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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001193125-03-037531.txt : 20030814
<SEC-HEADER>0001193125-03-037531.hdr.sgml : 20030814
<ACCEPTANCE-DATETIME>20030814130631
ACCESSION NUMBER:		0001193125-03-037531
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20030630
FILED AS OF DATE:		20030814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TAITRON COMPONENTS INC
		CENTRAL INDEX KEY:			0000942126
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065]
		IRS NUMBER:				954249240
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-25844
		FILM NUMBER:		03845358

	BUSINESS ADDRESS:	
		STREET 1:		25202 ANZA DR
		CITY:			SANTA CLARITA
		STATE:			CA
		ZIP:			91355
		BUSINESS PHONE:		8052576060

	MAIL ADDRESS:	
		STREET 1:		25202 ANZA DR
		CITY:			SANTA CLARITA
		STATE:			CA
		ZIP:			91355
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>d10qsb.htm
<DESCRIPTION>FORM 10-QSB
<TEXT>
<HTML><HEAD>
<TITLE>Form 10-QSB</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
  <hr size="3" width="100%" color="black" noshade><p align="center"><font style="font-size:18pt"><b>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</b></font> <br><font style="font-size:12pt"><b>Washington, D.C.
20549</b></font></p> <hr size="1" width="17%" color="black" align="center" noshade> <p align="center"><font style="font-size:18pt"><b>FORM 10-QSB</b></font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="top">
<td width="5%" align="left"><font style="font-size:10pt"></font></td>
<td width="95%" align="left"><font style="font-size:10pt"></font></td></tr>
<tr valign="top">
<td align="left"><font style="font-size:12pt" face="Wingdings">x</font></td>
<td align="left"><font style="font-size:12pt"><b>QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</b></font></td></tr>
<tr valign="top">
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="top">
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt"><b>For the quarterly period ended June 30, 2003</b></font></td></tr>
<tr valign="top">
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="top">
<td align="left"><font style="font-size:10pt" face="Wingdings">o</font></td>
<td align="left"><font style="font-size:12pt"><b>TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</b></font></td></tr> </table> <p align="center"><font style="font-size:10pt"><b>Commission File Number
0-25844</b></font></p> <hr size="1" width="17%" color="black" align="center" noshade> <p align="center"><font style="font-size:24pt"><b>TAITRON COMPONENTS INCORPORATED</b></font><br> <font style="font-size:8pt"><b>(Exact name of small business
issuer as specified in its charter)</b></font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="bottom">
<th><font style="font-size:10pt"><b>California</b></font> </th>
<th></th>
<th> <font style="font-size:10pt"><b>95-4249240</b></font></th></tr>
<tr valign="bottom">
<td width="35%" align="center"><font style="font-size:10pt"></font></td>
<td width="30%" align="center"><font style="font-size:10pt"></font></td>
<td width="35%" align="center"><font style="font-size:10pt"></font></td></tr>
<tr valign="bottom">
<td align="center"><font style="font-size:8pt"><b>(State or Other Jurisdiction of Incorporation or Organization)</b></font></td>
<td align="center"><font style="font-size:10pt">&nbsp;</font></td>
<td align="center"><font style="font-size:8pt"><b>(I.R.S. Employer Identification No.)</b></font></td></tr> </table> <p align="center"><font style="font-size:10pt"><b>28040 West Harrison Parkway<br> Valencia, California
91355-4162</b></font><br><font style="font-size:8pt"><b>(Address Of Principal Executive Offices)</b></font></p> <p align="center"><font style="font-size:10pt"><b>(661) 257-6060</b></font><br> <font style="font-size:8pt"><b>(Issuer&#146;s Telephone
Number)</b></font></p> <p align="center"><font style="font-size:10pt"><b>NONE</b></font><br> <font style="font-size:8pt"><b>(Former Name, Address and Fiscal Year, if Changed Since Last Report)</b></font></p> <hr size="1" width="17%" color="black"
align="center" noshade> <p><font style="font-size:10pt">Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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.</font></p> <p align="center"><font style="font-size:10pt">Yes&nbsp;&nbsp;</font><font
style="font-size:10pt" face="Wingdings">x</font><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp; No &nbsp;&nbsp;</font><font style="font-size:10pt" face="Wingdings">o</font></p> <p><font style="font-size:10pt">State the number of shares
outstanding of each of the issuer&#146;s classes of common stock, as of the latest practicable date:</font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="bottom">
<td align="center"><font style="font-size:10pt">Class</font><hr size="1" width="100%" color="black" noshade></td>
<td></td>
<td align="center"><font style="font-size:10pt">Outstanding on July 31, 2003</font><hr size="1" width="100%" color="black" noshade></td></tr>
<tr valign="top">
<td width="40%" align="left"><font style="font-size:10pt"></font></td>
<td width="20%" align="left"><font style="font-size:10pt"></font></td>
<td width="40%" align="center"><font style="font-size:10pt"></font></td></tr>
<tr valign="top">
<td align="left"><font style="font-size:10pt">Class A Common Stock, $.001 par value</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="center"><font style="font-size:10pt">4,886,571&nbsp;</font></td></tr>
<tr valign="top">
<td align="left"><font style="font-size:10pt">Class B Common Stock, $.001 par value</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="center"><font style="font-size:10pt">&nbsp;762,612&nbsp;</font></td></tr> </table> <p><font style="font-size:10pt">Transitional Small Business Disclosure Format (check one):&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Yes&nbsp;&nbsp;</font><font
style="font-size:10pt" face="Wingdings">o</font><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp; No&nbsp;&nbsp; </font><font style="font-size:10pt" face="Wingdings">x</font></p> <hr size="3" width="100%" color="black" noshade>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <p><font style="font-size:10pt">PART I. FINANCIAL INFORMATION</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Item 1. Financial Statements</font></p> <p
align="center"><font style="font-size:10pt"><b>TAITRON COMPONENTS INCORPORATED</b></font><br> <font style="font-size:10pt">Condensed Consolidated Balance Sheets<br> (Dollars in Thousands)</font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="bottom">
<td width="78%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="1%" align="left"><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt"><b>&nbsp;</b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>June 30,<br> 2003<br></b></font> <hr width="100%" size="1" color="black" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>December 31,<br> 2002<br></b></font> <hr width="100%" size="1" color="black" noshade> </td> </tr>
<tr valign="bottom">
<td align="left"><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;<b>Assets</b></font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="center" colspan="2"><font style="font-size:8pt">(Unaudited)</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt"></font></td>
<td align="right"><font style="font-size:10pt"></font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">Current assets:</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">638</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">326</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts receivable, net</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,338</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">2,009</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">310</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory, net</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">22,653</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">24,314</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">198</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">252</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">220</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">220</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current assets</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">82</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">128</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">25,129</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">27,559</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">Property and equipment, net</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">6,185</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">6,383</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">Other assets</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">175</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">172</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">31,489</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">34,114</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>Liabilities and
Shareholders&#146; Equity</b></font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">Current liabilities:</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Revolving line of credit</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">3,935</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Current portion of long term debt</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">943</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">91</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts payable</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">968</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,314</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities and other</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">206</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">332</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">2,117</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5,672</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">Long-term debt, less current portion</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">4,991</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">3,896</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">7,108</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">9,568</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">Commitments and contingencies (Notes 3, 4 and 5)</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">Shareholders&#146; equity:</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $.001 par value. Authorized 5,000,000 shares.</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None issued or outstanding.</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class A common stock, $.001 par value. Authorized 20,000,000 shares; issued and outstanding
4,886,571 and 4,945,107 shares as of June 30, 2003 and December 31, 2002, respectively.</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class B common stock, $.001 par value. Authorized, issued and outstanding 762,612, shares as of
June 30, 2003 and December 31, 2002.</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">10,834</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">10,893</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss, net of tax</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(55</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(35</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">13,596</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">13,682</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders&#146; equity</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">24,381</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">24,546</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders&#146; equity</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">31,489</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">34,114</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr> </table> <p align="center"><font style="font-size:10pt">See accompanying notes to condensed consolidated financial statements.</font></p> <p align="center"><font style="font-size:10pt">Page
2</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <p align="center"><font style="font-size:10pt"><b> TAITRON COMPONENTS INCORPORATED</b></font><br><font style="font-size:8pt">Condensed Consolidated Statements of Operations <br> (Dollars in thousands, except per share
amounts)</font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="bottom">
<td width="53%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="1%" align="left"><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt"><b>&nbsp;</b></font></td>
<td valign="bottom" colspan="5" align="center"><font style="font-size:8pt"><b>Three months ended June 30,</b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b> </b></font></td>
<td valign="bottom" colspan="5" align="center"><font style="font-size:8pt"><b>Six months ended June 30, </b></font></td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center">&nbsp;</td>
<td valign="bottom" colspan="5" align="center"> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" align="center">&nbsp;</td>
<td valign="bottom" colspan="5" align="center"> <hr width="100%" size="1" color="BLACK" noshade> </td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt"><b>&nbsp;</b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>2003 </b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>2002 </b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>2003 </b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>2002 </b></font> <hr width="100%" size="1" color="BLACK" noshade> </td> </tr>
<tr valign="bottom" align="center">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2"><font style="font-size:8pt">(Unaudited)</font></td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2"><font style="font-size:8pt">(Unaudited)</font></td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2"><font style="font-size:8pt">(Unaudited)</font></td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2"><font style="font-size:8pt">(Unaudited)</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">Net sales</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">$</font></td>
<td align="right" bgcolor="#cceeff"><font style="font-size:10pt">2,324</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">$</font></td>
<td align="right" bgcolor="#cceeff"><font style="font-size:10pt">3,579</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">$</font></td>
<td align="right" bgcolor="#cceeff"><font style="font-size:10pt">5,479</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">$</font></td>
<td align="right" bgcolor="#cceeff"><font style="font-size:10pt">7,285</font></td>
<td align="left" bgcolor="#cceeff"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Cost of goods sold</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,594</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">2,645</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">3,782</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5,328</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">730</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">934</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,697</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,957</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Selling, general and administrative expenses</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">768</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,168</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,617</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">2,364</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating (loss) income</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(38</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(234</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">80</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(407</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">Interest expense, net</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">91</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">107</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">199</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">231</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"><font style="font-size:10pt">Other income, net</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(37</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(50</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(33</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(139</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss before income taxes</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(92</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(291</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(86</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(499</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">Income tax provision</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">452</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">437</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(92</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(743</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(86</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(936</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"><font style="font-size:10pt">Net loss per share Basic &#38; Diluted</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(.02</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(.13</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(.02</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(.17</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Weighted average common shares outstanding Basic &#38; Diluted</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5,682,401</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5,716,319</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5,666,667</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5,684,894</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr> </table> <br> <p align="center"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See accompanying notes to condensed consolidated financial statements.</font></p>
<p align="center"><font style="font-size:10pt">Page 3</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <p align="center"><font style="font-size:10pt"><b>TAITRON COMPONENTS INCORPORATED</b></font><br><font style="font-size:8pt">Condensed Consolidated Statements of Cash Flows <br> (Dollars in thousands)</font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="bottom">
<td width="78%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="1%" align="left"><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt"><b>&nbsp;</b></font></td>
<td valign="bottom" colspan="5" align="center"><font style="font-size:8pt"><b>Six months ended June 30, </b></font></td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt"><b>&nbsp;</b></font></td>
<td valign="bottom" colspan="5" align="center"> <hr width="100%" size="1" color="BLACK" noshade> </td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt"><b>&nbsp;</b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>2003</b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>2002</b></font> <hr width="100%" size="1" color="BLACK" noshade> </td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2"> <div align="center"><font style="font-size:8pt">(Unaudited)</font></div> </td>
<td>&nbsp;</td>
<td colspan="2"> <div align="center"><font style="font-size:8pt">(Unaudited)</font></div> </td>
<td>&nbsp;</td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Cash flows from operating activities:</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt"></font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt"></font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Net loss</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(86</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(936</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash provided by operating activities:</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">212</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">275</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount related to options issued with notes payable</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">7</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Provision for inventory reserves</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">156</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">265</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Provision for sales returns and doubtful accounts</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">148</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">196</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Provision for deferred income taxes</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">528</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets and liabilities:</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts receivable</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">523</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(498</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">310</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">50</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,505</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">330</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:40px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">100</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(49</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(3</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">118</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts payable</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(346</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">845</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities and other</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(126</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">20</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total adjustments</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">2,486</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">2,080</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"> <div style="margin-left:60px; text-indent:-60px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">2,400</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,144</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">Cash flows from investing activities:</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:40px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisitions of property and equipment</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(14</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(177</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:40px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of assets</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">2</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:60px; text-indent:-60px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(14</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(175</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">Cash flows from financing activities:</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:40px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Borrowings from revolving line of credit</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">2,190</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:40px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Payments on revolving line of credit</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(3,935</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(3,287</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:40px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Borrowings on notes payable</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,955</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:40px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Repurchase of Class A Common Stock</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(74</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(49</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:40px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of Class A common stock</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">119</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:60px; text-indent:-60px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(2,054</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(1,027</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Impact of exchange rate changes on cash</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(20</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">23</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:60px; text-indent:-60px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net increase (decrease) in cash and cash equivalents</font></div>
</td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">312</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(35</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Cash and cash equivalents, beginning of period</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">326</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">182</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="1" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Cash and cash equivalents, end of period</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">638</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">147</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Supplemental disclosure of cash flow information:</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">222</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">192</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:40px; text-indent:-40px"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;Cash (refunded) paid for income taxes</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">(315</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">1</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font> <hr width="100%" size="3" color="black" noshade> </td>
<td><font style="font-size:10pt"></font></td> </tr> </table> <p align="center"><font style="font-size:10pt">See accompanying notes to condensed consolidated financial statements.</font></p> <p align="center"><font style="font-size:10pt"> Page
4</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <p align="center"><font style="font-size:10pt"><b>TAITRON COMPONENTS INCORPORATED</b></font></p> <p align="center"><font style="font-size:10pt">Notes to Condensed Consolidated Financial Statements <br> June 30, 2003
and 2002<br> (All amounts are unaudited, except for the balance sheet as of December 31, 2002)</font></p> <p align="left"><font style="font-size:10pt"><b>(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basis of Presentation</b></font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">The accompanying unaudited condensed consolidated financial statements of Taitron Components Incorporated (&#147;the Company&#148;) were prepared in accordance with accounting principles generally accepted in the
United States of America and reflect all adjustments, consisting of normal recurring accruals and adjustments, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position and results of
operations at and for the periods presented. Such financial statements do not include all the information or footnotes necessary for a complete presentation and, accordingly, should be read in conjunction with the Company&#146;s Annual Report on
Form 10-K for the fiscal year ended December 31, 2002, and the notes thereto, which include significant accounting policies and estimates. The results of operations for the interim periods are not necessarily indicative of results for the full
year.</font></td> </tr> </table> <br> <p align="left"><font style="font-size:10pt"><b>(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Summary of Significant Accounting Policies and Estimates</b></font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt"><b>Principles of Consolidation</b></font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">The unaudited condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiary. All significant intercompany transactions have been eliminated in
consolidation.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt"><b>Revenue Recognition</b></font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">Revenue is recognized upon shipment of the merchandise. Reserves for sales allowances and customer returns are established based upon historical experience and management&#146;s estimates as shipments are made. Sales
returns for the quarters ended June 30, 2003 and 2002 aggregated $71,000 and $57,000, respectively and for the six months ended June 30, 2003 and 2002 aggregated to $117,000 and $151,000, respectively. The allowance for sales returns and doubtful
accounts at June 30, 2003 and December 31, 2002 aggregated $155,000 and $135,000, respectively.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt"><b>Inventory</b></font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="95%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">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. Inventory is presented net of valuation
allowances of $1,388,000 and $1,083,000 at June 30, 2003 and December 31, 2002, respectively.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt"><b>Deferred Taxes</b></font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">The Company reviews the nature of each component of its deferred income taxes for an assessment of future realization. The Company has reserved for a portion of its deferred income tax assets, as management could not
determine that it was more likely than not such assets would be realized.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt"><b>Net Loss Per Share</b></font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">Common equivalent shares of approximately 405,000 and 616,000 for the three month periods ended June 30, 2003 and 2002, respectively, and approximately 419,000 and 615,000 for the six months ended June 30, 2003 and
2002, respectively, are excluded from the computation of diluted loss per share as their effect is anti-dilutive.</font></td> </tr> </table> <br> <p align="center"><font style="font-size:10pt">Page 5</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt"><b>Stock Option Plan</b></font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">The Company has adopted the disclosure requirements of SFAS No. 148, &#147;Accounting for Stock-Based Compensation&#151;Transition and Disclosure&#148;. SFAS No. 123 allows companies to choose whether to account for
stock-based compensation on a fair value method, or to continue to account for stock-based compensation under the current intrinsic value method as prescribed by APB Opinion No.&nbsp;25, &#147;Accounting for Stock Issued to Employees.&#148; The
Company has elected to continue to follow the provisions of APB Opinion No.&nbsp;25. SFAS No. 148 requires interim disclosures regarding the pro forma effects of compensation expense had the Company&#146;s 1995 Stock Incentive Plan been determined
based on the fair value consistent with SFAS No.&nbsp;123.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">Accordingly, under SFAS No.&nbsp;123, the Company&#146;s net loss and diluted loss per share for the quarter and six months ended June 30, 2003 and June 30, 2002, would have been changed to the pro forma amounts
indicated below:</font></td> </tr> </table> <br>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="bottom">
<td width="24%" align="left"><font style="font-size:10pt"></font></td>
<td width="6%" align="left"><font style="font-size:10pt"></font></td>
<td width="29%" align="left"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="6%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="6%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="6%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="6%" align="right"><font style="font-size:10pt"></font></td>
<td width="1%" align="left"><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom">
<td colspan="4"></td>
<td colspan="5" align="center"><font style="font-size:8pt"><b>Three Month<br>Period Ended June 30,<br></b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td></td>
<td colspan="5" align="center"><font style="font-size:8pt"><b>Six Month<br>Period Ended June 30,<br></b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td></td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt"><b>&nbsp;</b></font></td>
<td valign="bottom" align="center">&nbsp;</td>
<td valign="bottom" align="center"> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" colspan="1" align="center"><font style="font-size:8pt"><b>2003</b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" align="center"> <hr width="100%" size="1" color="BLACK" noshade> <font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" colspan="1" align="center"><font style="font-size:8pt"><b>2002</b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" align="center"> <hr width="100%" size="1" color="BLACK" noshade> <font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" colspan="1" align="center"><font style="font-size:8pt"><b>2003</b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" align="center"> <hr width="100%" size="1" color="BLACK" noshade> <font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" colspan="1" align="center"><font style="font-size:8pt"><b>2002</b></font> <hr width="100%" size="1" color="BLACK" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">As reported</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(92,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(743,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(86,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(936,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">Pro Forma</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(81,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(736,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(64,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(922,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted loss</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">As reported</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(.02</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(.12</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(.01</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(.15</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">Pro Forma</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(.01</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(.12</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(.01</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$</font></div> </td>
<td align="right"><font style="font-size:10pt">(.15</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr> </table>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">At June 30, 2003, the number of options exercisable was 424,500 and weighted average exercise prices of those options were $2.15.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt"><b>Use of Estimates</b></font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">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 these condensed consolidated financial
statements in conformity with accounting principles generally accepted in the United States. These estimates have a significant impact on the Company&#146;s 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.</font></td> </tr> </table> <br> <p align="left"><font style="font-size:10pt"><b>(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revolving
Line of Credit</b></font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt">&nbsp;</font></td>
<td width="96%"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">As of June 30, 2003, the Company has completed the repayment of this revolving line of credit facility. This credit facility originally matured on December 31, 2002, with the bank also previously indicating that no
further borrowings would be made available.</font></td> </tr> </table> <br> <p align="center"><font style="font-size:10pt">Page 6</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <p align="left"><font style="font-size:10pt"><b>(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-Term Debt</b></font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="bottom">
<td width="78%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="right"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="1%" align="left"><font style="font-size:10pt"></font></td></tr>
<tr valign="bottom">
<td colspan="3" align="left"><font style="font-size:10pt">Long-term debt is summarized as follows:</font></td>
<td align="center" colspan="2"><font style="font-size:8pt"><b>June 30,<br>2003<br></b></font> <hr width="100%" size="1" color="black" noshade></td>
<td></td>
<td align="center" colspan="2"><font style="font-size:8pt"><b>December 31,<br>2002<br></b></font> <hr width="100%" size="1" color="black" noshade></td>
<td></td></tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">Note payable collateralized by real property, due</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt"></font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt"></font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="bottom">
<td align="left"><div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">&nbsp;&nbsp;December 31, 2009, bearing an interest rate of 6.875%</font></div></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$&nbsp;</font></div> </td>
<td align="right"><font style="font-size:10pt">2,594,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"> <div align="left"><font style="font-size:10pt">$&nbsp;</font></div> </td>
<td align="right"><font style="font-size:10pt">2,625,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Subordinated note, due September 30, 2005, bearing an interest rate of 4.75% per annum.</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,000,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,000,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Subordinated note, due September 30, 2003, bearing an interest rate of 7% per annum.</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">500,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Subordinated note, due February 20, 2006, bearing an interest rate of 4.75% per annum.</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">500,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Subordinated note, due June 23, 2006, bearing an interest rate of 7% per annum.</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">1,000,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&#151;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">Note payable collateralized by real property, due</font></div></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="bottom">
<td align="left"> <div style="margin-left:20px; text-indent:-20px"><font style="font-size:10pt">&nbsp;&nbsp;December 1, 2013, bearing an interest rate of 6.359% per annum.</font></div> </td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">375,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">388,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font><hr width="100%" size="1" color="black" noshade></td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font><hr width="100%" size="1" color="black" noshade></td>
<td><font style="font-size:10pt"></font></td></tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5,969,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">4,013,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">Less current maturities</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(943,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(91,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td></tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font><hr width="100%" size="1" color="black" noshade></td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font><hr width="100%" size="1" color="black" noshade></td>
<td><font style="font-size:10pt"></font></td></tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">5,026,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">3,922,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">Less unamortized debt discount</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(35,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(26,000</font></td>
<td align="left"><font style="font-size:10pt">)</font></td></tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font><hr width="100%" size="1" color="black" noshade></td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font><hr width="100%" size="1" color="black" noshade></td>
<td><font style="font-size:10pt"></font></td></tr>
<tr bgcolor="#cceeff" valign="bottom">
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">4,991,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">3,896,000</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td></tr>
<tr valign="bottom">
<td colspan="3"><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font><hr width="100%" size="3" color="black" noshade></td>
<td><font style="font-size:10pt"></font></td>
<td colspan="2" align="right"><font style="font-size:10pt"></font><hr width="100%" size="3" color="black" noshade></td>
<td><font style="font-size:10pt"></font></td></tr> </table>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">The subordinated notes of $1,000,000 bearing interest at 4.75%, $500,000 bearing interest at 7% and $1,000,000 bearing interest at 7%, are all due to K.S. Best International Co. Ltd., a company controlled by the
brother of the Company&#146;s Chief Executive Officer.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">In connection with the subordinated notes of $1,000,000 and $500,000 bearing interest at 4.75%, the Company issued 100,000 and 50,000 stock options, respectively, with relative estimated fair values of $29,000 and
$15,000, respectively. Such amounts have been presented as debt discounts and accreted through periodic interest charges through the maturity date of these notes.</font></td> </tr> </table> <br> <p align="left"><font
style="font-size:10pt"><b>(5)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsequent Events</b></font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">As of August 11, 2003, the Company has closed escrow on the sale of its former office/warehouse facility for $1,800,000.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">The Company received notice that it&#146;s not in compliance with The Nasdaq National Market continued listing requirements. Nasdaq is allowing the Company through August 19, 2003 to regain compliance. If the Company
cannot demonstrate compliance before that date, Nasdaq staff may notify the Company of a determination to delist the Company&#146;s securities. If an initial delisting decision is made by the staff, the Company may appeal the decision as permitted
by Nasdaq rules. Nasdaq also stated that the Company may apply to transfer its securities to The Nasdaq SmallCap Market before August 19, 2003. In response to this Nasdaq notification, as of August 7, 2003, the Company plans to apply for listing on
the Nasdaq SmallCap Market and retain its ticker symbol of TAIT.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="4%"><font style="font-size:10pt"></font></td>
<td width="96%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">As of the date of this report, the Company has listed for sale its office building facility located in Taipei, Taiwan.</font></td> </tr> </table> <br> <p align="center"><font style="font-size:10pt">Page 7</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <p><font style="font-size:10pt"> Item 2.&nbsp;&nbsp;MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>The following should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in
Item 1 of this Report as well as the Company&#146;s most recent annual report on Form 10-K. Also, several of the matters discussed in this document contain forward looking statements that involve risks and uncertainties. Such forward looking
statements are usually denoted by words or phrases such as &#147;believes,&#148; &#147;expects,&#148; &#147;projects,&#148; &#147;estimates,&#148; &#147;anticipates,&#148; &#147;will likely result,&#148; or similar expressions. We wish to caution
readers that all forward looking statements are necessarily speculative and not to place undue reliance on such 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. Factors associated with the forward looking statements that could cause the forward looking statements to be inaccurate and could otherwise impact our future results are set forth in detail in our most recent annual
report on Form 10-K. In addition to the other information contained in this document, readers should carefully consider the information contained in our Form 10-K for the year ended December 31, 2002 under the heading &#147;Cautionary Statements and
Risk Factors.&#148;</i></font></p> <p align="left"><font style="font-size:10pt"><b>Overview</b></font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taitron Components
Incorporated (&#147;Taitron&#148; or the &#147;Company&#148;) is a national distributor of electronic components manufactured by others. The Company distributes a wide variety of transistors, diodes and other discrete semiconductors, optoelectronic
devices and passive components to other electronic distributors, original equipment manufacturers (OEMs) and to contract electronic manufacturers (CEMs) who incorporate these devices in their products. In order to meet the rapid delivery
requirements of its customers, the Company maintains a significant inventory of discrete and passive components. The Company distributes over 13,000 different products manufactured by more than 50 different suppliers.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discrete semiconductors are basic electronic building blocks. One or more different types of discrete semiconductors generally are found in
the electronic or power supply circuitry of such diverse products as automobiles, televisions, radios, telephones, computers, medical equipment, airplanes, industrial robotics and household appliances. The term &#147;discrete&#148; is used to
differentiate those single function semiconductor products which are packaged alone, such as transistors or diodes, from those which are &#147;integrated&#148; into microchips and other integrated circuit devices.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The demand for discrete semiconductors in the U.S. market decreased from 1996 through the middle of 1999. From 1999 throughout 2000, demand
had increased as a result of industry wide shortages. The industry wide shortage began to diminish towards the end of 2000 and demand through today has drastically declined. This declining demand has primarily resulted from the accelerated trend of
moving the production capacity of OEM/CEM customers abroad and the consolidation of CEM customers domestically.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s core strategy includes maintaining a substantial inventory of discrete and passive components purchased at prices generally lower than those commonly available to its competitors. This strategy allows the Company to fill customer
orders immediately from stock held in inventory. Since demand remains weak resulting from an overall economic slowdown and excess product availability, the Company continued to focus on lowering its inventory balances and changing the product mix.
As such, inventory levels decreased throughout the current period from $24,314,000 as of December 31, 2002 to $22,653,000 as of June 30, 2003, including a non-cash provision of approximately $156,000 during the current six month period ending June
30, 2003 to increase the Company&#146;s inventory reserves. Since demand continued to be weak throughout the current period, the Company expects to continue lowering inventory balances throughout 2003.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with accounting principles generally accepted in the United States, management has classified inventory as a current asset.
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.</font></p>
<p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our gross profit margins in general have been stable or slightly increased mainly because our purchasing price decrease more than
offset the selling price erosion in the down market. Our gross profit margins are subject to a number of factors, including product demand, a strong US dollar, manufacturer&#146;s price protection programs, our</font></p> <p align="center"><font
style="font-size:10pt">Page 8</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <p><font style="font-size:10pt">ability to purchase inventory at favorable prices and our sales product mix, all of which could adversely impact margins. There are no assurances that demand in the discrete
semiconductor market will increase and that market conditions will improve. Therefore, its possible that further declines in our carrying values of inventory could result.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<i>Readers are cautioned that the foregoing statements are forward looking and are necessarily speculative. There can be no guarantee that a
recovery in the discrete semiconductor market will take place. Also, if prices of components held in our inventory decline or if new technology is developed that displaces products distributed by us and held in inventory, our business could be
materially adversely affected. </i></font></p> <p align="left"><font style="font-size:10pt"><b>Critical Accounting Policies and Estimates</b></font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States. These estimates have a significant impact on the
Company&#146;s 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.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue Recognition - Revenue is recognized upon shipment of the merchandise. Reserves for sales allowances and customer returns are
established based upon historical experience and management&#146;s estimates of future returns. Sales returns for the quarters ended June 30, 2003 and 2002 were $71,000 and $57,000, respectively and for the six months ended June 30, 2003 and 2002
aggregated to $117,000 and $151,000, respectively. The allowance for sales returns and doubtful accounts at June 30, 2003 and December 31, 2002 were $155,000 and $135,000, respectively. The Company reviews the actual sales returns and bad debts for
its customers and establishes an estimate of future returns and allowance for doubtful accounts.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. The Company had inventory balances in the amounts of $22,653,000 and $24,314,000 at June
30, 2003 and December 31, 2002, respectively, which are presented net of valuation allowances of $1,388,000 and $1,083,000 at June 30, 2003 and December&nbsp;31, 2002, respectively. The Company evaluates inventories to identify excess, high cost,
slow-moving, or other factors rendering inventories as unmarketable at normal profit margins. For inventories supplied under franchise agreements, the Company relies upon its contractual rights to receive compensation for price differences caused by
market fluctuations. 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, and/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.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred Taxes &#150;
The Company reviews the nature of each component of its deferred income taxes for an assessment of future realization. The Company has reserved for a portion of its deferred income tax assets, as management could not determine that it was more
likely than not such assets would be realized.</font></p> <p align="left"><font style="font-size:10pt"><b>Revolving Line of Credit Facility</b></font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June 30, 2003, the Company has completed the repayment of this revolving line of credit facility. This credit facility originally
matured on December 31, 2002, with the bank also previously indicating that no further borrowings would be made available.</font></p> <p align="center"><font style="font-size:10pt">Page 9</font></p>

<p Style='page-break-before:always'>
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  <p align="left"><font style="font-size:10pt"><i>Results of Operations</i></font></p> <p align="left"><font style="font-size:10pt"><i>Three month Period Ended June 30, 2003 Compared To The Three month Period Ended June
30, 2002.</i></font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales for the three months ended June 30, 2003 were $2,324,000, compared with $3,579,000 for the same
period last year, a decrease of $1,255,000 or 35.1%. The decrease is primarily due to an industry-wide decrease in demand for discrete and passive and semiconductor components.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of goods sold for the quarter ended June 30, 2003 decreased to $1,594,000 from $2,645,000 for the same period last year, a decrease of
$1,051,000 or 39.7%. Consistent with the decrease in net sales, cost of goods sold decreased, however at a faster rate, resulting in gross profit increasing as a percentage of net sales to 31.4% for the quarter ended June 30, 2003 from 26.1% for the
same period last year. Gross profit decreased by $204,000 to $730,000 for the quarter ended June 30, 2003 from $934,000 for the same period in 2002. Included with cost of sales are provisions for inventory reserves of $81,000 and $75,000 during the
quarters ended June 30, 2003 and 2002, respectively.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative (&#147;SG&amp;A&#148;) expenses
decreased by $400,000 or 34.2% for the quarter ended June 30, 2003 compared to the same period of 2002. The decrease is primarily attributable to cost cutting measures consistently implemented during the last twelve months. As a result,
personnel-related expenses decreased by $250,000, with no other individual item significantly impacting the change during the quarter ended June 30, 2003. The corresponding average employee base declined by 12 employees, which represents a 28%
reduction in overall workforce. As a percentage of net sales, SG&amp;A remained consistently 33% for the three months ended June 30, 2003 and 2002.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating losses were $38,000 for the quarter ended June 30, 2003 as compared to $234,000 for the same period last year. The decrease in
operating losses results from the increase in gross profit margin and from the decrease in SG&amp;A expenses, as discussed above.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net of interest income, for the quarter ended June 30, 2003 decreased by $16,000 compared to the same period last year. The
decrease is primarily due to lower outstanding borrowing levels incurred during the current quarter, when compared to the same period last year.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No income tax provision or benefit was recorded during the quarter ended June 30, 2003, as compared to an income tax provision of $452,000 for
the same period last year.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss was $92,000 for the quarter ended June 30, 2003 as compared to a net loss of $743,000
for the same period last year.</font></p> <p align="left"><font style="font-size:10pt"><i>Six month Period Ended June 30, 2003 Compared To The Six month Period Ended June 30, 2002.</i></font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales for the six months ended June 30, 2003 were $5,479,000 compared with net sales for the six months ended June 30, 2002 of $7,285,000,
a decrease of $1,806,000 or 24.8%. The decrease is primarily due to an industry wide decrease in demand for discrete semiconductors.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of goods sold decreased by $1,546,000 to $3,782,000 for the six months ended June 30, 2003, a decrease of 29% from the same period in
2002. Consistent with the decrease in net sales, cost of goods sold decreased, however at a faster rate, resulting in gross profit increasing as a percentage of net sales to 31% for the first six months of this year from 26.9% for the same period
last year. Gross profit decreased by $260,000 to $1,697,000 for the six months ended June 30, 2003 from $1,957,000 for the same period in 2002. Also contributing to the decrease in gross profit was a provision for inventory reserves of $156,000 and
$265,000 during the six months ended June 30, 2003 and 2002, respectively.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SG&amp;A expenses decreased by $747,000 or
31.6% for the six months ended June 30, 2003 compared to the same period in 2002. The decrease is primarily attributable to cost cutting measures consistently implemented during the last twelve months. As a result, personnel-related expenses
decreased by $486,000, with no other</font></p> <p align="center"><font style="font-size:10pt">Page 10</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <p><font style="font-size:10pt">individual item significantly impacting the change during the six months ended June 30, 2003. The corresponding average employee base declined by 12 employees, which represents a 28%
reduction in overall workforce. As a percentage of net sales, SG&amp;A decreased to 29.5% for the six months ended June 30, 2003 from 32.5% for the same period last year.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income was $80,000 for the six months ended June 30, 2003 as compared to an operating loss of $407,000 for the same period ended
June 30, 2002. The operating loss decreased primarily due to the cost cutting measures, as discussed above.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
expense, net of interest income for the six months ended June 30, 2003 decreased by $32,000 compared to the six months ended June 30, 2002. The decrease is primarily due to lower outstanding borrowing levels incurred during the current quarter, when
compared to the same period last year.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No income tax provision or benefit was recorded during the six months ended June
30, 2003, as compared to an income tax provision of $437,000 for the same period last year.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss was $86,000 for the
six months ended June 30, 2003 compared to $936,000 for the same period in 2002, a decrease of $850,000 resulting from the same reasons discussed above.</font></p> <p align="left"><font style="font-size:10pt"><i>Liquidity and Capital
Resources</i></font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have satisfied our liquidity requirements principally through cash generated from operations, short-term
commercial loans, subordinated promissory notes and issuance of equity securities. A summary of our cash flows resulting from our operating, investing and financing activities for the six months ended June 30, 2003 and 2002 are as
follows:</font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="bottom">
<td width="78%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="0%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="left"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="1%" align="left"><font style="font-size:10pt"></font></td>
<td width="8%" align="right"><font style="font-size:10pt"></font></td>
<td width="1%" align="left"><font style="font-size:10pt"></font></td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt"><b>&nbsp;</b></font></td>
<td valign="bottom" colspan="5" align="center"><font style="font-size:8pt"><b>Six months ended June 30,</b></font> <hr width="100%" size="1" color="black" noshade> </td>
<td valign="bottom" align="center">&nbsp;</td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt">(Dollars in thousands)</font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>2003</b></font> <hr width="100%" size="1" color="black" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt"><b>2002</b></font> <hr width="100%" size="1" color="black" noshade> </td>
<td valign="bottom" align="center"><font style="font-size:8pt"><b></b></font></td> </tr>
<tr valign="bottom">
<td valign="bottom" colspan="3" align="center"><font style="font-size:8pt"></font></td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt">(Unaudited)</font></td>
<td valign="bottom" align="center">&nbsp;</td>
<td valign="bottom" colspan="2" align="center"><font style="font-size:8pt">(Unaudited)</font></td>
<td valign="bottom" align="center">&nbsp;</td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"><font style="font-size:10pt">Operating activities</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">2,400</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">$</font></td>
<td align="right"><font style="font-size:10pt">1,144</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="bottom">
<td align="left"><font style="font-size:10pt">Investing activities</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(14</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(175</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr>
<tr valign="bottom" bgcolor="#cceeff">
<td align="left"><font style="font-size:10pt">Financing activities</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(2,054</font></td>
<td align="left"><font style="font-size:10pt">)</font></td>
<td align="right"><font style="font-size:10pt">&nbsp;</font></td>
<td align="right"><font style="font-size:10pt">(1,027</font></td>
<td align="left"><font style="font-size:10pt">)</font></td> </tr> </table> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash flows provided by operating activities increased to
$2,400,00 during the six months ended June 30, 2003, as compared to $1,144,000 during the same period last year. The change is primarily due to a decrease in inventory of $1,505,000 during the first six months of 2003, as compared to a decrease of
$330,000 during the same period last year. Additionally, the overall increase in operating cash flow was affected by a decrease in accounts receivable of $523,000 during the first six months of 2003, as compared to an increase of $498,000 during the
same period last year. The Company&#146;s ability to continue generating cash from operations is dependent upon using its current inventory (as opposed to new purchases of inventory) for generating sales, collection of its receivables and extended
payments of accounts payables.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash flows used in investing activities was $14,000 during the six months ended June 30,
2003 compared to $175,000 during the same period last year. Cash flows from investing activities may change significantly in the following three months due to the probable sale of one of the Company&#146;s buildings (see <i>Subsequent Events</i>
below).</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash flows used in financing activities increased to $2,054,000 from $1,027,000 during the six months ended June
30, 2003 and 2002, respectively.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory is included in current assets, however, it may take over one year for the
inventory to turn and therefore may not be saleable within a one-year time frame. Hence, inventory would not be as readily marketable or liquid as other items included in current assets, such as cash.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that funds generated from operations and issuance of debt or equity securities will be sufficient to finance our working capital
and capital expenditure requirements for the foreseeable future or until principal payments are due under the outstanding subordinated notes.</font></p> <p align="center"><font style="font-size:10pt">Page 11</font></p>

<p Style='page-break-before:always'>
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  <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the date of this Report, we had no commitments for other equity or debt financing or other capital expenditures.</font></p>
<p align="left"><font style="font-size:10pt"><i>Subsequent Events</i></font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of August 11, 2003, the Company has closed escrow on the sale of its former
office/warehouse facility for $1,800,000.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company received notice that it&#146;s not in compliance with The Nasdaq National Market continued listing
requirements. Nasdaq is allowing the Company through August 19, 2003 to regain compliance. If the Company cannot demonstrate compliance before that date, Nasdaq staff may notify the Company of a determination to delist the Company&#146;s securities.
If an initial delisting decision is made by the staff, the Company may appeal the decision as permitted by Nasdaq rules. Nasdaq also stated that the Company may apply to transfer its securities to The Nasdaq SmallCap Market before August 19, 2003.
In response to this Nasdaq notification, as of August 7, 2003, the Company plans to apply for listing on the Nasdaq SmallCap Market and retain its ticker symbol of TAIT.</font></p> <p><font style="font-size:10pt">As of the date of this report, the
Company has listed for sale its office building facility located in Taipei, Taiwan.</font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt">&nbsp;</font></td>
<td width="93%"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">Item 3.</font></td>
<td><font style="font-size:10pt"> Controls and Procedures</font></td> </tr> </table> <br> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June 30, 2003, the Company carried out an evaluation, under the
supervision and with the participation of the Company&#146;s management, including the Company&#146;s Chief Executive Officer, of the effectiveness of the design and operation of the Company&#146;s disclosure controls and procedures pursuant to Rule
13a-14 of the Securities Exchange Act of 1934 (the &#147;Exchange Act&#148;). Based upon that evaluation, the Chief Executive Officer concluded that the Company&#146;s disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company (including its consolidated subsidiary) required to be included in the Company&#146;s Exchange Act filings.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There have been no significant changes in the Company&#146;s internal controls or in other factors which could significantly affect internal controls subsequent to the date
the Company carried out its evaluation.</font></p> <p><font style="font-size:10pt">PART II. OTHER INFORMATION</font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt">&nbsp;</font></td>
<td width="93%"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">Item 1.</font></td>
<td><font style="font-size:10pt"> Legal Proceedings.</font></td> </tr> </table> <br> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.</font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">Item 2.</font></td>
<td><font style="font-size:10pt"> Changes In Securities.</font></td> </tr> </table> <br> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of August 7, 2003, the Company plans to apply to transfer its Class A
securities from the NASDAQ National Market to the NASDAQ SmallCap Market and retain its ticker symbol of TAIT.</font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">Item 3.</font></td>
<td><font style="font-size:10pt"> Defaults Upon Senior Securities.</font></td> </tr> </table> <br> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Part I Item 1 - Note 3 and Part I Item 2 - &#147;MANAGEMENT&#146;S DISCUSSION
AND ANALYSIS - Revolving Line of Credit Facility.&#148;</font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">Item 4.</font></td>
<td><font style="font-size:10pt"> Submission of Matters to a Vote of Security Holders.</font></td> </tr> </table> <br> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; None.</font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">Item 5.</font></td>
<td><font style="font-size:10pt"> Other Information.</font></td> </tr> </table> <br> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.</font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">Item 6.</font></td>
<td><font style="font-size:10pt"> Exhibits and Reports on Form 8-K.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="5%"><font style="font-size:10pt"></font></td>
<td width="88%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">(a) </font></td>
<td><font style="font-size:10pt"> Exhibits:</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="5%"><font style="font-size:10pt"></font></td>
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="81%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">31 </font></td>
<td><font style="font-size:10pt"> Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="5%"><font style="font-size:10pt"></font></td>
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="81%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">32 </font></td>
<td><font style="font-size:10pt"> Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</font></td> </tr> </table> <br> <p align="center"><font style="font-size:10pt">Page 12</font></p>

<p Style='page-break-before:always'>
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<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="5%"><font style="font-size:10pt"></font></td>
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="81%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">10.29 </font></td>
<td><font style="font-size:10pt"> Subordinated Promissory Note, Dated June 23, 2003, between Registrant and K.S. Best International Co., Ltd.</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="5%"><font style="font-size:10pt"></font></td>
<td width="88%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">(b) </font></td>
<td><font style="font-size:10pt"> Reports on Form 8-K:</font></td> </tr>
<tr valign="top">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp;</td> </tr>
<tr valign="top">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.</font></td> </tr> </table> <br> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p> <p><font
style="font-size:10pt">SIGNATURES</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with the requirements of the
Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.</font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="top">
<td align="left" width="40%"><font style="font-size:10pt"></font></td>
<td align="left" width="10%"><font style="font-size:10pt"></font></td>
<td align="left" colspan="2" width="50"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td align="left" width="35%"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left" colspan="3"><font style="font-size:10pt">T<small>AITRON</small> C<small>OMPONENTS</small> I<small>NCORPORATED</small></font></td>
<td align="left" width="0%"><font style="font-size:10pt">&nbsp;</font></td> </tr>
<tr valign="top">
<td align="left" width="40%">&nbsp;</td>
<td align="left" width="10%">&nbsp;</td>
<td align="left" colspan="2" width="50">&nbsp;</td> </tr>
<tr valign="top">
<td align="left" width="40%">&nbsp;</td>
<td align="left" width="10%">&nbsp;</td>
<td align="left" colspan="2" width="50">&nbsp;</td> </tr>
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<td align="left" width="40%"><font style="font-size:10pt">Date:&nbsp;&nbsp;August 14, 2003</font></td>
<td align="left" width="10%"><font style="font-size:10pt">&nbsp;</font></td>
<td align="left" width="3%"><font style="font-size:10pt">By:&nbsp;</font><br> </td>
<td align="left" width="47%"> <font style="font-size:10pt">&nbsp;/s/&nbsp;S<small>TEWART</small> W<small>ANG</small></font><hr size="1" width="95%" color="black" align="left" noshade> <font style="font-size:8pt">Stewart Wang<br> Chief Executive
Officer, Director,<br> Chief Financial Officer and Principal<br> Accounting Officer.</font> </td> </tr> </table> <p align="center"><font style="font-size:10pt">Page 13</font></p>
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<DOCUMENT>
<TYPE>EX-10.29
<SEQUENCE>3
<FILENAME>dex1029.htm
<DESCRIPTION>SUBORDINATED PROMISSORY NOTE, DATED JUNE 23, 2003
<TEXT>
<HTML><HEAD>
<TITLE>Subordinated Promissory Note, dated June 23, 2003</TITLE>
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  <p align="right"><font style="font-size:10pt">Exhibit 10.29</font></p> <p><font style="font-size:10pt">Subordinated Promissory Note, Dated June 23, 2003, between Registrant and K.S. Best International Co.,
Ltd.</font></p> <p align="center"><font style="font-size:10pt">TAITRON COMPONENTS INCORPORATED <br> 7% SUBORDINATED PROMISSORY NOTE</font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
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<td width="60%" align="left"><font style="font-size:10pt"></font></td>
<td width="40%" align="left"><font style="font-size:10pt"></font></td></tr>
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<td align="left"><font style="font-size:10pt">$1,000,000 U.S.D</font></td>
<td align="left"><font style="font-size:10pt">June 23, 2003</font></td></tr> </table> <p><font style="font-size:10pt">PROMISE TO PAY.&nbsp;&nbsp;Subject to the terms and conditions of this 7% Subordinated Promissory Note (the &#147;Note&#148;),
TAITRON COMPONENTS INCORPORATED, a California corporation (the &#147;Company&#148;), for value received, promises to pay to the order of K.S Best International Co., Ltd. or its registered assigns (the &#147;Noteholder&#148;), whose address is
setforth in Section 8.3 below, the principal amount of ONE MILLION and 00/100 U.S. DOLLARS ($1,000,000 U.S.D.), together with simple interest on the unpaid principal balance from the date hereof at the rate of 7% (SEVEN percent) per annum until paid
in full.</font></p> <p><font style="font-size:10pt">PAYMENT.&nbsp;&nbsp;The Company will pay this loan in accordance with the following payment schedule: Such principal amount plus all accrued but previously unpaid interest will be due and payable
on the third anniversary of the Note Date. Interest only payments shall be made by the end of each fiscal quarter after the Note Date. Principal and interest payable hereunder shall be paid to the Noteholder in lawful money of the United States of
America by wire transfer to such bank account or at such other address or location, as shall be specified by the Noteholder. Overdue interest shall bear interest at the rate of SEVEN percent (7%) per annum from the date on which it is due until
paid.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a statement of the rights of the Noteholder and the terms and conditions to which this Note is subject, and to which the Company
and the Noteholder, by the acceptance of this Note, agree.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp; Definitions.&nbsp;&nbsp;As used in this Note, the following terms,
unless the context otherwise requires, shall have the following meanings:</font></p>
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<tr valign="top">
<td width="5%"><font style="font-size:10pt"></font></td>
<td width="95%"><font style="font-size:10pt"></font></td> </tr> </table>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="5%"><font style="font-size:10pt"></font></td>
<td width="95%"><font style="font-size:10pt"></font></td> </tr>
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<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">1.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Company&#148; shall mean the Company and shall include any corporation that shall succeed to or assume the obligations of the Company under this Note.</font></td> </tr>
</table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="5%"><font style="font-size:10pt"></font></td>
<td width="95%"><font style="font-size:10pt"></font></td> </tr>
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<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">1.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Note Date&#148; shall mean the date on which this Note was originally issued, which is set forth on the first page of this Note in the heading.</font></td> </tr> </table>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="3%"><font style="font-size:10pt"></font></td>
<td><font style="font-size:10pt"></font></td> </tr>
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<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td> </tr> </table>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="5%"><font style="font-size:10pt"></font></td>
<td width="95%"><font style="font-size:10pt"></font></td> </tr>
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<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">1.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Merger&#148; shall mean any consolidation of the Company with, or merger of the Company with or into, another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any reclassification of, or change in, the outstanding shares of Common Stock), or any proposed sale or transfer to another corporation of all or substantially all of the assets of
the Company. The Company shall be the &#147;surviving corporation&#148; in any Merger if the Company, or its shareholders immediately before the transaction, shall own (immediately after the transaction) equity securities, other than warrants,
options or similar rights to subscribe to or purchase equity securities, of the surviving or acquiring corporation, or its parent corporation, possessing more than 50% of the voting power of the surviving or acquiring corporation or its parent
corporation; and in making the determination of ownership by the shareholders of a corporation, immediately after the transaction, of equity securities pursuant to the preceding clause, equity securities which they owned immediately before the
transaction as shareholders of another party to the transaction shall be disregarded.</font></td> </tr> </table> <br> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp; Treatment of Note. To
the extent permitted by generally accepted accounting principles consistently applied, the Company shall treat, account and report this Note as debt and not equity for accounting purposes and with respect to any returns filed with federal, state or
local tax authorities.</font></p>

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  <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordination. The Company, for itself and its successors and assigns, covenants and agrees, and
the Noteholder and each successive holder of this Note, by the acceptance of this Note, likewise covenants and agrees, that the payment of the principal of and interest and premium, if any, on this Note is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, in right of payment to the prior payment in full, in cash, of all the Company&#146;s &#147;Senior Indebtedness,&#148; and that these subordination provisions are for the benefit of the holders of
Senior Indebtedness.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Section 3 shall constitute a continuing Offer to all persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Indebtedness, and such provisions are made for the benefit of the holders of Senior Indebtedness, and such holders are made obligees hereunder and they or each of them may enforce such provisions. Without limiting the
generality of the foregoing, it is acknowledged and agreed that Comerica Bank, is a holder of Senior Indebtedness, that such provisions are made for its benefit, and that it may enforce such provisions.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Definitions. As used in this Section 3, and also in Section 4:</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Indebtedness&#148; of any corporation shall mean the principal of (and
premium, if any) and unpaid interest, fees and other payments due in connection with (a) indebtedness which is for money borrowed from others; (b) indebtedness of any other person for money borrowed guaranteed, directly or indirectly, in any manner
by such corporation, or in effect guaranteed, directly or indirectly, by such corporation through an agreement, contingent or otherwise; (c) all indebtedness secured by any mortgage, lien, pledge, charge or other encumbrance upon property owned by
such corporation, even though such corporation has not in any manner become liable for the payment of such indebtedness; (d) all indebtedness of such corporation created or arising under any conditional sale, lease (intended primarily as a financing
device), or other title retention agreement with respect to property acquired by such corporation wherein the rights and remedies of the seller, lessor or lender under such agreement or lease in the event of a default are limited to repossession or
sale of such properties; (e) any other obligation whether outstanding on the Note Date or thereafter created or assumed with respect to which the Company shall be or become liable which the Company shall designate as &#147;Indebtedness&#148;; and
(f) deferrals, amendments, refinancing, renewals, extensions and refundings of an such indebtedness.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Senior Indebtedness&#148; shall mean Indebtedness incurred or assumed by the
Company, either before or after the date of this Agreement, which is for money borrowed or evidenced by bonds, notes, reimbursement agreements in respect of letters of credit, debentures or similar instruments (a) pursuant to a short-term instrument
which constitutes commercial paper, or (b) the holder or holders of which are banks, savings institutions, trust companies, insurance companies, investment trusts, pension funds, pension trusts, employees&#146; profit-sharing trusts, financial
institutions or corporations engaged as the substantial part of their business or operations in investing funds in securities, or any other person lending the Company amounts in excess of U.S. $100,000 or any of them, or (c) obligations which
otherwise would have been considered Senior Indebtedness except that they were created or arose under a conditional sale, lease (intended primarily as a financing device) or other similar title retention agreement with respect to the property of the
Company or its Subsidiaries wherein the rights and remedies of the seller, lessor or lender under such agreement or lease are limited, in the event of default, to repossession or sale of such properties; provided, however, that there shall be
excluded from the definition of Senior Indebtedness any borrowing which by its terms ranks on a parity with or is subordinate to the Notes. &#147;Senior Indebtedness&#148; shall include, in any event, all obligations of the Company from time to time
(whether in respect of principal, interest, fees, charges or otherwise, including, without limitation, any interest accruing subsequent to the filing by or against Payor of any proceeding brought under Chapter 11 of the U.S. Bankruptcy Code, whether
or not such interest is allowed as a claim in such proceeding) under or pursuant to that certain Business Loan Agreement dated as of May 6, 1997, between the Company and Comerica Bank-California, and any amendment, modification, restatement
extension, renewal, refunding, replacement or refinancing thereof, together with all documents, instruments and agreements entered into from time to time in connection therewith or pursuant thereto.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment in Event of Bankruptcy or Similar Event. Upon any receivership, insolvency, assignment for the benefit of creditors, bankruptcy,
reorganization or arrangements with creditors (whether or not pursuant to bankruptcy or other insolvency laws), sale of all or substantially all of the assets, dissolution, liquidation or any other marshalling of the assets and liabilities, of the
Company, or otherwise (a) no amount shall be paid by the Company in respect of the principal of or interest or premium, if any, on this Note at the time outstanding, unless and until the principal, premium, if any, and interest upon all Senior
Indebtedness shall first be paid in full, in cash, (b) no claim or proof of claim shall be filed with the company by or on behalf of the Noteholder which shall assert any right to receive any payments in respect of the principal of and interest or
premium, if any, on this Note, except subject to the payment in full of the principal of, premium, if any, </font></p>

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  <p><font style="font-size:10pt">and interest on all of the Senior Indebtedness then outstanding, in cash, (c) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or
securities to which the holders of the Notes would be entitled except for the provisions of this Section 3, shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or otherwise, directly to the holders of Senior Indebtedness (pro rata to each holder on the basis of the respective amounts of Senior Indebtedness owed to such holder), to the extent necessary to pay in full, in cash, all Senior
Indebtedness remaining unpaid after giving effect to any prior or concurrent payment or distribution to the holders of the Senior Indebtedness on the Senior Indebtedness, and (d) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than payments described in the provisos below) shall be received by the holder of any Note before all Senior Indebtedness is paid in full,
in cash, such payment or distribution shall be received and held in trust for and shall be paid over to holders of Senior Indebtedness (pro rata to each such holder on the basis of the respective amounts of Senior Indebtedness owed to such holder),
for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, in cash, after giving effect to any prior or concurrent payment or distribution to the holders of the Senior
Indebtedness on the Senior indebtedness; provided, however, that this Subparagraph (d) shall apply only to payments or distributions received by the holder of any Note after the commencement of proceedings relating to the winding up dissolution,
liquidation or reorganization of the Company as described in this Section.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subordination upon Default With Respect to
Senior Indebtedness Due, etc. The Company shall not be permitted to make any payments with respect to this Note if, at the time of the proposed payment, any default shall have occurred and be continuing with respect to the Senior Indebtedness and
written notice thereof has been given to the Company and the Noteholder invoking a payment blockage under this Note (a &#147;Payment Blockage Notice&#148;), unless and until such default shall have been cured or the application of this Section 3.3
to such default shall have been waived in writing by the holders of the Senior Indebtedness; provided, however, that: if such default does not relate to the payment of money to the holders of Senior Indebtedness (a &#147;Nonpayment Default&#148;),
this Section 3.3 shall not prevent the making of any proposed payment under this Note for a period of more than One Hundred and Eighty (180) consecutive days after the date that a Payment Blockage Notice is given relating to the occurrence of such
Nonpayment Default unless the Senior Indebtedness has been declared due and payable in its entirety, in which case no payment or distribution may be made until (i)&nbsp;the Nonpayment Default has been waived or cured and such acceleration has been
rescinded or annulled, or (ii)&nbsp;the Senior Indebtedness has been paid in full in cash.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Effect of Subordination.
Nothing contained in this Section 3 shall impair, as between the Company and the Noteholder, the obligation of the Company, which is absolute and unconditional, to pay the Noteholder the principal hereof and interest hereon as and when the same
become due and payable, or shall prevent the Noteholder, upon default under this Note, from exercising all rights, power and remedies otherwise provided herein or by applicable law, all subject to the rights, if any, of the holders of Senior
Indebtedness under this Section 3.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subrogation. Subject to the payment in full, in cash, of all Senior Indebtedness
and until this Note shall be paid in full, the Noteholder shall be subrogated (equally and ratably with the holders of all Indebtedness of the Company which, by its terms, ranks on a parity with this Note) to all rights of any such holder of Senior
Indebtedness to receive payments or distributions of assets of the Company, but only to the extent the Noteholder has made any payment to any holder of Senior Indebtedness pursuant to the subordination provisions of this Note. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the Company and its creditors, other than the holders of Senior Indebtedness and the Noteholder, be deemed to be a payment by the Company to or on account of this Note; and for
the purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness to which the Noteholder would be entitled except for the provisions of this Section 3 shall, as between the Company and its creditors, other than
the holders of Senior Indebtedness and the Noteholder, be deemed to be a payment by the Company to or on account of the Senior Indebtedness.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Reliance by Note Holders. Upon any payment or distribution of assets of the Company referred to in this Section 3, the holders of the
Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending or upon a certificate of the liquidating trustee or
agent or other person making any distribution the holders of Notes for the purpose of ascertaining the amount of the Senior Indebtedness, the holders thereof, the amounts paid or distributed thereon and all other facts pertinent thereto or to this
Section 3.</font></p>

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  <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rights of Holders of Senior Indebtedness Not to Be Impaired. Subject to Section 3.3
hereof, no right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impair by any act or failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder or by any noncompliance by the Company with the terms, provisions and covenants of this Note, regardless of any knowledge thereof which any such holder may have or otherwise be charge
with.</font></p><p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When Distribution Must Be Paid Over. In the event that the Company shall make any payment to the
Noteholder on account of the principal or interest on the Note at the time when such payment is prohibited by Section 3.3, such payment shall be held by the Noteholder, in trust for the benefit of, and shall be forthwith over and delivered to, the
holders of Senior Indebtedness (pro rata as to each of such holders on the basis of the amount of Senior Indebtedness held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior
Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness remaining unpaid to the extent necessary
to pay all Senior Indebtedness in full accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a distribution is made to the holder of this Note that because of this Section 3.8 should not have been made to it, the holder of this Note who receives the distribution
shall hold it in trust for the holders of Senior Indebtedness and pay it over to them as their interests may appear.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.9
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notices By Company. The Company shall promptly notify the Noteholder of any facts known to the Company that would cause a payment of principal of or interest of this Note to violate this Section 3, but
failure to give such notice shall not affect the subordination of this Note to the Senior Indebtedness provided in this Section 3.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;4. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Events of
Default. If any of the following events shall occur and be continuing (each individually referred to as an &#147;Event of Default&#148;), the Noteholder may declare the entire unpaid principal and accrued interest on this Note immediately due and
payable, without any other presentment, demand, protest or other notice of any kind or character, all of which are hereby expressly waived; provided, however, that with respect to the Events of Default described in Sections 4.2 and 4.3 below, the
unpaid principal and accrued interest on this Note shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company:</font></p>
<p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Principal or Interest. (a) Any default in the payment of any part of the interest of
this Note shall occur and such default shall be continuing uncured or unwaived for 30 days after the Noteholder has given the Company written notice thereof or (b) the Company&#146;s failure to observe any covenant or other provision contained in
this Note and such failure of observation shall be continuing uncured or unwaived for 30 days after the Noteholder has given the Company written notice thereof;</font></p> <p><font style="font-size:10pt"><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>4.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Involuntary Bankruptcy. Within 270 days after the commencement of an action against the
Company seeking any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar relief under any statute, law or regulation, such action shall not have been dismissed or all orders or proceedings thereunder affecting the operations
or the business of the Company stayed, or the stay of any such order or proceeding shall thereafter be set aside, or within 270 days after the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of
the Company or of all or any substantial part of the properties of the Company, such appointment shall not have been vacated;</font></p> <p><font style="font-size:10pt"><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>4.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Voluntary Bankruptcy. The Company shall have commenced a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall have consented to the entry of an order for relief in an involuntary case under any such law, or shall have consented to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian or similar official, of the Company or for any substantial part of its property, or shall have made any general assignment for the benefit of creditors, or shall have failed generally to pay its
debts as they become due or shall have admitted in writing its inability to pay its debts generally as they become due, or shall have taken any corporate action in furtherance of any of the foregoing; or</font></p>

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  <p><font style="font-size:10pt"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>4.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cross-Default. Any
declared default of the Company under any Senior Indebtedness of the Company for borrowed money that gives the holder thereof the right to accelerate such Senior Indebtedness, and such Senior Indebtedness is in fact accelerated by such holder, and
such acceleration is continuing unrescinded.</font></p> <p><font style="font-size:10pt"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>4.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Remedies. If any of the foregoing Events of Default shall have occurred and be continuing, the Noteholder may proceed to protect and enforce its rights under this Note by an action in law, suit in equity or other appropriate proceeding, whether for
specific performance of any agreement contained in this Note or for an injunction against a violation of any terms of this Note or in aid of the exercise of any power granted by this Note or by law. In case any action is brought arising from a
breach of any provision of this Note, the non-prevailing party shall pay to the prevailing party all of the prevailing party&#146;s fees and expenses, including without limitation reasonable attorneys&#146; fees, relating to such action. No course
of dealing and no delay on the part of the Noteholder in exercising any right shall operate as a waiver thereof or otherwise prejudice the Noteholder&#146;s rights, powers or remedies. No right, power or remedy conferred by this Note upon the
Noteholder shall be exclusive of any right, power or remedy referred to in this Note, or now or hereafter available at law, in equity, by statute or otherwise.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unpaid Interest. In case any one or more Events of Default shall occur and be continuing, any due but
unpaid interest shall continue to remain due and accrue interest thereon at the rate of SEVEN percent (7%) per annum from the date on which it is due until paid.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;5.
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No Shareholder Rights. This Note shall not entitle the Noteholder to any voting rights or other rights as a shareholder of the Company, prior to conversion hereof.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;6. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Redemption. This Note shall be subject to redemption under the circumstances set forth in this Section 6.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Optional Redemption. The Company, at its option, may redeem in whole or in part the
principal amount of this Note at any time or from time to time. Upon redemption of this Note, the Company also shall pay to the Noteholder the interest relating to such redeemed principal amount which is accrued and unpaid to the date of redemption
plus a premium as set forth below in Section 6.2.</font></p> <p><font style="font-size:10pt"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>6.2
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Premium. There shall be no pre-payment premium</font></p> <p><font style="font-size:10pt"><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>6.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notice of Redemption. No notice of redemption is necessary.</font></p> <p><font
style="font-size:10pt"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>6.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cessation of Rights. From and after the Redemption Date,
unless there has been a default in redemption, all interest on the redeemed principal amount shall cease to accrue and all rights of the Noteholder as a holder of this Note shall cease with respect to the principal amount redeemed and, with respect
to such amount, this Note thereafter shall not be deemed to be outstanding for any purpose whatsoever.</font></p> <p><font style="font-size:10pt"><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>6.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Undertaking. By acceptance of this Note, the Noteholder agrees to execute and deliver
such documents as may reasonably be requested from time to time by the Company in order to implement the foregoing provisions of this Section 6.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp; &nbsp;7.
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Registration, Transfer and Exchange of the Note. The Company shall keep at its principal office a register in which it will provide for the registration and transfer of this Note, at its own expense
(excluding transfer taxes). Subject to compliance with applicable laws and the restrictions on transfer described herein, this Note and all rights hereunder are transferable and assignable at the office of the Company, by the Noteholder in person or
by the duly authorized representative of the Noteholder, upon surrender of this Note. If this Note is surrendered at said office for registration of transfer or exchange (accompanied in the case of a registration) or transfer by a written instrument
of transfer in satisfactory to the Company, at its expense, shall deliver in exchange one or more new Notes in denominations as requested by the Noteholder (but in no case less than U.S. $100,000), for the aggregate unpaid principal amount. Any note
or notes issued in a transfer or exchange shall carry the same rights to interest (unpaid and to accrue) carried by this Note so transferred or exchanged so that there will not be any loss or gain of interest on the Note surrendered. Prior to due
presentation for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner and holder of this Note for the purpose of receiving payment of principal of and interest on this Note and for all other
purposes whatsoever.</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the sale or transfer of any Note, the Noteholder shall surrender said Note to the Company in exchange for a new Note in
the principal amount equal to the unpaid balance of principal of the Note surrendered.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;8. &nbsp;&nbsp;&nbsp;&nbsp; Miscellaneous.</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Successors and Assigns. Subject to the foregoing terms and conditions, the rights and obligations of
the Company and the Noteholder shall inure to the benefit of and be binding upon the respective executors, administrators, heirs, transferees, successors and assigns of the Company and the Noteholder.</font></p> <p><font style="font-size:10pt"><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>8.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Governing Law.&nbsp;&nbsp;&nbsp;&nbsp; THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS BETWEEN CALIFORNIA RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN CALIFORNIA. ANY US PERSON WHO HOLDS THIS NOTE IS SUBJECT TO LIMITATIONS UNDER THE US INCOME
TAX LAWS.</font></p> <p><font style="font-size:10pt"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>8.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notices. Except as otherwise provided
herein, all communications hereunder shall be in writing or by either telecopier of telegraph and, if to the Company, shall be mailed, telecopied or telegraphed or delivered to Taitron Components Incorporated, 28040 West Harrison Parkway, Valencia,
CA 91355; and if to the Noteholder, shall be mailed, telecopied, telegraphed or delivered to K.S. Best International Co., Ltd., Room 704 Kowloon Building, 555 Nathan Rd, Kowloon, Hong Kong. All notices given by telecopy or telegraph shall be
promptly confirmed by letter. Any party hereto may by notice so given change its address for future notice hereunder.</font></p> <p><font style="font-size:10pt"><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>8.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Severability. In case any provision of this Note shall be invalid, illegal or unenforceable, it
shall, to the extent practicable, be modified so as to make it valid, legal and enforceable and to retain as nearly as practicable, the intent of the parties, and the validity, legality and enforceability of the remaining provisions of this Note
shall not in any way be affected or impaired thereby.</font></p> <p><font style="font-size:10pt"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>8.5
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the transferee, successor or assign of the Noteholder or, if such Note has been transferred by
the Noteholder, the holders of at least fifty-one per cent (51%) of the aggregate principal amount of all of the Notes then outstanding.</font></p> <p><font style="font-size:10pt"><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>8.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lost, Stolen, Mutilated or Destroyed Note. If this Note is lost, stolen, mutilated or destroyed, the
Company shall, on such terms as to indemnity or otherwise as it may reasonable impose (which shall, in the case of a mutilated Note, include the surrender and cancellation thereof), issue a new Note of like denomination and tenor as the Note so
lost, stolen, mutilated or destroyed.</font></p> <p><font style="font-size:10pt"><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>8.7 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Titles and
Headings. The titles and headings contained in this Note are intended for reference and shall not by themselves determine the construction or interpretation of this Note.</font></p> <p><font style="font-size:10pt"><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font>8.8 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement. This Note delivered pursuant hereto and thereto, constitute the full and entire
understanding and agreement between the parties with respect to the subjects hereof and thereof.</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Company has caused this Note to
be issued as of the date first written above.</font></p>
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<td width="25%" align="left"></td>
<td width="75%" align="left">&nbsp;</td></tr>
<tr valign="bottom">
<td align="left" colspan="2"><font style="font-size:10pt">T<small>AITRON</small> C<small>OMPONENTS</small> I<small>NCORPORATED</small></font></td></tr>
<tr valign="bottom">
<td align="left">&nbsp;</td></tr>
<tr valign="bottom">
<td align="left">&nbsp;</td></tr>
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<td align="left"><hr size="1" width="100%" color="black" noshade></td>
<td align="left">&nbsp;</td></tr>
<tr valign="bottom">
<td align="left"><font style="font-size:8pt">By:</font> <font style="font-size:8pt">Stewart Wang</font></td>
<td align="left">&nbsp;</td></tr>
<tr valign="bottom">
<td align="left"><font style="font-size:8pt">Title:</font> <font style="font-size:8pt">President &#38; CEO</font></td>
<td align="left">&nbsp;</td></tr> </table>
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>4
<FILENAME>dex31.htm
<DESCRIPTION>CERTIFICATION BY THE CEO & CFO PURSUANT TO SECTION 302
<TEXT>
<HTML><HEAD>
<TITLE>Certification by the CEO &amp; CFO pursuant to Section 302</TITLE>
</HEAD>
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  <p align="right"><font style="font-size:10pt">Exhibit 31 </font></p> <p align="center"><font style="font-size:10pt">Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</font></p> <p
align="center"><font style="font-size:10pt">Certification of <br> Chief Executive Officer and Chief Financial Officer<br> Of Taitron Components Incorporated <br> Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</font></p> <p><font
style="font-size:10pt">I, Stewart Wang, certify that:</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp; I have reviewed this quarterly report on Form 10-QSB of Taitron Components
Incorporated;</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp; 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;</font></p> <p><font
style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp; 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;</font></p> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp; The registrant&#146;s
other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:</font></p>
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<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
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<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) designed such disclosure controls and procedures 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 quarterly report is being prepared;</font></td> </tr> </table>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
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<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the &#147;Evaluation Date&#148;); and</font></td> </tr> </table>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;</font></td> </tr> </table> <br> <font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp; The registrant&#146;s other certifying officers and I have disclosed, based on our most recent evaluation,
to the registrant&#146;s auditors and the audit committee of registrant&#146;s board of directors (or persons performing the equivalent function):</font>
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<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
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<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant&#146;s ability to record,
process, summarize and report financial data and have identified for the registrant&#146;s auditors any material weaknesses in internal controls; and</font></td> </tr> </table>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="93%"><font style="font-size:10pt"></font></td> </tr>
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<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal controls;
and</font></td> </tr> </table> <p><font style="font-size:10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp; The registrant&#146;s other certifying officers and I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and
material weaknesses.</font></p>
<table cellpadding="0" cellspacing="0" border="0" width="100%">
<tr valign="top">
<td width="50%" align="left"><font style="font-size:10pt"></font></td>
<td width="3%" align="left"><font style="font-size:10pt"></font></td>
<td width="47%" align="left"><font style="font-size:10pt"></font></td></tr>
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<td align="left"><font style="font-size:10pt">Dated&nbsp;&nbsp;August 14, 2003.</font></td>
<td align="left"><font style="font-size:10pt">By:</font></td>
<td align="left"><font style="font-size:10pt">/s/&nbsp;S<small>TEWART</small> W<small>ANG</small></font><hr size="1" width="100%" color="black" noshade><font style="font-size:8pt">Stewart Wang<br>Chief Executive Officer &amp; Chief Financial
Officer</font></td></tr> </table>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>dex32.htm
<DESCRIPTION>CERTIFICATION BY THE CEO & CFO PURSUANT TO SECTION 906
<TEXT>
<HTML><HEAD>
<TITLE>Certification by the CEO &amp; CFO pursuant to Section 906</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
  <p align="right"><font style="font-size:10pt">Exhibit 32 </font></p> <p align="center"><font style="font-size:10pt">Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.</font></p> <p><font
style="font-size:10pt">This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C Section 1350, and accompanies the quarterly report on Form 10-QSB for the quarter ended June 30, 2003 of Taitron Components
Incorporated (the &#147;Issuer&#148;).</font></p> <p><font style="font-size:10pt">I, Stewart Wang, the Chief Executive Officer, Director and Chief Financial Officer of Issuer, certify that to the best of my knowledge:</font></p>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="86%"><font style="font-size:10pt"></font></td> </tr>
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<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">(i) </font></td>
<td><font style="font-size:10pt"> the Form 10-QSB fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d); and:</font></td> </tr> </table> <br>
<table width="100%" cellpadding="0" cellspacing="0">
<tr valign="top">
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="7%"><font style="font-size:10pt"></font></td>
<td width="86%"><font style="font-size:10pt"></font></td> </tr>
<tr valign="top">
<td><font style="font-size:10pt">&nbsp;</font></td>
<td><font style="font-size:10pt">(ii) </font></td>
<td><font style="font-size:10pt"> the information contained in the Form 10-QSB fairly presents, in all material respects, the financial condition and results of operation of the Issuer.</font></td> </tr> </table> <br> <p><font
style="font-size:10pt">Dated August 14, 2003. <br> /s/&nbsp;S<small>TEWART</small> W<small>ANG</small></font></p>
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