10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2014

or

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

For the transition period from __________ to __________

Commission File Number:  0-25844

TAITRON COMPONENTS INCORPORATED

(Exact name of registrant as specified in its charter)

California	95-4249240
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

28040 West Harrison Parkway, Valencia, California	91355-4162
(Address of principal executive offices)	(Zip Code)

(661) 257-6060

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o  (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Class	Outstanding on July 30, 2014
Class A common stock, $0.001 par value	4,777,144
Class B common stock, $0.001 par value	762,612

	TAITRON COMPONENTS INCORPORATED
	FORM 10-Q
	June 30, 2014
	TABLE OF CONTENTS
		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Consolidated Balance Sheets at June 30, 2014 and December 31, 2013	1
	Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2014 and 2013	2
	Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013	3
	Notes to Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4.	Controls and Procedures	9
PART II - OTHER INFORMATION
Item 1.	Legal proceedings	10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	10
Item 3.	Defaults Upon Senior Securities	10
Item 4.	[Removed and Reserved]	10
Item 5.	Other Information	10
Item 6.	Exhibits	10
	Signatures	11

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

TAITRON COMPONENTS INCORPORATED

Consolidated Balance Sheets

	June 30,		December 31,
	2014		2013
	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	3,042,000	$	2,724,000
Accounts receivable, less allowances of  $52,000		599,000		511,000
Inventories, less reserves for obsolescence of $6,382,000, and $5,939,000, respectively		9,694,000		10,151,000
Prepaid expenses and other current assets		142,000		109,000
Total current assets		13,477,000		13,495,000
Property and equipment, net		4,383,000		4,462,000
Other assets (Note 4)		1,179,000		1,276,000
Total assets	$	19,039,000	$	19,233,000
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable	$	812,000	$	568,000
Accrued liabilities		237,000		288,000
Total current liabilities		1,049,000		856,000
Long-term debt from related party (Note 5)		1,500,000		1,500,000
Total Liabilities		2,549,000		2,356,000
Commitments and contingencies (Notes 6 and 8)
Shareholders’ Equity:
Preferred stock, $0.001 par value.  Authorized 5,000,000 shares; None issued or outstanding		-		-
Class A common stock, $0.001 par value.  Authorized 20,000,000 shares; 4,777,144 shares issued and outstanding		5,000		5,000
Class B common stock, $0.001 par value.  Authorized, issued and outstanding 762,612 shares		1,000		1,000
Additional paid-in capital		10,675,000		10,661,000
Accumulated other comprehensive income		133,000		132,000
Retained earnings		5,562,000		5,959,000
Total Shareholders’ Equity - Taitron Components Inc		16,376,000		16,758,000
Noncontrolling interest in subsidiary		114,000		119,000
Total Shareholders’ Equity		16,490,000		16,877,000
Total Liabilities and Shareholders’ Equity	$	19,039,000	$	19,233,000

See accompanying notes to consolidated financial statements.

1

TAITRON COMPONENTS INCORPORATED

Consolidated Statements of Operations

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net sales	$	1,609,000		$	1,663,000		$	2,895,000		$	3,295,000
Cost of goods sold		1,123,000			1,324,000			2,125,000			2,604,000
Gross profit		486,000			339,000			770,000			691,000
Selling, general and administrative expenses		541,000			605,000			1,105,000			1,209,000
Operating loss		(55,000	)		(266,000	)		(335,000	)		(518,000	)
Interest expense, net		(10,000	)		(8,000	)		(18,000	)		(16,000	)
Other income(expense), net		(74,000	)		34,000			(48,000	)		66,000
Loss before income taxes		(139,000	)		(240,000	)		(401,000	)		(468,000	)
Income tax provision		-			-			(1,000	)		(1,000	)
Net loss		(139,000	)		(240,000	)		(402,000	)		(469,000	)
Net loss attributable to noncontrolling interest in subsidiary		(2,000	)		(19,000	)		(5,000	)		(29,000	)
Net loss attributable to Taitron Components Inc.	$	(137,000	)	$	(221,000	)	$	(397,000	)	$	(440,000	)
Net loss per share:  Basic & Diluted	$	(0.03	)	$	(0.04	)	$	(0.07	)	$	(0.08	)
Weighted average common shares outstanding:  Basic & Diluted		5,539,756			5,539,756			5,539,756			5,539,756
Net loss	$	(139,000	)	$	(240,000	)	$	(402,000	)	$	(469,000	)
Other comprehensive income (loss):
Foreign currency translation adjustment		-			4,000			1,000			3,000
Comprehensive loss		(139,000	)		(236,000	)		(401,000	)		(466,000	)
Comprehensive loss attributable to noncontrolling interests		(4,000	)		(17,000	)		(6,000	)		(28,000	)
Comprehensive loss attributable to Taitron Components Inc.	$	(135,000	)	$	(219,000	)	$	(395,000	)	$	(438,000	)

See accompanying notes to consolidated financial statements.

2

TAITRON COMPONENTS INCORPORATED

Consolidated Statements of Cash Flows

	Six Months Ended June 30,
		2014			2013
	(Unaudited)			(Unaudited)
Operating activities:
Net loss	$	(402,000	)	$	(469,000	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		87,000			91,000
Provision for sales returns and doubtful accounts		3,000			59,000
Stock based compensation		14,000			12,000
Changes in assets and liabilities:
Trade accounts receivable		(91,000	)		185,000
Inventory		457,000			617,000
Prepaid expenses and other current assets		(33,000	)		(23,000	)
Trade accounts payable		244,000			(51,000	)
Accrued liabilities		(51,000	)		(73,000	)
Other assets and liabilities		97,000			-
Total adjustments		727,000			817,000
Net cash provided by operating activities		325,000			348,000
Investing activities:
Acquisition of property & equipment		(8,000	)		(3,000	)
Payments for investments in securities		-			(303,000	)
All other investing activity		-			2,000
Net cash used for investing activities		(8,000	)		(304,000	)
Impact of exchange rates on cash		1,000			3,000
Net increase in cash and cash equivalents		318,000			47,000
Cash and cash equivalents, beginning of period		2,724,000			2,475,000
Cash and cash equivalents, end of period	$	3,042,000		$	2,522,000
Supplemental disclosures of cash flow information:
Cash paid for interest	$	18,000		$	26,000
Cash paid for income taxes, net	$	2,000		$	3,000

See accompanying notes to consolidated financial statements.

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TAITRON COMPONENTS INCORPORATED

Notes to Consolidated Financial Statements (Unaudited)

1 – ORGANIZATION

In 1989, we were formed and incorporated in California.  We maintain a majority-owned subsidiary in Mexico (since 1998) and two subsidiaries in each of Taiwan (since 1998) and China (since 2005).  Our Mexico location closed all operations in May 2013 (final closure is pending sale of our local 15,000 sqft office and warehouse facility) and our Taiwan and China locations are for supporting overseas customers, inventory sourcing, purchases and coordinating the manufacture of our products.  Our China location also serves as the engineering center responsible for designing circuits, arranging pre-production scheduling and mass production runs with joint venture partners for our projects, making component datasheets and test specifications, preparing samples, monitoring quality of shipments and performing failure analysis reports.

2 – BASIS OF PRESENTATION

The unaudited consolidated interim financial statements include the accounts of the Company and all wholly owned subsidiaries, including its 60% majority-owned subsidiary, Taitron Components Mexico, S.A. de C.V.  All significant intercompany accounts and transactions have been eliminated in consolidation.

These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments of a normal recurring nature and considered necessary for a fair presentation of its financial condition and results of operations for the interim periods presented in this Quarterly Report on Form 10-Q have been included.  Operating results for the interim periods are not necessarily indicative of financial results for the full year.  These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.  In preparing these financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.  Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the allowance for sales returns, doubtful accounts, inventory reserves, accrued liabilities and deferred income taxes.  Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation.

3 – RECENT ACCOUNTING DEVELOPMENTS

Recently Adopted Accounting Pronouncements

Effective January 2013, we adopted FASB ASU No. 2011-11, Balance Sheet (Topic 210):  Disclosures about Offsetting Assets and Liabilities (ASU 2011-11).  The amendments in ASU 2011-11 require the disclosure of information on offsetting and related arrangements for financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position.  Amendments under ASU 2011-11 will be applied retrospectively for fiscal years, and interim periods within those years, beginning after January 1, 2013.  The adoption of this update did not have a material impact on the consolidated financial statements.

Effective January 2013, we adopted FASB ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02).  This guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other comprehensive income (AOCI).  The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income.  However, the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the notes thereto.  Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail.  This standard is effective prospectively for annual and interim reporting periods beginning after December 15, 2012.  The adoption of this update did not have a material impact on the consolidated financial statements.

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In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The amendments in ASU 2013-04 provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this standard are effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013.  The adoption of ASU No. 2013-04 did not have a material impact on our consolidated financial statements.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. The amendments in ASU No. 2013-05 resolve the diversity in practice about whether Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, Foreign Currency Matters—Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment ina foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) withina foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. The amendments in this standard are effective prospectively for fiscal years, and interim reporting periods within those years, beginning December 15, 2013.  The adoption of ASU No. 2013-05 did not have a material impact on our consolidated financial statements.

4 – OTHER ASSETS

	June 30,		December 31,
	2014		2013
	(Unaudited)
Investment in securities - Zowie Technology	$	405,000	$	405,000
Investment in joint venture - Grand Shine Mgmt		751,000		849,000
Other		23,000		22,000
Other Assets	$	1,179,000	$	1,276,000

Our $405,000 investment in securities as of June 30, 2014 relates to our ownership of 1,037,739 common shares of Zowie Technology Corporation (Taipei Hsien, Taiwan), a supplier of electronic component products.  Our investment relates to 9.2% of their total outstanding shares and we do not have significant influence or control.  This investment is accounted for under the cost method basis of accounting.

Our $751,000 investment in joint venture as of June 30, 2014, relates to our 49% ownership of Grand Shine Management Limited (Dong Guan, China), an electronic device contract manufacturer, and joint venture with its 51% owner, Teamforce Company Limited.  This joint venture is not considered to be a “Variable Interest Entity”, and as such, is accounted for under the equity method basis of accounting.  During the second quarter of 2014, we included a ($98,000) loss related to our year-to-date proportionate share of net losses for the six months ending June 30, 2014.

5 – LONG-TERM DEBT FROM RELATED PARTY

Secured credit facility - On April 21, 2008 we entered into a $3,000,000 credit facility, collateralized by real property, from K.S. Best International Co. Ltd., a company controlled by the brother of our Chief Executive Officer.  On April 12, 2013 we renewed and extended maturities to June 30, 2015 and beyond.  Credit is available in $500,000 advances, each advance payable in monthly interest only installments, at the rate of Prime + 0.25% per annum.  As of June 30, 2014 and December 31, 2013, the aggregate outstanding balance on this credit facility was $1,500,000.  The advance history of the credit line is such that on June 3, 2008, we borrowed $500,000, on April 3, 2009, we borrowed $500,000 and on April 1, 2010, we borrowed $500,000.  All advances are due from June 30, 2015 to June 30, 2017.

5

6 – RELATED PARTY TRANSACTIONS

We made payments of approximately $6,000 for both of the quarters ending June 30, 2014 and 2013, to K.S. Best International Co. Ltd., a company controlled by the brother of our Chief Executive Officer.  These payments were for professional fees related to the operational management of our Taiwan office.  In addition, we also made payments of $13,000 for both of the quarters ended June 30, 2014 and 2013, for interest expense on our credit facility from K.S. Best International Co. Ltd.  See Note 5.

We have a $3,000,000 credit facility, collateralized by real property, from K.S. Best International Co. Ltd., a company controlled by the brother of our Chief Executive Officer.  See Note 5 for additional details.

7 – SHARE BASED COMPENSATION

Accounting for stock options issued to employees measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.  That cost is recognized over the period during which an employee is required to provide service in exchange for the award.  Outstanding options to purchase Class A common stock (“the Options”) vest in three equal annual installments beginning one year from the date of grant and are subject to termination provisions as defined in our 2005 Stock Incentive Plan.  The option activity during the three months ended June 30, 2014 is as follows:

	Number of Shares			Weighted Average xercise Price		Weighted Average Years Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2013		396,000		$	1.34		4.4	$	19,300
Grants		78,000
Forfeited		(20,000	)
Outstanding at June 30, 2014		454,000			1.31		4.6	$	20,300
Exercisable at June 30, 2014		274,999		$	1.47		3.5	$	10,000

At June 30, 2014 the range of individual outstanding weighted average exercise prices was $0.98 to $1.49.

8 – COMMITMENTS AND CONTINGENCIES

Inventory Purchasing

Outstanding commitments to purchase inventory from suppliers aggregated $970,000 as of June 30, 2014.

6

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in Item 1 of Part 1of this quarterly report on Form 10-Q, as well as our most recent annual report on Form 10-K for the year ended December 31, 2013.

This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 which are subject to risks and uncertainties.  Forward-looking statements usually are denoted by words or phrases such as “believes,” “expects,” “projects,” “estimates,” “anticipates,” “will likely result” or similar expressions.  We wish to caution readers that all forward-looking statements are necessarily speculative and not to place undue reliance on forward-looking statements, which speak only as of the date made, and to advise readers that actual results could vary due to a variety of risks and uncertainties.  We do not undertake any duty to update forward-looking statements after the date they are made or to conform them to actual results or to changes in circumstances or expectations.

References to “Taitron,” the “Company,” “we,” “our” and “us” refer to Taitron Components Incorporated and its wholly owned and majority-owned subsidiaries, unless the context otherwise specifically defines.

Critical Accounting Policies and Estimates

Use of Estimates - Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States.  These estimates have a significant impact on our valuation and reserve accounts relating to the allowance for sales returns, doubtful accounts, inventory reserves and deferred income taxes.  Actual results could differ from these estimates.

Revenue Recognition – Revenue is recognized upon shipment of the merchandise, which is when legal transfer of title occurs.  Reserves for sales allowances and customer returns are established based upon historical experience and our estimates of future returns.  Sales returns for the three months ended June 30, 2014 and 2013 were $2,000 and $53,000, respectively and for the six months ended June 30, 2014 and 2013 were $3,000 and $59,000, respectively.  The allowance for sales returns and doubtful accounts both at June 30, 2014 and December 31, 2013 aggregated $52,000.

Inventory – Inventory, consisting principally of products held for resale, is recorded at the lower of cost (determined using the first in-first out method) or estimated market value.  We had inventory balances in the amount of $9,694,000 and $10,151,000 at June 30, 2014 and December 31, 2013, respectively, which is presented net of valuation allowances of $6,382,000 and $5,939,000, respectively.  We evaluate inventories to identify excess, high-cost, slow-moving or other factors rendering inventories as unmarketable at normal profit margins.  Due to the large number of transactions and the complexity of managing and maintaining a large inventory of product offerings, estimates are made regarding adjustments to the cost of inventories.  Based on our assumptions about future demand and market conditions, inventories are carried at the lower of cost or estimated market value.  If our assumptions about future demand change, or market conditions are less favorable than those projected, additional write-downs of inventories may be required.  In any case, actual amounts could be different from those estimated.

Overview

We distribute brand name electronic components and supply original designed and manufactured (“ODM”) electronic components (“ODM Components”), with our product offerings ranging from discrete semiconductors through small electronic devices.  We also offer value-added engineering and turn-key solutions, focusing on providing contract electronic manufacturers (“CEM”s) and original equipment manufacturers (“OEM”s) with ODM services for their multi-year turn-key projects (“ODM Projects” or “Projects”).

Due to ongoing economic recession and related decreased product demand, we are placing emphasis on increasing our sales to existing customers through further expansion of the number of different types of discrete components and other integrated circuits in our inventory and by attracting additional contract electronic manufacturers (“CEMs”), OEMs and electronics distributor customers. 

Our core strategy of electronic components fulfillment, however, consists of carrying a substantial quantity and variety of products in inventory to meet the rapid delivery requirements of our customers.  This strategy allows us to fill customer orders immediately from stock on hand.  Although we believe better market conditions may return, we are focused on lowering our inventory balances and increasing our cash holdings.  Our long-term strategy is to rely not only on our core strategy of component fulfillment service, but also our Projects of value-added engineering services and turn-key solutions.

7

In accordance with Generally Accepted Accounting Principles, we have classified inventory as a current asset in our June 30, 2014, consolidated financial statements representing approximately 72% of current assets and 51% of total assets.  However, if all or a substantial portion of the inventory was required to be immediately liquidated, the inventory would not be as readily marketable or liquid as other items included or classified as a current asset, such as cash.  We cannot assure you that demand in the discrete semiconductor market will increase and that market conditions will improve.  Therefore, it is possible that further declines in our carrying values of inventory may result.

Our gross profit margins are subject to a number of factors, including product demand, strength of the U.S. dollar, our ability to purchase inventory at favorable prices and our sales product mix.

Results of Operations

Second quarter of 2014 versus 2013.

Net sales in the second quarter of 2014 totaled $1,609,000 versus $1,663,000 in the comparable period for 2013, a decrease of $54,000 or 3.3% over the same period last year.

Gross profit for the second quarter of 2014 was $486,000 versus $339,000 in the comparable period for 2013, and gross margin percentage of net sales was 30.2% in the second quarter of 2014 versus 20.4% in the comparable period for 2013.

Selling, general and administrative expenses in the second quarter of 2014 totaled $541,000 versus $605,000 in the comparable period for 2013.

Interest expense, net of interest income, was $10,000 for the second quarter of 2014 versus $8,000 in the comparable period for 2013.

Other income, net of other (expenses), in the second quarter of 2014 was ($74,000) versus $34,000 in the comparable period for 2013.  During the second quarter of 2014, we included a ($98,000) loss related to our year-to-date proportionate share of net losses recorded by our Grand Shine joint venture (see Note 4).  Other income was primarily derived from the rental income of available excess office space within our headquarters’ facility in Valencia, CA.

Income tax provision, was $0 for the second quarter of both 2014 and 2013, as we do not expect significant taxable income.

Net loss was $139,000 for the second quarter of 2014 versus $240,000 in the comparable period for 2013, a decrease of $101,000 resulting from the reasons discussed above.

Six Months Ended June 30, 2014 versus Six Months Ended June 30, 2013.

Net sales in the six months ended June 30, 2014 was $2,895,000 versus $3,295,000 in the comparable period for 2013, a decrease of $400,000 or 12.1% over the same period last year.

Gross profit for the six months ended June 30, 2014 was $770,000 versus $691,000 in the comparable period for 2013, and gross margin percentage of net sales was approximately 26.7% for the six months ended June 30, 2014 and 21% for 2013, respectively.  The overall increase in gross margin percentage came from a change in mix of higher margin products sold compared to the same period last year.

Selling, general and administrative (“SG&A”) expenses in the six months ended June 30, 2014 totaled $1,105,000 versus $1,209,000 in the comparable period for 2013.  The decrease of $104,000 or 8.7% was primarily attributed to decreases of salaries and benefits.

Interest expense, net of interest income, was $18,000 for the six months ended June 30, 2014 versus $16,000 in the comparable period for 2013.

Other income, net of other (expenses), in the six months ended June 30, 2014 was ($48,000) versus $66,000 in the comparable period for 2013.  During the second quarter of 2014, we included a ($98,000) loss related to our year-to-date proportionate share of net losses recorded by our Grand Shine joint venture (see Note 4).  Other income was primarily derived from the rental income of available excess office space within our headquarters’ facility in Valencia, CA.

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Income tax provision was $1,000 for the both six months ended June 30, 2014 and 2013.

Net loss was $402,000 for the six months ended June 30, 2014 versus $469,000 in the comparable period for 2013, a decrease of $67,000 resulting from the reasons discussed above.

Liquidity and Capital Resources

We have financed our operations with funds generated from operating activities and borrowings under our revolving credit facility.

Cash flows provided by operating activities were $325,000 as opposed to $348,000 for the six months ending June 30, 2014 and 2013, respectively.  The decrease of $23,000 in cash flows provided by operations compared with the prior period resulted from changes in operating assets and liabilities, primarily from reductions of inventory and accounts receivables compared to the prior period.

Cash flows used in investing activities were $8,000 and $304,000 used in for the six months ending June 30, 2014 and 2013, respectively.

Inventory is included in current assets; however, it will take over one year for the inventory to turn.  Hence, inventory would not be as readily marketable or liquid as other items included in current assets, such as cash.

We believe that funds generated from, or used in operations, in addition to existing cash balances are likely to be sufficient to finance our working capital and capital expenditure requirements for the foreseeable future.  If these funds are not sufficient, we may secure new sources of short-term commercial loans, asset-based lending on accounts receivables or issue debt or equity securities.

Off-Balance Sheet Arrangements

As of June 30, 2014, we had no off-balance sheet arrangements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk. - Not applicable.

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”).  Based on that evaluation, our principal executive and principal financial officers concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

9

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings. - None

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds. - None

Item 3.  Defaults Upon Senior Securities. - None

Item 4.  [Removed and Reserved]

Item 5.  Other Information. – None

Item 6.  Exhibits.

Exhibit Number	Description of Document
31.1 *	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 *	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 *	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 USC. Section 1350).
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase
101.DEF*	XBRL Taxonomy Extension Definition Linkbase
101.LAB*	XBRL Taxonomy Extension Label Linkbase
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase
*	Filed herewith.

10

SIGNATURES

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

	TAITRON COMPONENTS INCORPORATED
Date:  August 14, 2014	/s/ Stewart Wang
	Stewart Wang,
	Chief Executive Officer and President (Principal Executive Officer)
	/s/ David Vanderhorst
	David Vanderhorst
	Chief Financial Officer and Secretary (Principal Financial Officer)

11

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Stewart Wang, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Taitron Components Incorporated;

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

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

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

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

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date:  August 14, 2014

/s/ Stewart Wang

Stewart Wang

Chief Executive Officer and President

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, David Vanderhorst, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Taitron Components Incorporated;

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

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

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

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

b.  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date:  August 14, 2014

/s/ David Vanderhorst

David Vanderhorst

Chief Financial Officer and Secretary

(Principal Financial Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Taitron Components Incorporated (the “Company”) for the period ended June 30, 2014 (the “Report”), the undersigned hereby certify in their capacities as Chief Executive Officer and Chief Financial Officer of the Company, respectively, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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:  August 14, 2014

/s/ Stewart Wang

Stewart Wang

Chief Executive Officer and President

(Principal Executive Officer)

/s/ David Vanderhorst

David Vanderhorst

Chief Financial Officer and Secretary

(Principal Financial Officer)

XML

4 - OTHER ASSETS

6 Months Ended

Jun. 30, 2014

Disclosure Text Block Supplement [Abstract]

Other Assets Disclosure [Text Block]

4 – OTHER ASSETS

	June 30,		December 31,
	2014		2013
	(Unaudited)
Investment in securities - Zowie Technology	$	405,000	$	405,000
Investment in joint venture - Grand Shine Mgmt		751,000		849,000
Other		23,000		22,000
Other Assets	$	1,179,000	$	1,276,000

Our $405,000 investment in securities as of June 30, 2014 relates to our ownership of 1,037,739 common shares of Zowie Technology Corporation (Taipei Hsien, Taiwan), a supplier of electronic component products.  Our investment relates to 9.2% of their total outstanding shares and we do not have significant influence or control.  This investment is accounted for under the cost method basis of accounting.

Our $751,000 investment in joint venture as of June 30, 2014, relates to our 49% ownership of Grand Shine Management Limited (Dong Guan, China), an electronic device contract manufacturer, and joint venture with its 51% owner, Teamforce Company Limited.  This joint venture is not considered to be a “Variable Interest Entity”, and as such, is accounted for under the equity method basis of accounting.  During the second quarter of 2014, we included a ($98,000) loss related to our year-to-date proportionate share of net losses for the six months ending June 30, 2014.

XML

3 - RECENT ACCOUNTING DEVELOPMENTS

6 Months Ended

Jun. 30, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

3 – RECENT ACCOUNTING DEVELOPMENTS

Recently Adopted Accounting Pronouncements

Effective January 2013, we adopted FASB ASU No. 2011-11, Balance Sheet (Topic 210):  Disclosures about Offsetting Assets and Liabilities (ASU 2011-11).  The amendments in ASU 2011-11 require the disclosure of information on offsetting and related arrangements for financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position.  Amendments under ASU 2011-11 will be applied retrospectively for fiscal years, and interim periods within those years, beginning after January 1, 2013.  The adoption of this update did not have a material impact on the consolidated financial statements.

Effective January 2013, we adopted FASB ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive (ASU 2013-02).  This guidance is the culmination of the FASB’s deliberation on reporting reclassification adjustments from accumulated other comprehensive income (AOCI).  The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income.  However, the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the notes thereto.  Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail.  This standard is effective prospectively for annual and interim reporting periods beginning after December 15, 2012.  The adoption of this update did not have a material impact on the consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The amendments in ASU 2013-04 provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this standard are effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013.  The adoption of ASU No. 2013-04 did not have a material impact on our consolidated financial statements.

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. The amendments in ASU No. 2013-05 resolve the diversity in practice about whether Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, Foreign Currency Matters—Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment ina foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) withina foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. The amendments in this standard are effective prospectively for fiscal years, and interim reporting periods within those years, beginning December 15, 2013.  The adoption of ASU No. 2013-05 did not have a material impact on our consolidated financial statements.

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Consolidated Balance Sheets (USD $)	Jun. 30, 2014	Dec. 31, 2013
Current Assets:
Cash and cash equivalents	$ 3,042,000	$ 2,724,000
Accounts receivable, less allowances of $52,000	599,000	511,000
Inventories, less reserves for obsolescence of $6,382,000, and $5,939,000, respectively	9,694,000	10,151,000
Prepaid expenses and other current assets	142,000	109,000
Total current assets	13,477,000	13,495,000
Property and equipment, net	4,383,000	4,462,000
Other assets (Note 4)	1,179,000	1,276,000
Total assets	19,039,000	19,233,000
Current Liabilities:
Accounts payable	812,000	568,000
Accrued liabilities	237,000	288,000
Total current liabilities	1,049,000	856,000
Long-term debt from related party (Note 5)	1,500,000	1,500,000
Total Liabilities	2,549,000	2,356,000
Commitments and contingencies (Notes 6 and 8)
Shareholders’ Equity:
Preferred stock, $0.001 par value. Authorized 5,000,000 shares; None issued or outstanding	0	0
Additional paid-in capital	10,675,000	10,661,000
Accumulated other comprehensive income	133,000	132,000
Retained earnings	5,562,000	5,959,000
Total Shareholders’ Equity - Taitron Components Inc	16,376,000	16,758,000
Noncontrolling interest in subsidiary	114,000	119,000
Total Shareholders’ Equity	16,490,000	16,877,000
Total Liabilities and Shareholders’ Equity	19,039,000	19,233,000
Common Class A [Member]
Shareholders’ Equity:
Common Stock, value, issued	5,000	5,000
Common Class B [Member]
Shareholders’ Equity:
Common Stock, value, issued	$ 1,000	$ 1,000

XML

1 - ORGANIZATION

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1 – ORGANIZATION

In 1989, we were formed and incorporated in California.  We maintain a majority-owned subsidiary in Mexico (since 1998) and two subsidiaries in each of Taiwan (since 1998) and China (since 2005).  Our Mexico location closed all operations in May 2013 (final closure is pending sale of our local 15,000 sqft office and warehouse facility) and our Taiwan and China locations are for supporting overseas customers, inventory sourcing, purchases and coordinating the manufacture of our products.  Our China location also serves as the engineering center responsible for designing circuits, arranging pre-production scheduling and mass production runs with joint venture partners for our projects, making component datasheets and test specifications, preparing samples, monitoring quality of shipments and performing failure analysis reports.

XML

7 - SHARE BASED COMPENSATION (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
7 - SHARE BASED COMPENSATION (Details) [Line Items]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit	$ 0.98
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit	$ 1.49
2005 Stock Incentive Plan [Member]
7 - SHARE BASED COMPENSATION (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	three equal annual installments beginning one year from the date of grant and are subject to termination provisions as defined in our 2005 Stock Incentive Plan

XML

8 - COMMITMENTS AND CONTINGENCIES (Details) (USD $)	Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
Purchase Commitment, Remaining Minimum Amount Committed	$ 970,000

XML

2 - BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2014

Disclosure Text Block [Abstract]

Business Description and Basis of Presentation [Text Block]

2 – BASIS OF PRESENTATION

The unaudited consolidated interim financial statements include the accounts of the Company and all wholly owned subsidiaries, including its 60% majority-owned subsidiary, Taitron Components Mexico, S.A. de C.V.  All significant intercompany accounts and transactions have been eliminated in consolidation.

These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments of a normal recurring nature and considered necessary for a fair presentation of its financial condition and results of operations for the interim periods presented in this Quarterly Report on Form 10-Q have been included.  Operating results for the interim periods are not necessarily indicative of financial results for the full year.  These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.  In preparing these financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods.  Actual results could differ from those estimates.  Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the allowance for sales returns, doubtful accounts, inventory reserves, accrued liabilities and deferred income taxes.  Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation.

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Consolidated Balance Sheets (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Accounts receivable, allowances (in Dollars)	$ 52,000	$ 52,000
Inventories, reserves for obsolescence (in Dollars)	$ 6,382,000	$ 5,939,000
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common Class A [Member]
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	4,777,144	4,777,144
Common stock, shares outstanding	4,777,144	4,777,144
Common Class B [Member]
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	762,612	762,612
Common stock, shares issued	762,612	762,612
Common stock, shares outstanding	762,612	762,612

XML

2 - BASIS OF PRESENTATION (Details) (Taitron Components Mexico [Member])	6 Months Ended
	Jun. 30, 2014
Taitron Components Mexico [Member]
2 - BASIS OF PRESENTATION (Details) [Line Items]
Subsidiary or Equity Method Investee, Cumulative Percentage Ownership after All Transactions	60.00%

XML

Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 30, 2014 Common Class A [Member]	Jul. 30, 2014 Common Class B [Member]
Document Information [Line Items]
Entity Registrant Name	TAITRON COMPONENTS INC
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		4,777,144	762,612
Amendment Flag	false
Entity Central Index Key	0000942126
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

XML

4 - OTHER ASSETS (Details) (USD $)	3 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Common Stock [Member] | Zowie Technology [Member]
4 - OTHER ASSETS (Details) [Line Items]
Investment Owned, Balance, Shares	1,037,739
Zowie Technology [Member]
4 - OTHER ASSETS (Details) [Line Items]
Equity Method Investments	$ 405,000	$ 405,000
Equity Method Investment, Ownership Percentage	9.20%
Grand Shine Management Limited [Member] | Teamforce Company Limited [Member]
4 - OTHER ASSETS (Details) [Line Items]
Equity Method Investment, Ownership Percentage	51.00%
Grand Shine Management Limited [Member]
4 - OTHER ASSETS (Details) [Line Items]
Equity Method Investments	751,000	849,000
Equity Method Investment, Ownership Percentage	49.00%
Income (Loss) from Equity Method Investments	$ 98,000

XML

Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net sales	$ 1,609,000	$ 1,663,000	$ 2,895,000	$ 3,295,000
Cost of goods sold	1,123,000	1,324,000	2,125,000	2,604,000
Gross profit	486,000	339,000	770,000	691,000
Selling, general and administrative expenses	541,000	605,000	1,105,000	1,209,000
Operating loss	(55,000)	(266,000)	(335,000)	(518,000)
Interest expense, net	(10,000)	(8,000)	(18,000)	(16,000)
Other income(expense), net	(74,000)	34,000	(48,000)	66,000
Loss before income taxes	(139,000)	(240,000)	(401,000)	(468,000)
Income tax provision	0	0	(1,000)	(1,000)
Net loss	(139,000)	(240,000)	(402,000)	(469,000)
Net loss attributable to noncontrolling interest in subsidiary	(2,000)	(19,000)	(5,000)	(29,000)
Net loss attributable to Taitron Components Inc.	(137,000)	(221,000)	(397,000)	(440,000)
Net loss per share: Basic & Diluted (in Dollars per share)	$ (0.03)	$ (0.04)	$ (0.07)	$ (0.08)
Weighted average common shares outstanding: Basic & Diluted (in Shares)	5,539,756	5,539,756	5,539,756	5,539,756
Net loss	(139,000)	(240,000)	(402,000)	(469,000)
Other comprehensive income (loss):
Foreign currency translation adjustment	0	4,000	1,000	3,000
Comprehensive loss	(139,000)	(236,000)	(401,000)	(466,000)
Comprehensive loss attributable to noncontrolling interests	(4,000)	(17,000)	(6,000)	(28,000)
Comprehensive loss attributable to Taitron Components Inc.	$ (135,000)	$ (219,000)	$ (395,000)	$ (438,000)

XML

7 - SHARE BASED COMPENSATION

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

7 – SHARE BASED COMPENSATION

Accounting for stock options issued to employees measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award.  That cost is recognized over the period during which an employee is required to provide service in exchange for the award.  Outstanding options to purchase Class A common stock (“the Options”) vest in three equal annual installments beginning one year from the date of grant and are subject to termination provisions as defined in our 2005 Stock Incentive Plan.  The option activity during the three months ended June 30, 2014 is as follows:

	Number of Shares			Weighted Average xercise Price		Weighted Average Years Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2013		396,000		$	1.34		4.4	$	19,300
Grants		78,000
Forfeited		(20,000	)
Outstanding at June 30, 2014		454,000			1.31		4.6	$	20,300
Exercisable at June 30, 2014		274,999		$	1.47		3.5	$	10,000

At June 30, 2014 the range of individual outstanding weighted average exercise prices was $0.98 to $1.49.

XML

6 - RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2014

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

6 – RELATED PARTY TRANSACTIONS

We made payments of approximately $6,000 for both of the quarters ending June 30, 2014 and 2013, to K.S. Best International Co. Ltd., a company controlled by the brother of our Chief Executive Officer.  These payments were for professional fees related to the operational management of our Taiwan office.  In addition, we also made payments of $13,000 for both of the quarters ended June 30, 2014 and 2013, for interest expense on our credit facility from K.S. Best International Co. Ltd.  See Note 5.

We have a $3,000,000 credit facility, collateralized by real property, from K.S. Best International Co. Ltd., a company controlled by the brother of our Chief Executive Officer.  See Note 5 for additional details.

XML

7 - SHARE BASED COMPENSATION (Details) - Schedule of Share-based Compensation, Stock Options, Activity (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Schedule of Share-based Compensation, Stock Options, Activity [Abstract]
Number of Shares	454,000	396,000
Weighted Average Exercise Price (in Dollars per share)	$ 1.31	$ 1.34
Weighted Average Years Remaining Contractual Term	4 years 219 days	4 years 146 days
Aggregate Intrinsic Value (in Dollars)	$ 20,300	$ 19,300
Exercisable at June 30, 2014	274,999
Exercisable at June 30, 2014 (in Dollars per share)	$ 1.47
Exercisable at June 30, 2014	3 years 6 months
Exercisable at June 30, 2014 (in Dollars)	$ 10,000
Grants	78,000
Forfeited	(20,000)

XML

4 - OTHER ASSETS (Details) - Schedule of Other Assets (USD $)	Jun. 30, 2014	Dec. 31, 2013
4 - OTHER ASSETS (Details) - Schedule of Other Assets [Line Items]
Other	$ 23,000	$ 22,000
Other Assets	1,179,000	1,276,000
Zowie Technology [Member]
4 - OTHER ASSETS (Details) - Schedule of Other Assets [Line Items]
Investments	405,000	405,000
Grand Shine Management Limited [Member]
4 - OTHER ASSETS (Details) - Schedule of Other Assets [Line Items]
Investments	$ 751,000	$ 849,000

XML

7 - SHARE BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

The option activity during the three months ended June 30, 2014 is as follows:

	Number of Shares			Weighted Average xercise Price		Weighted Average Years Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2013		396,000		$	1.34		4.4	$	19,300
Grants		78,000
Forfeited		(20,000	)
Outstanding at June 30, 2014		454,000			1.31		4.6	$	20,300
Exercisable at June 30, 2014		274,999		$	1.47		3.5	$	10,000

XML

8 - COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

8 – COMMITMENTS AND CONTINGENCIES

Inventory Purchasing

Outstanding commitments to purchase inventory from suppliers aggregated $970,000 as of June 30, 2014.

XML

4 - OTHER ASSETS (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Text Block Supplement [Abstract]

Schedule of Other Assets [Table Text Block]

	June 30,		December 31,
	2014		2013
	(Unaudited)
Investment in securities - Zowie Technology	$	405,000	$	405,000
Investment in joint venture - Grand Shine Mgmt		751,000		849,000
Other		23,000		22,000
Other Assets	$	1,179,000	$	1,276,000

XML

1 - ORGANIZATION (Details) (Land, Buildings and Improvements [Member], MEXICO)	Jun. 30, 2014 sqft
Land, Buildings and Improvements [Member] | MEXICO
1 - ORGANIZATION (Details) [Line Items]
Area of Real Estate Property	15,000

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6 - RELATED PARTY TRANSACTIONS (Details) (Immediate Family Member of Management or Principal Owner [Member], USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Apr. 21, 2014
6 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Related Party Transaction, Amounts of Transaction	$ 6,000	$ 6,000
Related Party Transaction, Description of Transaction	professional fees related to the operational management of our Taiwan office	professional fees related to the operational management of our Taiwan office
Line of Credit [Member]
6 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Paid	13,000	13,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,000,000		$ 3,000,000

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating activities:
Net loss	$ (402,000)	$ (469,000)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	87,000	91,000
Provision for sales returns and doubtful accounts	3,000	59,000
Stock based compensation	14,000	12,000
Changes in assets and liabilities:
Trade accounts receivable	(91,000)	185,000
Inventory	457,000	617,000
Prepaid expenses and other current assets	(33,000)	(23,000)
Trade accounts payable	244,000	(51,000)
Accrued liabilities	(51,000)	(73,000)
Other assets and liabilities	97,000
Total adjustments	727,000	817,000
Net cash provided by operating activities	325,000	348,000
Investing activities:
Acquisition of property & equipment	(8,000)	(3,000)
Payments for investments in securities	0	(303,000)
All other investing activity	0	2,000
Net cash used for investing activities	(8,000)	(304,000)
Impact of exchange rates on cash	1,000	3,000
Net increase in cash and cash equivalents	318,000	47,000
Cash and cash equivalents, beginning of period	2,724,000	2,475,000
Cash and cash equivalents, end of period	3,042,000	2,522,000
Supplemental disclosures of cash flow information:
Cash paid for interest	18,000	26,000
Cash paid for income taxes, net	$ 2,000	$ 3,000

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5 - LONG-TERM DEBT FROM RELATED PARTY

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

5 – LONG-TERM DEBT FROM RELATED PARTY

Secured credit facility - On April 21, 2008 we entered into a $3,000,000 credit facility, collateralized by real property, from K.S. Best International Co. Ltd., a company controlled by the brother of our Chief Executive Officer.  On April 12, 2013 we renewed and extended maturities to June 30, 2015 and beyond.  Credit is available in $500,000 advances, each advance payable in monthly interest only installments, at the rate of Prime + 0.25% per annum.  As of June 30, 2014 and December 31, 2013, the aggregate outstanding balance on this credit facility was $1,500,000.  The advance history of the credit line is such that on June 3, 2008, we borrowed $500,000, on April 3, 2009, we borrowed $500,000 and on April 1, 2010, we borrowed $500,000.  All advances are due from June 30, 2015 to June 30, 2017.

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5 - LONG-TERM DEBT FROM RELATED PARTY (Details) (Line of Credit [Member], USD $)	0 Months Ended				0 Months Ended					6 Months Ended
	Apr. 21, 2014 Immediate Family Member of Management or Principal Owner [Member] Prime Rate [Member]	Apr. 21, 2014 Immediate Family Member of Management or Principal Owner [Member]	Jun. 30, 2014 Immediate Family Member of Management or Principal Owner [Member]	Apr. 21, 2014 Immediate Family Member of Management or Principal Owner [Member]	Apr. 01, 2010	Apr. 03, 2009	Jun. 03, 2008	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Minimum [Member]	Jun. 30, 2014 Maximum [Member]
5 - LONG-TERM DEBT FROM RELATED PARTY (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 3,000,000	$ 3,000,000
Line of Credit Facility, Collateral		collateralized by real property
Line of Credit Facility, Description		Credit is available in $500,000 advances
Line of Credit Facility, Frequency of Payment and Payment Terms		each advance payable in monthly interest only installments
Debt Instrument, Basis Spread on Variable Rate	0.25%
Long-term Line of Credit								1,500,000	1,500,000
Proceeds from Secured Lines of Credit					$ 500,000	$ 500,000	$ 500,000
Debt Instrument, Maturity Date										Jun. 30, 2015	Jun. 30, 2017