currently
           subsisting and which have been previously disclosed to the Bank in
           writing, no further charges, assignments or encumbrance whatsoever
           are to be created over any of your present or future assets as long
           as any facilities are outstanding from you to the Bank, except with
           the Bank's prior written consent which shall not be unreasonably
           withheld.

           The negative pledge covenant shall be waived for new machinery and
           equipment to be acquired by the company that are in line with its
           core business activity

   (b)     Your networth is to be maintained at not less than S$10,000,000/-.
           Networth is defined as the sum of your paid-up capital, retained
           earnings, revaluation surplus and directors' and shareholders' loans
           less borrowings.

   (c)     Your total liabilities to tangible networth shall be less than 2.5x
           at all times.



   11.     CONDITIONS FOR ACCOUNTS RECEIVABLE FINANCING

           Financing of Accounts Receivable is/are restricted to Advanced Micro
           Devices Singapore Pte Ltd, Agilent Technologies (S) Pte Ltd, Infineon
           Technologies Asia Pacific Pte Ltd, Broadcom Singapore Pte Ltd, Robert
           Bosch (M) Sdn Bhd, Avimo Electro-Optics Pte Ltd, Analog Devices
           Taiwan Inc, Motorola Technology Sdn Bhd, Seagate Technology
           International Pte Ltd, ASAT Ltd, Intersil Services Company Sdn Bhd,
           National Semiconductor Manufacturing (S) Pte Ltd, ST Microelectronics
           Pte Ltd, Hewlett Packard Singapore Pte Ltd.



OCBC Bank                                                                      5

    Trio-Tech International Pte Ltd                  PRIVATE & CONFIDENTIAL
    OUR REF: LWK/in/Trio-Tech/Jul 02


    12.     CONDITIONS FOR DRAFT LOAN

    (a)     Financing of Draft Loan is/are restricted to Yamaichi Electronics
            Singapore Pte Ltd, Future Electronics Inc, Votsch Indusrietechnik
            GmhH, Spire Technologies Pte Ltd, Technitron Inc, Lambda EMI,
            Al-Tech Instrumentation & Engineering Pte Ltd, Ling Electronics Inc,
            Incal Technology Inc, P.K. Wong Engineering & Trading Co.

    (b)     Presentation of invoice from the supplier for the purchase of goods,
            to the Bank with a letter confirming that you have not obtained
            financing of goods from other financial institution.

    (c)     The financing proceeds will be paid directly to the supplier.



    13.     CONDITIONS FOR 3-YEARS TERM LOAN

    (a)     The Term Loan shall be disbursed against 90% of original invoices or
            up to S$1,000,000-00 whichever is lower and upon completion of all
            documentation, legal or otherwise.

    (b)     The Term Loan shall be disbursed against 90% of invoice value from
            Trio-Tech International Pte Ltd's suppliers including Honeywell Pte
            Ltd and other equipment suppliers for the testing of K8. Payment to
            be made directly to the suppliers or if payment of the cooling
            systems have already been paid by Trio-Tech International Pte Ltd,
            reimbursement can be sought subject to presentation of original
            invoices and evidence of payment satisfactory to the Bank.

    14.     OTHERS TERMS & CONDITIONS

   (a)      Debtors' Ageing List is to be provided to the Bank on quarterly
            basis or at such time as requested by the Bank from time to time.

   (b)      Unutilised Letter of Credit/Trust Receipt under Letter of Credit or
            collection bills and Draft Loan can be converted for Accounts
            Receivable Financing usage.

   To the extent that the same are not inconsistent with the express terms
   herein, the Bank's Standard Terms and Conditions Governing Banking Facilities
   and any amendments, supplements or replacements thereto from time to time
   shall form part of and be deemed to be incorporated in this offer.

   The Bank reserves the right to request you, from time to time, to furnish it
   with documentary evidence (in form and substance acceptable to the Bank)
   showing your compliance with all the terms and conditions required by the
   Bank and to execute any further document(s) deemed necessary by the Bank.

   This Letter of Offer shall cancel all the previous Letters of Offer.

   We trust that the above terms and conditions are acceptable to you. This
   offer will lapse after 21 days from the date of this Facility Letter, unless
   otherwise arranged.



OCBC Bank                                                                      6

   Trio-Tech International Pte Ltd                   PRIVATE & CONFIDENTIAL
   OUR REF: LWK/in/Trio-Tech/JuI 02

Please signify your acceptance by signing and returning to us the duplicate copy
of this Facility Letter together with a certified copy of your Board
Resolution(s) in the form attached.

We are pleased to be of service to you and look forward to hearing from you in
due course.

Yours faithfully
for OVERSEA -CHINESE BANKING CORPORATION LIMITED

/s/: Leong Koon Weng                                          /s/: Woo Siew Fook

___________________________                                   __________________

Leong Koon Weng                                               Woo Siew Fook
Senior Relationship Manager                                   Business Head
Enterprise Banking                                            Enterprise Banking

We hereby accept the Facilities on the terms and conditions contained in this
Facility Letter and in the Standard Terms and Conditions Governing Banking
Facilities.

/s/: Yong Siew Wai

____________________________________________________

For and on behalf of Trio-Tech International Pte Ltd
Name of Authorised Signatory(ies): Yong Siew Wai
Date: 1/st/ August 2002



TRIO-TECH INTERNATIONAL PTE LTD
(Incorporated in Singapore) -

WE, THE UNDERSIGNED, BEING ALL THE DIRECTORS OF THE COMPANY, DO ON THIS DATE,
AGREE AND CONSENT TO PASS THE FOLLOWING RESOLUTION AS DIRECTORS' RESOLUTION IN
WRITING

IT WAS NOTED THAT Oversea-Chinese Banking Corporation Limited ("OCBC") has
agreed to grant to the Company credit facilities in an amount not exceeding SGD
8,000,000 ("the Facilities") on the terms and conditions of OCBC's Facility
Letter dated 24 July 2002.

IT IS RESOLVED -

ACCEPTANCE OF CREDIT FACILITIES

1.   That the Company do accept the Facilities on the terms and conditions
     mentioned in the Facility Letter.

2.   That Mr Yong Siew Wai as authorised by the Company be and is hereby
     authorised on behalf of the Company:-

     (a)  to sign the Facility Letter, all security and/or collateral documents,
          any forms, notices, instruments and all documents in connection with,
          incidental or ancillary to the Facilities and to approve any
          amendment, alteration or modification to the same and to sign all
          instruments and all relevant documents in relation thereto;

     (b)  to approve and accept any revision or variation to the terms of the
          Facility Letter or any increase in, revision or restructuring of the
          Facilities and to sign all supplemental facility letters, security
          and/or collateral documents, any forms, notices, instruments and all
          documents in relation thereto; and

     (c)  to exercise all discretion and to do all acts and things necessary or
          expedient in relation to the Facilities and to give effect to all
          other matters referred to in these resolutions.

3.   That the Common Seal of the Company be and is hereby authorised to be
     affixed, where required, to all documents and instruments in connection
     with the Facilities in accordance with the Articles of Association of the
     Company.

Dated this 1 August 2002


/s/: Yong Siew Wai                                  /s/: A Charles Wilson

_______________________                             ____________________________

YONG SIEW WAI                                       A CHARLES WILSON
Director                                            Director



TRIO-TECH INTERNATIONAL PTE LTD                                             OCBC
(Incorporated in Singapore)

CERTIFIED EXTRACT OF THE DIRECTORS' RESOLUTION IN WRITING DULY PASSED ON 1
AUGUST 2002

IT WAS NOTED THAT Oversea-Chinese Banking Corporation Limited ("OCBC") has
agreed to grant to the Company credit facilities in an amount not exceeding SGD
8,000,000 ("the Facilities") on the terms and conditions of OCBC's Facility
Letter dated 24 July 2002.

IT IS RESOLVED -

ACCEPTANCE OF CREDIT FACILITIES

1.   That the Company do accept the Facilities on the terms and conditions
     mentioned in the Facility Letter.

2.   That Mr Yong Siew Wai as authorised by the Company be and is hereby
     authorised on behalf of the Company:-

     (a)  to sign the Facility Letter, all security and/or collateral documents,
          any forms, notices, instruments and all documents in connection with,
          incidental or ancillary to the Facilities and to approve any
          amendment, alteration or modification to the same and to sign all
          instruments and all relevant documents in relation thereto;

     (b)  to approve and accept any revision or variation to the terms of the
          Facility Letter or any increase in, revision or restructuring of the
          Facilities and to sign all supplemental facility letters, security
          and/or collateral documents, any forms, notices, instruments and all
          documents in relation thereto; and

     (c)  to exercise all discretion and to do all acts and things necessary or
          expedient in relation to the Facilities and to give effect to all
          other matters referred to in these resolutions.

3.   That the Common Seal of the Company be and is hereby authorised to be
     affixed, where required, to all documents and instruments in connection
     with the Facilities in accordance with the Articles of Association of the
     Company.

                                                       CERTIFIED TRUE COPY

                                                       /s/: Yong Siew Wai
                                                       -------------------------
                                                       Director

                                                       /s/: A Charles Wilson
                                                       -------------------------
                                                       Director/Secretary

Delete where inapplicable



     TRIO-TECH

     INTERNATIONAL
     PRIVATE LIMITED

     14 August 2002

     Oversea-Chinese Banking Corporation Limited
     65 Chulia Street
     OCBC Centre
     Singapore 049513
     Attn: Mr. Tan Ngee Piang
     Tel: 6559 6910
     Fax: 6226 8719

     Dear Sirs,

     BANKING FACILITIES LETTER (YOUR REF:LKW/in/Trio-Tech/Jul 02)

     We refer to the above-mentioned; we hereby attached the following document
     for your action: -
        1. Banking Facilities Letter (Your Ref:LKW/in/Trio-Tech/Jul 02) Dated
           24th July 2002.
        2. Directors' Resolution for acceptance of credit facilities dated 0
           August 2002
        3. Certified Extract of the Directors' Resolution passed on 1/st/ August
           2002

     Kindly acknowledge receipt of this letter and documents attached by signing
     and returning duplicate copy of this letter to us at address mentioned
     below or fax it to us via fax no: 6259 6355.

     Should you need any clarification please do not hesitate to contact Ms.
     Wong Yung Sung at telephone number 63549790.

     Thank you.

     Yours faithfully,
     For Trio-Tech International Pte Ltd

       /s/: Victor Ting Hock Ming
     ----------------------------
     Victor Ting
     Vice President, CFO

VT/wys



            Oversea-Chinese Banking      Tel (65) 6535 7222
            Corporation Limited          Fax (65) 6533 7955
            65 Chulia Street             www.ocbc.com
            OCBC Centre
            Singapore 049513

CBC Bank

22 August 2002

Trio-Tech International Pte Ltd                         Private And Confidential
1008 Toa Payoh North
#03-09
Singapore 318996

Dear Sir

BANKING FACILITIES

We refer to our Letter of Offer dated 24 July 2002.

Please be advised that the pricing (paragraph 3 [b] and repayment (paragraph
6[a]) of facilities should be read as follows :

3.     PRICING

   (b)  Letter of Credit - Letter of Credit commission at 1/8% per month,
        minimum 2 months on the amount of Letter of Credit for amount less than
        S$200,000/- or at 1/16% per month, minimum 2 months on the amount of
        Letter of Credit for amount more than or equal to S$200,000/-.

6.      REPAYMENT

   (a)  The Term Loan Facility is to be repaid by 36 equal monthly principal and
        interest instalments of S$30,195-90 each. The first principal instalment
        shall commence on the first day of the following month from the date of
        first disbursement of the loan. Interest is to be serviced monthly.

All the other terms and conditions remain the same.

We are pleased to be of service to you and look forward to hearing from you in
due course.

Yours faithfully
For OVERSEA-CHINESE BANKING CORPORATION LIMITED

/s/: Leong Koon Weng                            /s/: Woo Siew Fook

________________________________                ________________________________

Leong Koon Weng                                 Woo Siew Fook
Senior Relationship Manager                     Business Head
Enterprise Banking (Electronics)                Enterprise Banking (Electronics)

EX-10.18

10.18 Credit Facility Letter dated May 21, 2002, between Trio-Tech (M) Sdn Bhd
and HSBC Bank Malaysia Berhad
HSBC

PRIVATE AND CONFIDENTIAL
REF: PGH/CBC/BSC/WYM/Iyy

21/st/ May 2002

M/s Trio-Tech (M) Sdn Bhd
Plot IA Phase I
Bayan Lepas
Free Trade Zone
11900 Penang

Attention: Ms Tan Poh Lean

Dear Sirs,

Banking Facility

Account No. 372-064733

We confirm having completed our review of your banking facility and are pleased
to advise that we are agreeable to renewing and revising the undermentioned
facility for the purpose/s as stated for a further period.

This facility is subject to review at any time and, in any event by May 2003, to
our customary overriding right of repayment on demand; and to the requirements
of Biro Maklumat Cek from time to time. We shall be obliged if you will note to
send us two signed/certified copies of your next set of audited account (as at
30 June 2002) before that date.

Facilities                     Present Limit          Proposed Limit

Guarantee                      RM 152,000-00          RM 115,000-00 *

*    We are prepared to increase the limit to RM145,000-00 when your business
     volume picks up and there is need for issuance of additional guarantees.

Purpose:          Bank Guarantee
                  For issuance of Bank Guarantees.

The bank reserves the right to recall the facility if not used for the purpose
granted.

We wish to draw your attention to the attached terms and conditions which
require your understanding and acceptance of the arrangement made.

HSBC Bank Malaysia Berhad
(Formerly known as Hongkong Bank Malaysia Berhad)
(Company number 127776-V)
1, Downing Street, 10300 Penang.
Tel: 04-262 9441 Fax: 04-262 6206



Page 2
M/s Trio-Tech (Malaysia) Sdn Bhd
21/st/ May 2002

Please confirm that your total group borrowings comprising of your non-resident
controlled holding companies and subsidiaries in Malaysia including those from
us do not in aggregate exceed MYR 10 million + at any one time in terms of ECM 8
of the Malaysian Exchange Control Regulations. In the event that you decide to
negotiate or seek additional facilities from other financial institutions and or
any other sources in Malaysia which may lead to your borrowing exceeding MYR 10
million ++ you are required to inform this Bank and also obtain the necessary
approval from the relevant authority. In addition, kindly confirm that 50% of
your credit facilities +++ are sourced from Malaysian-owned licensed banks,
licensed merchant banks and/or licensed finance companies.

+    excluding short term trade financing facilities of less than 12 months
     (e.g. letter of credit,trust receipts, bankers acceptances, ECR, bills
     discounting facilities) guarantee and foreign exchange lines.
++   excluding the credit facilities referred to in + above
+++  excluding all guarantee lines (except guarantee for supply of goods) and
     forward exchange contracts.

The accountholder hereby agrees that the facilities hereunder are subject to the
requirement of the Biro Maklumat Cek from time to time and that the Bank
reserves the right to recall the facilities granted hereunder in the event the
accountholder's current account is closed by any bank following the requirements
of the Biro Maklumat Cek notwithstanding that the accountholder's current
account(s) with the Bank whether held solely or jointly with others has/have
been conducted satisfactorily.

Please arrange for the authorised signatories of your company, in accordance
with the terms of the Board Resolution to be given to the bank, to sign and
return to us the duplicate copy of this letter together with the required
documents before 21/st/ June 2002 after which date this offer will be deemed to
have lapsed to signify your understanding and acceptance of the terms and
conditions under which these facilities are granted.

Please also ensure that the attached list of securities is checked and the
correctness confirmed together with the acceptance of this offer.

We are pleased to be of continued assistance. Should you have any query, please
do not hesitate to contact our Mr. Beh Sui Chung at telephone no. 6503231 or Ms
Corene Wong at telephone no.6503163.



Yours faithfully,


/s/ Beh Sui Chung
- -----------------
Beh Sui Chung
Commercial Banking Manager



Page 3
M/s Trio-Tech (Malaysia) Sdn Bhd
21/st/ May 2002

We accept of the above offer as stated in your Letter of Offer dated 21/st/ May
2002 (REF:PGH/CBC/BSC/WYM/Iyy) that the Bank's agreement to provide us with the
abovementioned facility will not contravene the provisions of Section 62 of the
Banking and Financial Institutions act 1989. We accept that the Bank reserves
the right to recall the facility in the event that the facility extended to us
are not in compliance with the aforementioned section of the Act.

We confirm that the Bank's agreement to provide us with the abovementioned
facilities will not contravene the provision of ECM 8 of the Malaysian Exchange
Control Regulations. In additional we also confirm that 50% of our credit
facilities +++, at all times, are sourced from Malaysian-owned licensed banks,
licensed merchant banks and/or licensed finance companies.

In the event that we decide to negotiate or seek additional facilities from
other financial institutions and/or any other sources in Malaysia which may lead
to our total borrowings exceeding MYR 10 million +, we shall inform you and also
obtain the necessary approval from the relevant authority.

We further agree that your Letter of Offer embodies in writing all terms for the
Banking Facilities to be granted to us and hereby confirm that any warranties,
promises, representations collateral agreements that may have been made or made
to us, orally or otherwise by you in the course of the pre-contractual
negotiations that have not now been included in your Letter of Offer shall
hereafter be deemed by us to have lapsed and not legally binding upon you nor
shall it be raised by us as a defence or to support any claim by us in any legal
proceedings.

We also confirm that the securities list attached to the letter of offer is
correct.

For & on behalf of
TRIO-TECH (MALAYSIA) SDN. BHD.
CO. NO. 105390 V

/s/ Ting Hock Ming, Victor
- --------------------------
Authorised signatories and Company's Chop

Date: 8/7/02



Page 4
M/s Trio-Tech (Malaysia) Sdn Bhd
21/st/ May 2002

Terms and Conditions (Annexure to Letter of Offer).

Existing Securities:

a)   Time Deposit for RM 183,140-69 held under lien supported by Security Over
     Deposit in Respect of Obligations of the Depositor stamped at ad valorem.

b)   Blanket Counter Indemnity dated 19'h October 1985.

Documents Required:

1)   A suitable Board Resolution authorising:

a)   the negotiation and acceptance of the aforementioned facilities.

b)   the provision of a cash cover/cash margin, on demand by the Bank, in
     respect of the Bank's contingent liabilities under the guarantee
     performance bonds issued by the Bank; and

c)   the signatories for accepting this and future Letters of Offer.

d)   the execution of all other documents as required by the Bank.

e)   and the mode of execution on all relevant security documents in accordance
     with your Memorandum and Articles of Association.

If at any time the Bank shall consider that the security is insufficient you
shall within 14 days from the date of a notice from the Bank provide such
further security as the Bank shall require whether in cash or otherwise of such
value and for such tenure as the Bank shall in its absolute discretion decide.

                                    GUARANTEE

Commission:

Commission of not less than 0.170% per month subject to a minimum of RM100-00
shall be charged for the full liability period (inclusive of the claim period of
the guarantee issued).

Where a Guarantee does not have a claim period, additional commission of not
less than 0.05% per month shall be charged from the date of expiry to the date
of return of the Guarantee or on receipt of notification from the beneficiary
that the Bank is no longer liable under the Guarantee.



Page 5
M/s Trio-Tech (Malaysia) Sdn Bhd
21/st/ May 2002

All Guarantees issued by us must bear an expiry date and we are at liberty to
refuse to issue any particular guarantee and the facility remain subject to our
immediate right to settlement on demand, as stated in the terms of your Counter
Indemnity in the event of any claims being made under the guarantee.

Should any one of our guarantee be called up, we would immediately debit your
account with the amount and you would arrange to have funds available for this
purpose.

This facility is subject to our right to call for cash cover/cash margin on
demand for prospective and contingent liabilities under the
guarantees/performance bonds issued/to be issued by us.

EVENTS OF DEFAULT:

If there are circumstances likely to lead to events of default among other
things due to irregularities in your financial affairs or your inability to meet
your indebtedness to us, it is proposed that you contact is for an early
appraisal of your commitment.

All sums due hereunder shall be repayable on demand in the event:-

1)   You default in the payment of any instalments and/or interest or the
     conduct of your account has been unsatisfactory; or

2)   You fail to observe or perform any covenants herein; or

3)   a petition is presented or and order is made or resolution passed for your
     winding-up, dissolution or liquidation; or

4)   you commence a meeting for the purpose of making or proposing and/or enter
     into any arrangement with or for the benefit of your creditors; or

5)   a receiver or other similar officer is appointed of the whole or any part
     of your assets or undertaking; or

6)   you shall cease or threaten to cease to carry on your business or to be
     unable to pay your debts or dispose or threaten to dispose of the whole or
     a substantial part of your undertaking or assets; or

7)   for any reason any guarantee or security given to us for the repayment of
     this loan shall be terminated or shall lapse for any reason whatsoever or
     if the guarantor shall be in default under the terms of such guarantee or
     dies or become of unsound mind or is wound up or commits any act of
     bankruptcy; or



Page 6
M/s Trio-Tech (Malaysia) Sdn Bhd
21/st/ May 2002

8)   any of your other indebtedness to us or any third party or parties becomes
     capable in accordance with the relevant terms thereof of being declared due
     prematurely by reason of your default or your failure to make any payment
     in respect thereof on the due date of each payment or if due on demand when
     demanded or the security for such indebtedness become enforceable.

9)   if, in the Bank's opinion, there is any change or threatened change in
     circumstances which would materially and adversely affect the company's
     business or financial condition or the Company's ability to perform its
     obligations under the letter of offer or any other agreement with the Bank,
     including any change or threatened in its shareholders or directors, if a
     corporation;

10)  If, by any reason of any change after the date of this offer in applicable
     law, regulation or regulatory requirement or, in the interpretation or
     application thereof of any governmental or other authority charged with the
     administration thereof it shall become unlawful for the Bank to comply with
     its obligations herein or to continue to make available the facility.

     GENERAL TERMS:

a)   Notwithstanding anything to the contrary contained herein, the Bank may at
     any time and in its absolute discretion without discharging in any way your
     liabilities hereunder and under the security documents to vary the terms
     herein including but not limited to the rate of interest, additional
     interest, commission overdue interest, and other charges herein stated; and
     the amount or form of the facilities granted so as to convert the existing
     facility or cancel one or more facilities or create two or more from the
     facility (provided always at the applicable rate of interest) and such as
     variation etc. shall take effect upon notice being given by the bank to
     you.

b)   The Bank further reserves the right to immediately recall the facility
     granted herein if any if your other indebtedness to the Bank or to any
     third party or parties becomes capable in accordance with the relevant
     terms thereof of being declared due prematurely by reason of a default or
     your failure to make any payment in respect thereof on the due date of each
     payment or if due on demand when demanded or the security for such
     indebtedness becomes enforceable.

c)   All legal expenses and all other charges and disbursements (including stamp
     duty and the Bank's solicitors' fees on a solicitor and client basis)
     incurred in connection with or incidental to the preparation and execution
     of the security documents and in the recovery of the abovementioned
     facility and enforcement of security shall be payable by you and if
     remaining unpaid shall be debited without further notice to your current
     account or a disbursement/suspense account opened by the Bank for the
     purpose.



Page 7
M/s Trio-Tech (Malaysia) Sdn Bhd
21/st/ May 2002

c)   If the facility is extended beyond the expiry date of the time deposit, the
     deposit will be renewed automatically each time it falls due and will
     remain as continuing security for as long as the facility shall remain
     unpaid.

d)   If the effect of any, or a change in any, law or regulation is to increase
     the cost to us of advancing, maintaining or funding this facility or to
     reduce effective return to us, we reserve the right to require payment on
     demand of such amounts as we consider necessary to compensate us therefore.

e)   The facility granted does not contravene Section 62 of the Banking and
     Financial Institution Acts(BAFIA) 1989.
     (We enclose herewith a copy of Section 62 of Banking and Financial
     Institutions Act 1989 for your attention and please note that under Section
     62(2) of the BAFIA the word "officer" includes "any employee of the
     financial institution").

f)   Other terms and conditions as contained in the Bank's legal documentation
     executed by you shall apply.

g)   This facility is subject to our right to all for cash cover/cash margin on
     demand for prospective and contingent liabilities under the documentary
     credit/guarantee issued/to be issued by us.

h)   The Bank shall charge at its absolute discretion fees, where applicable, as
     follows, Administration Fee of RM500-00 per deal and Temporary Facility
     Arrangement Fee of RM200-00 per deal which charges shall be paid upon
     acceptance of Letter of Offer and if remaining unpaid shall be debited
     without further notice to your current/disbursement/other account whether
     or not opened by the Bank for the purpose. Notwithstanding these charges,
     the Bank reserves the absolute discretion whether to grant or otherwise any
     facility, restructuring/adjustment of facility and/or temporary excess or
     temporary drawing against uncleared effects.

You hereby irrevocably agree that any information related to the facilities, the
conduct of same and any related information on your accounts or otherwise may be
used, stored, disclosed, transferred, compiled, matched, obtained and/or
exchanged by the Bank from time to time as it may consider necessary to, from or
with any person as the Bank may consider necessary including without limitation
any member of the HSBC Group, any service provider or third party for any and
all purposes in connection herewith and/or the provision of products, services
and advances to you in relation hereto, to any bureaus or agencies established
or to be established by Bank Negara Malaysia (including the Central Credit
Reference Information System - "CCRIS") or by other authorities, the Association
of Banks in Malaysia, to any (prospective or otherwise) guarantors and/or
security providers and to any authorised depositary agent.



Page 8
M/s Trio-Tech (Malaysia) Sdn Bhd
21/st/ May 2002

All information given by the Bank to any of the abovementioned persons and any
persons having access to the information under CCRIS (collectively referred to
as "Users") is provided in good faith and for information purposes only and that
whilst every care has been taken in compiling, collating or producing the
information, the Bank and its officers shall not in any event be liable for any
claim, loss, damage or liability howsoever arising (including direct or
indirect, special, incidental, consequential or punitive damages or loss of
profits or savings) to you or to any other persons whatsoever for the accuracy,
completeness or authenticity of its contents or for the consequences of any
reliance which may be placed on the information whether caused by any technical,
hardware or software failure of any kind, interruption, error, omission, delay,
viruses, act of God, act of war, strikes, industrial action or otherwise.
Information given is kept strictly confidential by the Users.

It is a term of the credit facility granted to you that information regarding
the facility, the conduct of same and any related information on your accounts
or otherwise will be given to the abovenamed recipients for their use only.



62.  (1)*  Unless exempted by the Bank in writing with or without conditions, or
           except as provided under subsection (2) or (3), no licensed
           institution shall give any credit facility to -

           (a) any of its directors or officers or any other person receiving
               remuneration from it (other than any accountant, advocate,
               architect, estate agent, doctor and any other person receiving
               remuneration from it in respect of his professional services);

           (b) any body corporate or unincorporate, or a sole proprietorship, in
               which any of its directors or officers is a director or manager,
               or for which any of its directors or officers is a guarantor or
               an agent;

               Prohibition of credit facilities to director and officer.

                                     ACT 372

           (c) any corporation in which any of its directors or officers has any
               interest in the shares of that corporation; and

           (d) any person for whom any of its directors or officers has given
               any guarantee or other undertaking whatsoever involving financial
               liability.

     (2)   a licensed institution may given to any of its officers or its
           executive director -

           (a) any loan which is provided for under his scheme of service; or

           (b) where there is no such provision and the institution is satisfied
               that special or compassionate circumstances exist, a loan not
               exceeding at any one time -

               (i)   six months' remuneration of that officer or executive
                     director; or

               (ii)  his remuneration for such longer period a may be approved
                     by the bank,

           and subject to such other terms and conditions as the institution
           thinks fit

     (3)   The provisions of -

           (a) subsection (1)(a) shall not apply to the giving of any credit
               facility to the spouse, child or parent of an officer, including
               an executive director, of that licensed institution for the
               purchase of a house; and

           (b) subsection (1)(c) shall not apply to the giving of any credit
               facility by a licensed institution to -

               (i)   a corporation in which any executive  director or officer
                     of that licensed  institution has an interest in less than
                     five per centum of the shares of that corporation;

           BANKING AND FINANCIAL INSTITUTIONS

               (i)   a corporation which is listed on a recognised stock
                     exchange and in which no director, not being an executive
                     director, of that licensed institution has any-interest in
                     more than five per centum of the voting shares of that
                     corporation; or

               (iii) a corporation in which a director, not being an executive
                     director, of that licensed institution has no interest in
                     his personal capacity.

     (4)   For the purposes of this section, "director" or "officer" includes a
           spouse, child or parent of a director or officer.



HSBC                                         HSBC Bank Malaysia Berhad
                                             (Company No. 127776-V)

      Branch: DOWNING ST PENANG              Page:              1
      Cawangan:                              Mukasurat:

      Customer Number: 372-064733     371    Date:           31MAR2002
      Nombor Pelanggan:                      Tarikh

         M/S TRIO TECH MALAYSIA SDN BHD      Shares/Documents
         PLOT 1A PHASE 1                     Type :               UNDER LIEN
         BAYAN LEPAS                         Jenis Saham
         FREE TRADE ZONE                     Dokumen:
         BAYAN LEPAS

      List of Securities:
      Securities are held at this office for your account without
      responsibility on the part of the Bank for collection of interest/
      dividends/ bonus/ rights or for any loss or damage, occasioned to or
      incurred by you as a result thereof.

      This statement will be deemed to reconcile with your records unless
      errors or discrepancies are reported to the Bank within 90 days of the
      statement date.

      Senarai Sekuriti

      Sekuriti yang disimpan di pejabat ini bagi akaun anda dan Bank tidak
      dipertanggungjawabkan unluk mendapatkan faedah dividen / bonus / hak
      atau untuk sebarang kerugian atau kerosakan, disebabkan oleh anda
      akibat daripada tindakan tersebut.

      Penyata ini akan dianggap sebagai penyesuaian terhadap rekod anda
      melainkan kesilapan atau ketidaksamaan dilaporkan kepada Bank dalam
      masa 90 hari daripada tarikh penyata.


No. of Shares/Units   StockName            Details
BilanganSaham/Unit    NamaStok             Butir-Butir      DOC. No.   DEP. DATE

        1            BLANKET COUNTER INDEMNITY              72901114   12DEC1998
                     BLANKET COUNTER INDEMNITY DD 19OCT85
        1            CERT Of REGN (FORM 40)                 71975684   12DEC1998
                     FORM 40 IRO SEC OVER DEP(CO)(1ST PARTY) DD 22AU
                     G97
        1            TIME DEPOSIT RECEIPT                   71980121   12DEC1998
                     TMD REC 132 RM173, 955-54 (6M) (AUTO) (372-190124
        1            LETTER OF OFFER/ACCEPTANCE             71005264   17MAY2000
                     DD 16MAY2000 TO EXTEND GTE $152K.
        1            LETTER OF OFFER/ACCEPTANCE             71990612   19MAY1999
                     LETTER OF OFFER DD 05FEB99 TO REVISE GUARANTEE
                     LIMIT FROM 145K TO 152K
        1            RESOLUTION                             71981368   12DEC1998
                     RESLN DD 31JUL98 FOR BANKERS' GUARANTEE
        1            RESOLUTION                             71990613   19MAY1999
                     DIRECTORS' RESOLUTION PASSED ON 05MAR99 FOR L/O
                     DD 05FE99
        1            SEC OVER DEP/OBLIGATIONS(CO)1ST PTY    71980096   12DEC1998
                     SEC OVER DEP/OBLIGATIONS (CO) DD 06AUG97 FOR TM
                     D RM145K

EX-10.19

10.19 Credit Facility Letter dated January 22, 2002, between Trio-Tech (KL) Sdn
      Bhd and Public Bank Berhad. *

[LOGO]
PUBLIC BANK
(6463-H)

Our Ref: Sec Dept/OD 3082916428

22 January 2002

PRIVAIE & CONFIDENTIAL

M/S Trio-Tech (KL) Sdn Bhd                                      By Fax / By Post
Blk 1008
Toa Payoh North
#03-09
Singapore 318996

Attention: Ms Leonq Yin Teng

Dear Sirs

Reduction of Overdraft Limit
Old Limit: RM300,000-00
New Limit: RM30,000-00
Under OD Account No. 3-0929164-28

We refer to your letter dated 17 January 2002 and are pleased to inform that
your overdraft limit has been reduced from RM300,000-00 to RM30,000-00 with
immediate effect.

All other terms and conditions as per our Letter of Offer dated 30 January 1995
remain unchanged.

Meanwhile, kindly acknowledge by signing and returning the duplicate of this
letter.

Yours truly
for PUBLIC BANK BERHAD

/s/: Chang Wei Ling
Chang Wei Ling (Ms)
Operations Officer

CWL / - (mm)



                           [LETTERHEAD OF TRIO-TECH]

TRIO-TECH
(K.L) SDH. BHD. Company No. 197594X


17 January 2002

Chua Swee Leong
Banking Facilities Dept
Public Bank Bhd
Ground Floor Wisma Saudagar                       By fax
420 Batu 5 Jalan Ampang
68000 Ampang Selangor Darul Ehsan
Kuala Lumpur

Dear Mr Chua

Re: Revised Bank Facilities letter
    Current Account No: 3082916428

We would like to have a copy of the revised bank facilities letter after a
revision is made in November 2001.

We will appreciate it if we could receive the letter by 28 January 2002. You
could fax to us first at 02-2596355 and send it to Blk l008. Toa Payoh North,
#03-09 Singapore 318996.

Please do not hesitate call the undersigned at 02-3549744 respectively should
you need any clarification.

Thank you

Yours faithfully,

Leong Yin Teng
Accounts Officer

EX-10.20

                                                                   EXHIBIT 10.20

                                     [LOGO]

                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

          STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- GROSS
               (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.      Basic Provisions ("Basic Provisions")
        1.1 Parties: This Lease ("Lease"), dated for reference purposes only,
November 8, 2001, is made by and between ELBAR INVESTMENTS, L.P. ("Lessor") and
TRIO-TECH INTERNATIONAL, a California corporation ("Lessee"), (collectively the
"Parties," or individually a "Party").

        1.2     Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
known as 14731 Califa Street, Van Nuys, located at the County of Los Angeles,
State of CA, and generally described as (describe briefly the nature of the
property and, if applicable, the "Project", if the property is located within a
Project) approximately 10,400 square feet being the easterly half of a building
having overall dimensions of 130 feet by 160 feet together with parking as
defined in Paragraph 51 of the Addendum and on Exhibit "A" attached hereto. See
plot plan attached hereto and made a part hereof, marked as Exhibt
"A". ("Premises".) (See also Paragraph 2).

        1.3     Term: three (3) years and -0- months ("Original Term")
commencing January 1, 2002 ("Commencement Date") and ending December 31, 2004
("Expiration Date"). (See also Paragraph 3)

        1.4     Early Possession: N/A ("Early Possession Date"). (See also
Paragraph 3.2 and 3.3)

        1.5     Base Rent: $7,488.00 per month ("Base Rent"), payable on the
First (1st) day of each month commencing March 1, 2002. No rent shall be due for
the period 1/1/02 - 2/28/02 (See also Paragraph 4)

[X] If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted and/or for common area maintenance charges. (See Paragraph 50)

        1.6     Base Rent Paid Upon Execution: $7,488.00 as Base Rent for the
period March 1, 2002 through March 31, 2002.

        1.7     Security Deposit: $7,488.00 ("Security Deposit"). (See also
Paragraph 5).

        1.8     Agreed Use: offices and the assembly, testing, and warehousing
of equipment and systems used in the manufacture and testing of semiconductors
and for no other purpose. (See also Paragraph 6)

        1.9     Insuring Party: Lessor is the "Insuring Party"). The annual
"Base Premium" is $_______________. (See also Paragraph 8)

        1.12    Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 50 through 51 and Exhibits "A", all of which
constitute a part of this lease.

2.      Premises.

        2.1     Letting. Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Premises, for the term, at the rental, and upon all of
the terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.

        2.2     Condition. Lessor shall deliver the Premises broom clean and
free of debris on the Commencement Date or the Early Possession Date, whichever
first occurs ("Start Date"), and warrants that the existing electrical,
plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning
systems ("HVAC"), loading doors, if any, and all other such elements of the
building, in the Premises, other than those constructed by Lessee, shall be in
good operating condition on said date and that the surface and structural
elements of the roof, bearing walls and foundation of any buildings on the
Premises (the "Building") shall be free of material defects. If a non-compliance
with said warranty exists as of the Start Date, Lessor shall, except as
otherwise provided in this Lease, promptly after receipt of written notice from
Lessee seting forth with specificity the nature and extent of such
non-compliance, rectify same at Lessor's expense. If, after the Start Date,
Lessee does not give Lessor written notice of any non-compliance with this
warranty within (i) six (6) months as to the HVAC systems or (ii) thirty (30)
days as to the remaining systems and other elements of the Builiding, correction
of such non-compliance shall be the obligation of Lessee at Lessee's sole cost
and expense, except for the roof, foundations, and bearing walls which are
handled as provided in Paragraph 7.

        2.3     Compliance. Lessor warrants that the improvements on the
Premises comply with all appliacable laws, covenants or restrictions of record,
building codes, regulations and ordinances ("Applicable Requirements") in effect
on the Start Date. Said warranty does not apply to the use to which Lessee will
put the Premises or the any Alterations or Utility Installations (as defined in
Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determing whether or not the zoning is appropriate for Lessee's intended use,
and acknowledges that past uses of the Premises may no longer be allowed. If the
Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify the same
at Lessor's expense. If Lessee does not give written notice of a non-compliance
with this warranty within six (6) months following the Start Date, correction of
that non-compliance shall be the obligation of Lessee at Lessee's sole cost and
expense. If the Applicable Requirements are hereafter changed (as opposed to
being in existence at the Start Date, which is addressed in Paragraph 6.2(e)
below so as to require during the term of this Lease the construction of an
addition to or an alteration of the Building, the remediation of any Hazardous
Substance, or the reinforcement or other physical modification of the Building
("Capital Expenditure"), Lessor and Lessee shall allocate the cost of such work
as follows:

                (a) Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost therof, provided, however, that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof exceeds six (6) months' Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within ten (10) days after
receipt of Lessee's termination notice that Lessor has elected to pay the
difference between the actual cost

                                  Page 1 of 11       Initials ________ _________



thereof and the amount equal to six (6) months' Base Rent.  If Lessee elects
termination, Lessee shall immediately cease the use of the Premises which
requires such Capital Expenditure and deliver to Lessor written notice
specifying a termination date at least ninety (90) days thereafter.  Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

          (b) if such Capital Expenditure is not the result of the specific and
unique use of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor and Lessee shall allocate the obligation to pay for
such costs pursuant to the provisions of Paragraph 7.1(c); provided, however,
that if such Capital Expenditure is required during the last two years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor,
in writing, within ten (10) days after receipt of Lessor's termination notice
that Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure, Lessee
may advance such funds and deduct same, with interest, from Rent until Lessor's
share of such costs have been fully paid. If Lessee is unable to finance
Lessor's share, or if the balance of the Rent due and payable for the remainder
of this Lease is not  sufficient to fully  reimburse  Lessee on an offset basis,
Lessee  shall  have the right to  terminate  this Lease  upon  thirty  (30) days
written notice to Lessor.

          (c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Lessee as a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully responsible for the cost thereof, and Lessee shall not have any right to
terminate this Lease.

     2.4  Acknowledgements. Lessee acknowledges that: (a) it has been advised by
Lessor to satisfy itself with respect to the condition of the Premises
(including but not limited to the electrical, HVAC, security, environmental
aspects, and compliance with Applicable Requirements), and their suitability for
Lessee's intended use, (b) Lessee has made such investigation as it deems
necessary with reference to such matters and assumes all responsibility therefor
as the same relate to its occupancy of the Premises, and (c) neither Lessor,
Lessor's agents, has made any oral or written representations or warranties with
respect to said matters other than as set forth in this Lease. In addition,
Lessor acknowledges that: it is Lessor's sole responsibility to investigate the
financial capability and/or suitability of all proposed tenants.

     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.

3.   Term

     3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.

     3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease shall,
however, be in effect during such period. Any such early possession shall not
affect the Expiration Date.

     3.3 Delay in Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within sixty (60)
days after the Commencement Date, Lessee may, at its option, by notice in
writing within ten (10) days after the end of such sixty (60) day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said ten (10)
day period, Lessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Lessee by the Start Date and Lessee
does not terminate this Lease, as aforesaid any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession of the Premises is not delivered within
four (4) months after the Commencement Date, this Lease shall terminate unless
other agreements are reached between Lessor and Lessee, in writing.

     3.4 Lessee Compliance. Lessor shall not be required to tender possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.

4.   Rent

     4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").

     4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in
lawful money of the United States, without offset or deduction (except as
specifically permitted in this Lease), on or before the day on which it is due.
Rent for any period during the term hereof which is for less than one (1) full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating.

5.   Security Deposit.  Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease.  If Lessee fails to pay Rent, or otherwise
Defaults under this Lease, Lessor may use, apply or retain all or any portion of
said Security Deposit for the payment of any amount due Lessor or to reimburse
or compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof.  If Lessor uses or applies all or any portion
of said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease.  If the Base Rent increases
during the term of this Lease, Lessee shall, upon written request from Lessor,
deposit additional monies with Lessor so that the total amount of the Security
Deposit shall at all times bear the same proportion to the increased Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the Agreed
Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on said change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within fourteen (14) days after the expiration or termination
of this Lease, if Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the
Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment
for any monies to be paid by Lessee under this Lease.

6.   Use.

     6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use,
or any other legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to neighboring properties. Lessor shall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.

     6.2 Hazardous Substances.

          (a) Reportable Uses Require Consent. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance, or waste whose presence,
use, manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either: (i)
potentially injurious to the public health, safely or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority, or
(iii) a basis for potential liability of Lessor to any governmental agency or
third party under any applicable statute or common law theory. Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, by-products or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "Reportable Use" shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the  generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties.

                                  Page 2 of 11                Initials____ _____



Notwithstanding the foregoing, Lessee may use any ordinary and customary
materials reasonably required to be used in the normal course of the Agreed Use,
so long as such use is in compliance with all Applicable Requirements, is not a
Reportable Use, and does not expose the Premises or neighboring property to any
meaningful risk of contamination or damage or expose Lessor to any liability
therefor. In addition, Lessor may condition its consent to any Reportable Use
upon receiving such additional assurances as Lessor reasonably deems necessary
to protect itself, the public, the Premises and/or the environment against
damage, contamination, injury and/or liability, but not limited to, the
installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the
Security Deposit.

         (b) Duty to inform Lessor.  If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

         (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, take all investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
contamination of, and for the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to
by Lessee, or pertaining to or involving any Hazardous Substance brought onto
the Premises during the term of this Lease, by or for Lessee, or any third
party.

         (d) Lessee Indemnification.  Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys' and consultants' fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from adjacent properties). Lessee's obligations shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and the cost
of investigation, removal, remediation, restoration and/or abatement, and shall
survive the expiration or termination of this Lease. No termination,
cancellation or release agreement entered into by Lessor and Lessee shall
release from its obligations under this Lease with respect to Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement.

         (e) Lessor Indemnification.  Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which existed as a result of Hazardous Substances on the
Premises prior to the Start Date or which are caused by the gross negligence or
willful misconduct of Lessor, its agents or employees. Lessor's obligations, as
and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.

         (f) Investigations and Remediations.  Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to the Start Date, unless such
remediation measure is required as a result of Lessee's use (including
alterations) of the Premises, in which event Lessee shall be responsible for
such payment. Lessee shall cooperate fully in any such activities at the request
of Lessor, including allowing Lessor and Lessor's agents to have reasonable
access to the Premises at reasonable times in order to carry out Lessor's
investigative and remedial responsibilities.

          (g) Lessor Termination Option. If a Hazardous Substance Condition
occurs during the term of this Lease, unless Lessee is legally responsible
therefor (in which case Lessee shall make the investigation and remediation
thereof required by the Applicable Requirements and this Lease shall continue in
full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and
Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect, or (ii) if the estimated cost to remediate such condition
exceeds twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater, give written notice to Lessee, within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of
Lessor's desire to terminate this Lease as of the date sixty (60) days following
the date of such notice. In the event Lessor elects to give a termination
notice, Lessee may, within ten (10) days thereafter, give written notice to
Lessor of Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to
twelve (12) times the monthly Base Rent or $100,000, whichever is greater.
Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within thirty (30) days following such commitment. In such event, this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
remediation as soon as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time provided, this Lease shall terminate as of the
date specified in Lessor's notice of termination.

     6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee
shall, within ten (10) days after receipt of Lessor's written request, provide
Lessor with copies of all permits and other documents, and other information
evidencing Lessee's compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with
copies of any documents involved) of any threatened or actual claim, notice,
citation, warning, complaint or report pertaining to or involving the failure of
Lessee or the Premises to comply with any Applicable Requirements.

    6.4  Inspection; Compliance.  Lessor and Lessor's "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be
paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the inspection is requested
or ordered by a governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
reasonably related to the violation or contamination.

7.  Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.

    7.1  Lessee's Obligations.

         (a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's
Obligations), 9 (Damage and Destruction), and 14 (Condemnation), Lessee shall,
at Lessee's sole expense, keep the Premises, Utility Installations, and
Alterations in good order, condition and repair (whether or not the portion of
the Premises requiring repairs, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, but not limited to, all
equipment or facilities, such as plumbing, heating, ventilating,
air-conditioning, electrical, lighting facilities, boilers, pressure vessels,
fire protection system, fixtures, walls (interior and exterior), ceilings,
floors, windows, doors, skylights, landscaping, driveways, parking lots, fences,
signs, sidewalks and parkways located in, on, or adjacent to the Premises.
Lessee is also responsible for keeping the roof drainage clean and free of
debris. Lessor shall keep the surface and structural elements of the roof,
foundations, and bearing walls in good repair (see Paragraph 7.2). Lessee, in
keeping the Premises in good order, condition and repair, shall exercise and
perform good maintenance practices. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair. Lessee shall, during the term of this Lease, keep the exterior
appearance of the Building in a first-class condition (including, e.g., graffiti
removal) consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.

         (b) Service Contracts. Lessee shall, at Lessee's sole expense, procure
and maintain contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the maintenance of the
following equipment and improvements ("Basic Elements"), if any, and when
installed on the Premises: (i) HVAC equipment, fire extinguishing systems,
including fire alarm and/or smoke detection, and any other equipment, if
reasonably required by Lessor.

         (c) Replacement. Subject to Lessee's indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if the Basic Elements described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such Basic Elements, then such Basic Elements shall be replaced by Lessor, and
the cost thereof shall be prorated between the Parties and Lessee shall only be
obligated to pay, each month during the remainder of the term of this Lease, on
the date on which Base Rent is due, an amount equal to the product of
multiplying the cost of such replacement by a fraction, the numerator of which
is one, and the denominator of which is the number of months of the useful life
of such replacement as such useful life is specified pursuant to Federal income
tax regulations or guidelines for depreciation thereof (including interest on
the unamortized balance as is then commercially reasonable in the judgment of
Lessor's accountants), with Lessee reserving the right to prepay its obligation
at any time.

    7.2  Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building

                                 Page 3 of 11           Initials______  ______



Code), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by the
Parties hereto that Lessor have no obligation, in any manner whatsoever, to
repair and maintain the Premises, or the equipment therein, all of which
obligations are intended to be that of the Lessee, except for the surface and
structural elements of the roof, foundations and bearing walls, the repair of
which shall be the responsibility of Lessor upon receipt of written notice that
such a repair is necessary. It is the intention of the Parties that the terms of
this Lease govern the respective obligations of the Parties as to maintenance
and repair of the Premises, and they expressly waive the benefit of any statute
now or hereafter in effect to the extent it is inconsistent with the terms of
this Lease.

     7.3   Utility Installations; Trade Fixtures; Alterations.

           (a) Definitions; Consent Required. The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems and signs, communication
systems, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the
Premises. The term "Trade Fixtures" shall mean Lessee's machinery and equipment
that can be removed without doing material damage to the Premises. The term
"Alterations" shall mean any modification of the improvements, other than
Utility Installations or Trade Fixtures, whether by addition or deletion.
"Lessee Owned Alterations and/or Utility Installations" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility Installations to the Premises without Lessor's prior written consent.
Lessee may, however, make non-structural Utility Installations to the interior
of the Premises (excluding the roof) without such consent but upon notice to
Lessor, as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls.

           (b) Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. Consent shall be deemed
conditioned upon Lessee's: (i) acquiring all applicable government permits, (ii)
furnishing Lessor with copies of both the permits and the plans and
specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and
expeditious manner. Any Alterations or Utility Installations shall be performed
in a workmanlike manner with good and sufficient materials. Lessee shall
promptly upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.

           (c) Indemnification. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility. If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall, as its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof. If Lessor shall require, Lessee shall furnish a surety bond in an
amount equal to one and one-half times the amount of such contested lien, calm
or demand, indemnifying Lessor against liability for the same. If Lessor elects
to participate in any such action, Lessee shall pay Lessor's attorney's fees and
costs.

     7.4   Ownership; Removal; Surrender; and Restoration;

           (a) Ownership. Subject to Lessor's right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the
Premises. Lessor may, at any time, elect in writing to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per Paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.

           (b) Removal. By delivery to Lessee of written notice from Lessor not
earlier than ninety (90) and not later than thirty (30) days prior to the end of
the term of this Lease, Lessor may require that any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of this Lease. Lessor may require the removal at any time of all or any part of
any Lessee Owned Alterations or Utility Installations made without the required
consent.

           (c) Surrender/Restoration. Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Lessee shall repair
any damage occasioned by the installation, maintenance or removal of Trade
Fixture, Lessee Owned Alteration and/or Utility Installations, furnishings, and
equipment as well as the removal of any storage tank installed by or for lessee
and the removal, replacement, or remediation of any soil, material or
groundwater contaminated by Lessee. Trade Fixtures shall remain the property of
Lessee and shall be removed Lessee. The failure by Lessee to timely vacate the
Premises pursuant to this Paragraph 7.4(c) without the express written consent
of Lessor shall constitute a holdover under the provision of Paragraph 26 below.

     8.    Insurance; Indemnity.

           8.1 Payment of Premium Increases

           (a) Lessee shall pay to lessor any insurance cost increase
("Insurance Cost Increase") occurring during the term of this Lease. "Insurance
Cost Increase" is defined as any increase in the actual cost of the insurance
required under Paragraphs 8.2(b), 8.3(a) and 8.3(b) ("Required Insurance), over
and above the Base Premium as hereinafter defined calculated on an annual basis.
"Insurance Cost Increase" shall include but not be limited to increases
resulting from the nature of Lessee's occupancy, any act or omission of Lessee,
requirements of the holder of mortgage or deed of trust covering the Premises,
increased valuation of the Premises and/or a premium rate increase. The Parties
are encouraged to fill in the Base Premium in Paragraph 1.9 with a reasonable
premium for the Required Insurance based on the Agreed Use of the Premises. If
the Parties fail to insert a dollar amount in Paragraph 1.9, then the Base
Premium shall be the lowest annual premium reasonably obtainable for the
Required Insurance as of the commencement of the the Original Term for the
Agreed Use of the Premises. In no event, however, shall Lessee be responsible
for any portion of the increase in the premium cost attributable to liability
insurance carried by Lessor under Paragraph 8.1(b) in excess of $2,000,000 per
occurrence.

           (b) Lessee shall pay any such Insurance Cost Increase to Lessor
within (30) days after receipt by Lessee of a copy of the premium statement or
other reasonable evidence of the amount due. If the insurance policies
maintained hereunder cover other property besides the Premises, Lessor shall
also deliver to Lessee a statement of the amount of such insurance Cost increase
attributable only to the Premises showing in reasonable detail the manner in
which such amount was computed. Premiums for policy periods commencing prior to,
extending beyond the term of this Lease, shall be prorated to correspond to the
term of this Lease.

     8.2   Liability Insurance.

           (a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability Policy of Insurance protecting Lessee and Lessor
against claims for bodily injury, personal injury and property damage based upon
or arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $2,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any intra-insured exclusions as between Insured persons or
organization under this Lease. The limits of said insurance shall not, however,
limit the liability of Lessee nor relieve Lessee of any obligation hereunder.
All insurance carried by Lessee shall be primary to and not contributory with
any similar insurance carried by Lessor, whose insurance shall be considered
excess insurance only.

           (b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an additional
insured therein.

     8.3   Property Insurance-Building, Improvements and Rental Value.

           (a) Building and Improvements. The Insuring party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lenders, but in no event more than the commercially reasonable
and available insurable value thereof. If Lessor is the insuring Party, however,
Lessee Owned Alteration and Utility Installations, Trade Fixtures, and Lessee's
personal property shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. If the coverage is available and commercially appropriate, such policy
or policies shall insure against all risks of direct physical loss or damage
(except the perils of flood and/or earthquake included in the Base Premium),
including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement
of any portion of the Premises as the result of a covered loss. Said policy or
policies shall also contain an agreed valuation provision in lieu of any
coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less than the adjusted U.S. Department of Labour Consumer Price Index for
All Urban Consumer for the city nearest to where the Premises are located.

           (b) Rental Value. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor, with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one (1) year. Said insurance
shall provide that in the event the lease is terminated by reason of an
insured loss, the period of indemnity for such coverage shall be extended
beyond the date of the completion of repairs or replacement of the Premises, to
provide for one full year's

                                  Page 4 of 11         Initials _______ _______



loss of Rent from the date of any such loss. Said insurance shall contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected Rent otherwise
payable by Lessee, for the next twelve (12) month period.

                (c)     Adjacent Premises. If the Premises are part of a larger
building, or of a group of buildings owned by Lessor which are adjacent to the
Premises, the Lessee shall pay for any increase in the premiums for the property
insurance of such building or buildings if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.

        8.4     Lessee's Property/Business Interruption Insurance.

                (a)     Property Damage. Lessee shall obtain and maintain
insurance coverage on all of Lessee's personal property, Trade Fixtures, and
Lessee Owned Alterations and Utility Installations. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee Owned Alterations
and Utility installations. Lessee shall provide Lessor with written evidence
that such insurance is in force.

                (b)     Business Interruption. Lessee shall obtain and maintain
loss of income and extra expense insurance in amounts as will reimburse Lessee
for direct or indirect loss of earnings attributable to all perils commonly
insured against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

                (c)     No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

        8.5     Insurance Policies. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, as set forth in the most current issue
of "Best's Insurance Guide", or such other rating as may be required by a
Lender. Lessee shall not do or permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the Start Date, deliver to
Lessor certified copies of policies of such insurance or certificates evidencing
the existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after thirty (30) days prior
written notice to Lessor, Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. Such policies shall be for a term of at least
one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be
carried by it, the other Party may, but shall not be required to, procure and
maintain the same.

        8.6     Waiver of Subrogation. Without affecting any other rigths or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages against the other, for loss of or damage
to its property arising out of or incident to the perils required to be insured
against herein. The effect of such releases and waivers is not limited by the
amount of insurance carried or required, or by any deductibles applicable
hereto. The Parties agree to have their respective property damage insurance
carriers waive any right to subrogation that such companies may have against
Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

        8.7     Indemnity. Except for Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified.

        8.8     Exemption of Lessor from Liability. Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects or pipes, fire sprinklers,
wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the Building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under
no circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.

9.      Damage or Destruction.

        9.1     Definitions.

                (a)     "Premises Partial Damage" shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned
Alternations, Utility Installations and Trade Fixtures, which can reasonably be
repaired in six (6) months or less from the date of the damage or destruction.
Lessor shall notify Lessee in writing within thirty (30) days from the date of
the damage or destruction as to whether or not the damage is Partial or Total.

                (b)     "Premises Total Destruction" shall mean damage or
destruction to the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in six (6)
months or less from the date of the damage or destruction. Lessor shall notify
Lessee in writing within thirty (30) days from the date of the damage or
destruction as to whether or not the damage is Partial or Total.

                (c)     "Insured Loss" shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.

                (d)     "Replacement Cost" shall mean the cost to repair or
rebuild the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.

                (e)     "Hazardous Substance Condition" shall mean the
occurrence or discovery of a condition involving the presence of, or a
contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on,
or under the Premises.

        9.2     Partial Damage - Insured Loss. If a Premises Partial Damage that
is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
insuring Party shall promptly contribute the shortage in proceeds as and when
required to complete said repairs. In the event, however, such shortage was due
to the fact that, by reason of the unique nature of the improvements, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, the party responsible for making the repairs
shall complete them as soon as reasonably possible and this Lease shall remain
in full force and effect. If such funds or assurance are not received, Lessor
may nevertheless elect by written notice to Lessee within ten (10) days
thereafter to: (i) make such restoration and repair as is commercially
reasonable with Lessor paying any shortage in proceeds, in which case this Lease
shall remain in full force and effect; or (ii) have this Lease terminate thirty
(30) days thereafter. Lessee shall not be entitled to reimbursement of any funds
contributed by Lessee to repair any such damage or destruction. Premises Partial
Damage due to flood or earthquake shall be subject to Paragraph 9.3,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.

        9.3     Partial Damage - Uninsured Loss. If a Premises Partial Damage
that is not an insured Loss occurs, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either; (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (10) days after receipt of the termination notice to
give written notice to Lessor of Lessee's commitment to pay for the repair of
such damage without reimbursement from Lessor. Lessee shall provide Lessor with
said funds or satisfactory assurance thereof within thirty (30) days after
making such commitment. In such event this Lease shall continue in full force
and effect, and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required funds are available. If Lessee does not make the
required commitment, this Lease shall terminate as of the date specified in the
termination notice.

        9.4     Total Destruction. Notwithstanding any other provision hereof,
if a Premises Total Destruction occurs, this Lease shall terminate sixty (60)
days following such Destruction. If the damage or destruction was caused by the
gross negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

                                  Page 5 of 11          Initials _______ _______



        9.5     Damage Near End of Term. If at any time during the last six (6)
months of this Lease there is damage for which the cost to repair exceeds one
(1) month's Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (30) days after
the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee
at that time has an exercisable option to extend this Lease or to purchase the
Premises, then Lessee may preserve this Lease by, (a) exercising such option and
(b) providing Lessor with any shortage in insurance proceeds (or adequate
assurance thereof) needed to make the repairs on or before the earlier of (i)
the date which is ten days after Lessee's receipt of Lessor's written notice
purporting to terminate this Lease, or (ii) the day prior to the date upon which
such option expires. If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in insurance proceeds, Lessor shall, at Lessor's commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during such period, then this Lease shall
terminate on the date specified in the termination notice and Lessee's option
shall be extinguished.

        9.6     Abatement of Rent; Lessee's Remedies.

                (a)  Abatement. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee's use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value
Insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.

                (b)  Remedies. If Lessor shall be obligated to repair or restore
the Premises and does not commence, in a substantial and meaningful way, such
repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee
has actual notice, of Lessee's election to terminate this Lease on a date not
less than sixty (60) days following the giving of such notice. If Lessee gives
such notice and such repair or restoration is not commenced within thirty (30)
days thereafter, this Lease shall terminate as of the date specified in said
notice. If the repair or restoration is commenced within said thirty (30) days,
this Lease shall continue in full force and effect. "Commence" shall mean either
the unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.

        9.7     Termination - Advance Payments. Upon termination of this Lease
pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be
made concerning advance Base Rent and any other advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's
Security Deposit as has not been, or is not then, required to be, used by
Lessor.

        9.8     Waive Statutes. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the provisions of
any present or future statute to the extent inconsistent herewith.

10.     Real Property Taxes.

        10.1    Definition of "Real Property Taxes." As used herein, the term
"Real Property Taxes" shall include any form of assessment; real estate,
general, special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Building address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. The
term "Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including, but not limited to, a change in the ownership
of the Premises. (Lessee shall not be responsible for its pro-rata share of any
real estate tax increase due to a sale or transfer of the property during the
period January 1, 2002 through December 31, 2004.)

        10.2

                (a)  Payment of Taxes. Lessor shall pay the Real Property Taxes
applicable to the Premises provided, however, that Lessee shall pay to Lessor
the amount, if any, by which Real Property Taxes applicable to the Premises
increase over the fiscal tax year 2001/2 ("Tax Increase"). Subject to Paragraph
10.2(b), payment of any such Tax Increase shall be made by Lessee to Lessor
within thirty (30) days after receipt of Lessor's written statement setting
forth the amount due and the computation thereof. If any such taxes shall cover
any period of time prior to or after the expiration or termination of this
Lease, Lessee's share of such taxes shall be prorated to cover only that portion
of the tax bill applicable to the period that this Lease is in effect.

                (b)  Advance Payment. In the event Lessee incurs a late charge
on any Rent payment, Lessor may, at Lessor's option, estimate the current Real
Property Taxes, and require that the Tax Increase be paid in advance to Lessor
by Lessee, either: (i) in a lump sum amount equal to the amount due, at least
twenty (20) days prior to the applicable delinquency date; or (ii) monthly in
advance with the payment of the Base Rent. If Lessor elects to require payment
monthly in advance, the monthly payment shall be an amount equal to the amount
of the estimated installment of the Tax Increase divided by the number of months
remaining before the month in which said installment becomes delinquent. When
the actual amount of the applicable Tax Increase is known, the amount of such
equal monthly advance payments shall be adjusted as required to provide the
funds needed to pay the applicable Tax Increase. If the amount collected by
Lessor is insufficient to pay the Tax Increase when due, Lessee shall pay
Lessor, upon demand, such additional sums as are necessary to pay such
obligations. All monies paid to Lessor under this Paragraph may be intermingled
with other monies of Lessor and shall not bear interest. In the event of a
Breach by Lessee in the performance of its obligations under this Lease, then
any balance of funds paid to Lessor under the provisions of this Paragraph may,
at the option of Lessor, be treated as an additional Security Deposit.

                (c)  Additional Improvements. Notwithstanding anything to the
contrary in this Paragraph 10.2, Lessee shall pay to Lessor upon demand therefor
the entirety of any increase in Real Property Taxes assessed by reason of
Alterations or Utility Installations placed upon the Premises by Lessee or at
Lessee's request.

        10.3    Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Tax Increase for all
of the land and improvements included within the tax parcel assessed, such
proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.

        10.4    Personal Property Taxes. Lessee shall pay, prior to delinquency,
all taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.

11.     Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion, to be
determined by Lessor, of all charges jointly metered.

12.     Assignment and Subletting.

        12.1    Lessor's Consent Required.

                (a)  Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent.

                (b)  A change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of
twenty-five percent (25%) or more of the voting control of Lessee shall
constitute a change in control for this purpose.

                (c)  The involvement of Lessee or its assets in any transaction,
or series of transactions (by way of merger, sale, acquisition, financing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the execution of this Lease or at the time of the most recent assignment to
which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is
greater, shall be considered an assignment of this Lease to which Lessor may
withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee
(excluding any guarantors) established under generally accepted accounting
principles.

                (d)  An assignment or subletting without consent shall, at
Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon thirty (30)
days written notice, increase the monthly Base Rent to one hundred ten percent
(110%) of the Base Rent then in effect. Further, in the event of such Breach and
rental adjustment, (i) the purchase price of any option to purchase the Premises
held by Lessee shall be subject to similar adjustment to one hundred ten percent
(110%) of the price previously in effect, and (ii) all fixed and non-fixed
rentals adjustments scheduled during the remainder of the Lease term shall be
increased to one hundred ten percent (110%) of the scheduled adjusted rent.

                (e)  Lessee's remedy for any breach of Paragraph 12.1 by Lessor
shall be limited to compensatory damages and/or injunctive relief.

                                  Page 6 of 11          Initials _______  ______



        12.2    Terms and Conditions Applicable to Assignment and Subletting.

                (a)  Regardless of Lessor's consent, any assignment or
subletting shall not: (i) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this Lease; (ii)
release Lessee of any obligations hereunder; or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.

                (b)  Lessor may accept Rent or performance of Lessee's
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor's right to exercise its remedies for Lessee's Default or Breach.

                (c)  Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

                (d)  In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor's remedies against any other
person or entity responsible therefore to Lessor, or any security held by
Lessor.

                (e)  Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with a fee of $1,000 or ten percent (10%) of the current monthly Base
Rent applicable to the portion of the Premises which is the subject of the
proposed assignment or sublease, whichever is greater, as consideration for
Lessor's considering and processing said request. Lessee agrees to provide
Lessor with such other or additional information and/or documentation as may be
reasonably requested.

                (f)  Any assignee of, sublessee under, this Lease shall, by
reason of accepting such assignment or entering into such sublease, be deemed to
have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.

        12.3    Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

                (a)  Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease;
provided, however, that until a Breach shall occur in the performance of
Lessee's obligations, Lessee may collect said Rent. Lessor shall not, by reason
of the foregoing or any assignment of such sublease, nor by reason of the
collection of Rent, be deemed liable to the sublessee for any failure of Lessee
to perform and comply with any of Lessee's obligations to such sublessee. Lessee
hereby irrevocably authorizes and directs any such sublessee, upon receipt of a
written notice from Lessor stating that a Breach exists in the performance of
Lessee's obligations under this Lease, to pay to Lessor all Rent due and to
become due under the sublease. Sublessee shall rely upon any such notice from
Lessor and shall pay all Rents to Lessor without any obligation or right to
inquire as to whether such Breach exists, notwithstanding any claim from Lessee
to the contrary.

                (b)  In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.

                (c)  Any matter requiring the consent of the sublessor under a
sublease shall also require the consent of Lessor.

                (d)  No sublessee shall further assign or sublet all or any part
of the Premises without Lessor's prior written consent.

                (e)  Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.

13.     Default; Breach; Remedies.

        13.1    Default; Breach. A "Default" is defined as a failure by the
Lessee to comply with or perform any of the terms, covenants, conditions or
rules under this Lease. A "Breach" is defined as the occurrence of one or more
of the following Defaults, and the failure of Lessee to cure such Default within
any applicable grace period:

                (a)  The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable level of security, and/or
Security Deposit or where the coverage of the property insurance described in
Paragraph 8.13 is jeopardized as a result thereof, or without providing
reasonable assurances to minimize potential vandalism.

                (b)  The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of three
(3) business days following written notice to Lessee.

                (c)  The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination, (vi) evidence concerning any guaranty
and/or Guarantor, (vii) any document requested under Paragraph 42 (easements)
or (viii) any other documentation or information which Lessor may reasonably
require of Lessee under the terms of this Lease, where any such failure
continues for a period of ten (10) days following written notice to Lessee.

                (d)  A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (30) day
period and thereafter diligently prosecutes such cure to completion.

                (e)  The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a "debtor" as defined in 11 U.S.C. (S) 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph 13.1 (e) is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.

                (f)  The discovery that any financial statement of Lessee or of
any Guarantor given to Lessor was materially false.

                (g)  If the performance of Lessee's obligations under this Lease
is guaranteed: (i) the death of a Guarantor; (ii) the termination of a
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty; (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing; (iv) a Guarantor's refusal to honor the
guaranty; or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within sixty (60) days following
written notice of any such event, to provide written alternative assurance or
security, which, when coupled with the then existing resources of Lessee, equals
or exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.

        13.2    Remedies.  If Lessee fails to perform any of its affirmative
duties or obligations, within ten (10) days after written notice (or in case of
an emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee's behalf, including, but not limited to, the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier's check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:

                (a)  Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee; (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including, but not limited to, the cost of
recovering possession of the Premises, expenses or reletting, including
necessary renovation and alteration of the Premises, reasonable attorneys' fees,
and that portion of any leasing commission paid by Lessor in connection with
this Lease applicable to the unexpired term of this Lease. The worth at the time
of award of the amount referred to in provision (iii) of the immediately
preceding sentence shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of the District within which the Premises are
located at the time of award plus one percent (1%). Efforts by Lessor to
mitigate damages caused by Lessee's Breach of this Lease shall not waive
Lessor's right to recover

                                  Page 7 of 11          Initials______  ________



damages under Paragraph 12. If termination of this lease is obtained through the
provisional remedy of unlawful detainer, Lessor shall have the right to recover
in such proceeding any unpaid Rent and damages as are recoverable therein, or
Lessor may reserve the right to recover all or any part thereof in a separate
suit. If a notice and grace period required under Paragraph 13.1 was not
previously given, a notice to pay rent or quit, or to perform or quit given to
Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

                (b) Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor's interests, shall
not constitute a termination of the Lessee's right to possession.

                (c) Pursue any other remedy now or hereafter available under
the laws or judicial decisions of the state wherein the Premises are located.
The expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.

        13.3 Inducement Recapture. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into this
Lease, all of which concessions are hereinafter referred to as "Inducement
Provisions," shall be deemed conditioned upon Lessee's full and faithful
performance of all of the terms, covenants and conditions of this Lease. Upon
Breach of this Lease by Lessee, any such Inducement Provision shall
automatically be deemed deleted from this Lease and of no further force or
effect, and any rent, other charge, bonus, inducement or consideration
theretofore abated, given or paid by Lessor under such an inducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such acceptance.

        13.4 Late Charges. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to ten percent (10%) of each such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute,
a waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.

        13.5 Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within thirty (30) days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the thirty-first (31st) day after it was due as to
non-scheduled payments. The interest ("Interest") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date when due plus four percent(4%), but shall not exceed the maximum rate
allowed by law. Interest is payable in addition to the potential late charge
provided for in Paragraph 13.4.

13.6 Breach by Lessor.

             (a) Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonble
time shall in no event be less than thirty (30) days after receipt by Lessor,
and any Lender whose name and address shall have been furnished Lessee in
writing for such purpose, of written notice specifying wherein such obligation
of Lessor has not been performed; provided, however, that if the nature of
Lessor's obligation is such that more than thirty (30) days are reasonably
required for its performance, then Lessor shall not be in breach if performance
is commenced within such thirty (30) day period and thereafter dilligently
pursued to completion.

              (b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within thirty (30) days after
receipt of said written notice, or if having commenced said cure they do not
diligently pursue it to completion, then Lessee may elect to cure said breach at
Lessee's expense and offset from Rent an amount equal to the greater of one
month's Base Rent or the Security Deposit, and to pay an excess of such expense
under protest, reserving Lessee's right to reimbursement from Lessor. Lessee
shall document the cost of said cure and supply said documentation to Lessor.

14.     Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than ten percent (10%) of any building portion of the
premises, or more than twenty-five percent (25%) of the land area portion of the
premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be excercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

16.     Estoppel Certificates.

                (a) Each Party (as "Responding Party") shall within ten (10)
days after written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

                (b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such ten day period, the Requesting Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect without modification except as may be represented by the Requesting
Party; (ii) there are no uncured defaults in the Requesting Party's performance;
and (iii) if Lessor is the Requesting Party, not more than one month's rent has
been paid in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.

                (c) If Lessor desires to finance, refinance, or sell the
Prewmises, or any part thereof, Lessee and all Guarantors shall deliver to any
potential lender

                                  Page 8 of 11          Initials______   _______



or purchaser designated by Lessor such financial statements as may be reasonably
required by such lender or purchaser, including, but not limited to, Lessee's
financial statements for the past three (3) years. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and shall
be used only for the purposes herein set forth.

17.  Definition of Lessor. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises. In the event
of a transfer of Lessor's title or interest in the Premises or this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon
such transfer or assignment and delivery of the Security Deposit, as aforesaid,
the prior Lessor shall be relieved of all liability with respect to the
obligations and/or covenants under this Lease thereafter to be performed by the
Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease
to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined. Notwithstanding the above, and subject to the provisions of
Paragraph 20 below, the original Lessor under this Lease, and all subsequent
holders of the Lessor's interest in this Lease shall remain liable and
responsible with regard to the potential duties and liabilities of Lessor
pertaining to Hazardous Substances as outlined in Paragraph 6 above.

18.  Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

19.  Days. Unless otherwise specifically indicated to the contrary the word
"days" as used in this Lease shall mean and refer to calendar days.

20.  Limitation on Liability. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.

21.  Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

22.  No Prior or Other Agreements. This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement or understanding shall be effective. Lessor and Lessee
each represents and warrants that it has made, and is relying solely upon, its
own investigation as to the nature, quality, character and financial
responsibility of the other Party to this Lease and as to the nature, quality
and character of the Premises.

23.  Notices.

     23.1  Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by courier) or
may be sent by regular, certified or registered mail or U.S. Postal Service
Express Mail, with postage prepaid, or by facsimile transmission, and shall be
deemed sufficiently given if served in a manner specified in this Paragraph 23.
The addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notices. Either Party may be written
notice to the other specify a different address for notice, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.

     23.2  Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown
on the receipt card, or if no delivery date is shown, the postmark thereon. If
sent by regular mail the notice shall be deemed given forty-eight (48) hours
after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the Postal Service or courier. Notices transmitted by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received on the next business day.

24.  Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of monies or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.

25.  Recording. Lessee shall, upon request of the Lessor, execute, acknowledge
and deliver to the Lessor a short form memorandum of this Lease for recording
purposes. The Party requesting recordation shall be responsible for payment of
any fees applicable thereto.

26.  No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.

27.  Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28.  Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of
the Parties only and shall not be considered a part of this Lease. Whenever
required by the context, the singular shall include the plural and vice versa.
This Lease shall not be construed as if prepared by one of the Parties, but
rather according to its fair meaning as a whole, as if both Parties had prepared
it.

29.  Binding Effect; Choice of Law. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located. Any litigation
between the Parties hereto concerning this Lease shall be initiated in the
county in which the Premises are located.

30.  Subordination; Attornment; Non-Disturbance.

     30.1  Subordination. This Lease granted hereby shall be subject and
subordinate to any ground lease, mortgage, deed of trust, or other hypothecation
or security device (collectively, "Security Device"), now or hereafter placed
upon the Premises, to any and all advances made on the security thereof, and to
all renewals, modifications, and extensions thereof. Lessee agrees that the
holders of any such Security Devices (in this Lease together referred to as
"Lessor's Lender") shall have no liability or obligation to perform any of the
obligations of Lessor under this Lease. Any Lender may elect to have this Lease
granted hereby superior to the lien of its Security Device by giving written
notice thereof to Lessee, whereupon this Lease shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.

     30.2  Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent.

     30.3  Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
will not be disturbed so long as Lessee is not in Breach hereof and attorns to
the record owner of the Premises. Further, within sixty (60) days after the
execution of this Lease, Lessor shall use its commercially reasonable efforts to
obtain a Non-Disturbance Agreement from the holder of any pre-existing Security
Device which is secured by the Premises. In the event that Lessor is unable to
provide the Non-Disturbance Agreement within said sixty (60) days, then Lessee
may, at Lessee's option, directly contact Lessor's lender and attempt to
negotiate for the execution and delivery of a Non-Disturbance Agreement.

     30.4  Self-Executing. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31.  Attorneys' Fees. If any Party brings an action or proceeding involving the
Premises to enforce the terms hereof or to declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may
be awarded in the same suit or recovered in a separate suit, whether or not such
action or proceeding is pursued to decision or judgment. The term, "Prevailing
Party" shall include, without limitation, a Party who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,

                                  Page 9 of 11          Initials_______  _______



settlement, judgment, or the abandonment by the other Party of its claim or
defense. The attorneys' fees award shall not be computed in accordance with any
court fee schedule, but shall be such as to fully reimburse all attorneys' fees
reasonably incurred. In addition, Lessor shall be entitled to attorneys' fees,
costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach.

32.  Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary "For Lease" signs. Lessee may at any time place on or
about the Premises any ordinary "For Sublease" sign.

33.  Auctions. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.

34.  Signs. Except for ordinary "For Sublease" signs, Lessee shall not place any
sign upon the Premises without Lessor's prior written consent. All signs must
comply with all Applicable Requirements.

35.  Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor's failure within ten (10) days following any such
event to elect to the contrary by written notice to the holder of any such
lesser interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.

36.  Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including but not limited to architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.

38.  Quiet Possession. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.

40.  Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties, including the care and cleanliness of the
grounds and including the parking, loading and unloading of vehicles, and the
Lessee will pay its fair share of common expenses incurred in connection
therewith.

41.  Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include that cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

42.  Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.

43.  Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.

44.  Authority. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each Party
shall, within thirty (30) days after request, deliver to the other party
satisfactory evidence of such authority.

45.  Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

46.  Offer. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

47.  Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or
refinancing of the Premises.

48.  Multiple Parties. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease.

49.  Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties

                                 Page 10 of 11          Initials_______  _______



arising out of this Lease [_] is [X] is not attached to this Lease.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

- --------------------------------------------------------------------------------
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1.  SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2.  RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.
- --------------------------------------------------------------------------------

The Parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

                                                           
Executed at:  Van Nuys, CA                                    Executed at:  Van Nuys, CA
            -----------------------------------------                      --------------------------------------
on: November 8, 2001                                          on:  November 8, 2001
   --------------------------------------------------            ------------------------------------------------
by LESSOR:                                                    by LESSEE:
ELBAR INVESTMENT, L.P.                                        TRIO-TECH INTERNATIONAL, a California
- -----------------------------------------------------         ---------------------------------------------------
                                                              corporation
_____________________________________________________         ---------------------------------------------------

By:__________________________________________________         By: /s/ Dale C. Cheesman
                                                                 ------------------------------------------------

Name Printed: John P. Webster - Trustee The John              Name Printed:   [ILLEGIBLE]
              ---------------------------------------                     ---------------------------------------
Title: Paul Webster Trust - General Partner                   Title           [ILLEGIBLE]
       ----------------------------------------------              ----------------------------------------------


By:__________________________________________________         By:________________________________________________
Name Printed:________________________________________         Name Printed:______________________________________
Title:_______________________________________________         Title: ____________________________________________
Address: 5636 Van Nuys Boulevard, Suite A, Van                Address: 14731 Califa Street, Van Nuys, CA
         --------------------------------------------                  ------------------------------------------
         Nuys, CA 91401                                                91411
         --------------------------------------------                  ------------------------------------------
Telephone: (818) 785-3207                                     Telephone: (___) __________________________________
           ----- ------------------------------------
Facsimile: (818) 785-2402                                     Facsimile  (___) __________________________________
           ----- ------------------------------------

Federal ID No. 95-4440166                                     Federal ID No._____________________________________
               --------------------------------------



NOTE: These forms are often modified to meet changing requirements of law and
      industry needs. Always write or call to make sure you are utilizing the
      most current form:  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So.
      Flower Street, Suite 600, Los Angeles, California 90017. (213) 687-8777.
      Fax No. (213)687-8616

                                 Page 11 of 11



ADDENDUM TO LEASE DATED: November 8, 2001
PROPERTY ADDRESS: 14731 Califa Street, Van Nuys
LESSOR: ELBAR INVESTMENTS, L.P.
LESSER: TRIO-TECH INTERNATIONAL, a California corporation

50.  ADJUSTMENT OF BASE RENT.

        The Rental Adjustment Dates for the purposes of this Lease shall be
January 1, 2003 and January 1, 2004. The "Base Rent" for each adjustment period
during the Lease term, shall be determined by calculating the increase, if any,
in the Consumer Price Index (The United States Department of Labor, Bureau of
Labor Statistics Consumer Price Index For All Urban Consumers, Los
Angeles/Anaheim/Riverside Average, Sub-group "All Items" (1982-84=100). The
Index in publication for the month preceding the Adjustment Date shall be
compared with the Index published for the month which is twelve (12) months
prior to the month preceding the Adjustment Date and the Base rent shall be
increased in accordance with the percentage increase between such indexes. In no
event shall said upward adjustment be less than three (3%) percent nor shall it
exceed six (6%) percent. When the "Base Rent" payable as of each Rental
Adjustment Date is determined, the Lessor shall promptly give Lessee written
notice of such adjusted "Base Rent". The "Base Rent" as so adjusted from time to
time shall be the "Base Rent" for all purposes under this Lease. If at any
Rental Adjustment Date the Index no longer exists in the form described in this
Lease, Lessor may substitute any substantially equivalent official index
published by the Bureau of Labor Statistics or its successor. Lessor shall use
any appropriate conversion factors to accomplish such substitution. The
substitute index shall then become the "Index" hereunder.

51.  PARKING AND COMMON AREAS.

        (a)     Lessor covenants that an area approximately equal to the common
            and parking areas as shown on Exhibit "A" shall be at all times
            available for the non-exclusive use of Lessee during the full term
            of this Lease, or any extension hereof, provided that the
            condemnation or other taking by any public authority, or sale in
            lieu of condemnation, or any repair, maintenance or replacement of
            any or all of such common and parking areas shall not constitute a
            violation of this covenant. Lessor reserves the right to change the
            entrances, exits, traffic lanes and the boundaries and locations of
            such parking area or areas, provided, however, that said parking
            area or areas shall at all times be substantially equal or
            equivalent to that shown on the attached Exhibit "A".

        (b)     Lessee, for the use and benefit of Lessee, its agents,
            employees, customers, licensees, and sub-tenants, shall have the
            non-exclusive right, in common with Lessor, and other present and
            future owners, tenants and their agents, employees, customers,
            licensees and sub-tenants, to use said common parking areas during
            the entire term of this lease, or any extension hereof, for ingress
            and egress, automobile parking and loading and unloading of trucks
            and motor vehicles. The Lessee, in the use of said common and
            parking areas agrees to comply with such reasonable rules and
            regulations as the Lessor may adopt from time to time for the
            orderly and proper operation and use of said areas. Such rules and
            regulations may include, but shall not be limited to, the following:
            (1) The restricting of employee parking to a limited designated
            area or areas; and (2) The regulation of the removal, storage
            and disposal of the Lessee's refuse and other rubbish at the sole
            cost and expense of Lessee; and (3) The regulation and restriction
            of the parking, loading and unloading of trucks and motor vehicles.

        (c)     Lessee agrees to keep and maintain the areas adjacent to the
            Premises in a neat, clean and orderly condition Lessor shall keep in
            good order, condition and repair the asphalt paving on said common
            areas, unless such repairs are a result of any misuses, or negligent
            or intentional act of Lessee, in which event Lessee shall be
            responsible for such repairs.


LESSOR'S INITIALS:__________________       LESSEE'S INITIALS:___________________



                                   EXHIBIT "A"

                                     [MAP]

LESSEE'S INITIALS:_______________              LESSOR'S INITIALS:_______________

EX-10.21

EXHIBIT 10.21

                                  AMENDMENT TO

                           DIRECTORS STOCK OPTION PLAN

                           OF TRIO-TECH INTERNATIONAL

         Section 4 of the Directors Stock Option Plan of Trio-Tech International
is amended by changing the number "150,000" appearing therein to the number
"300,000."

EX-23.1

                                                                    Exhibit 23.1

[LOGO]          BDO International               5 Shenton Way w07.00
                Certified Public Accountants    Ulc Building Singapore 068808
                                                Telephone. 65-6828 9118
                                                Telefax 65-6828 9111
                                                E-mail:info@bdo.com
                                                www.bdo.com



Trio-Tech International
Van Nuys.CA



                        Consent of Independent Auditors

We hereby consent to the incorporation by reference in Registration Statement
No.333-38082 on Form S-3 and No.333-40102 on Form S-8 of Trio-Tech International
of our report dated September 6, 2002, relating to the consolidated financial
statements of Trio-Tech International appearing in the Company's Annual Report
on Form 10-K for the year ended June 30, 2002.



/s/ [ILLEGIBLE]

BDO International

Singapore
September 24, 2002

EX-23.2

Exhibit 23.2


                          INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statement No.
333-38082 on Form S-3 and No. 333-40102 on Form S-8 of Trio-Tech International
of our report dated September 7, 2001, appearing in this Annual Report on Form
10-K of Trio-Tech International for the year ended June 30, 2002.

/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP

Los Angeles, California
October 8, 2002

EX-99.1

                                                                    Exhibit 99.1

                         CERTIFICATION UNDER SECTION 906
                                     OF THE
                           SARBANES-OXLEY ACT OF 2002

       Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each
of the undersigned officers of Trio-Tech International, a California corporation
(the "Company"), does hereby certify with respect to the Annual Report of the
Company on Form 10-K for the year ended June 30, 2002 as filed with the
Securities and Exchange Commission (the "Report") that, to the best of their
knowledge:

       (1) 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.

Date:   September 24, 2002

                                      /s/ S. W. YONG
                                      -----------------------------------
                                      S. W. Yong, Chief Executive Officer and
                                      President


                                      /s/ VICTOR H.M. TING
                                      -----------------------------------
                                      Victor H.M. Ting, Chief Financial Officer
                                      (Principal Financial Officer)


This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.