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<SEC-DOCUMENT>0000891092-05-000954.txt : 20050516
<SEC-HEADER>0000891092-05-000954.hdr.sgml : 20050516
<ACCEPTANCE-DATETIME>20050516151859
ACCESSION NUMBER:		0000891092-05-000954
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20050331
FILED AS OF DATE:		20050516
DATE AS OF CHANGE:		20050516

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:		05833839

	BUSINESS ADDRESS:	
		STREET 1:		28040 WEST HARRISON PARKWAY
		CITY:			VALENCIA
		STATE:			CA
		ZIP:			91355
		BUSINESS PHONE:		(661) 257-6060

	MAIL ADDRESS:	
		STREET 1:		28040 WEST HARRISON PARKWAY
		CITY:			VALENCIA
		STATE:			CA
		ZIP:			91355
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>e20894-10qsb.htm
<DESCRIPTION>FORM 10QSB
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Center Head 3 Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B><font size="4">UNITED
  STATES SECURITIES AND EXCHANGE COMMISSION </font><BR>
  <font size="2">Washington, D.C. 20549 </font></B></FONT></P>

<!-- MARKER FORMAT-SHEET="Center Head 3 Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4><B>FORM 10-QSB
  </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Footnote Left" FSL="Workstation" -->
<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=4% ALIGN=left VALIGN=top><font size="2"><b>|X| </b></font></TD>
    <TD WIDTH=2%>&nbsp;</TD>
    <TD WIDTH=94% ALIGN=left VALIGN=top><font size="2"><b>QUARTERLY REPORT UNDER
      SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</b></font></TD>
  </TR>
  <TR>
    <TD WIDTH=4% ALIGN=left VALIGN=top>&nbsp;</TD>
    <TD WIDTH=2%>&nbsp;</TD>
    <TD WIDTH=94% ALIGN=left VALIGN=top>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH=4% ALIGN=left VALIGN=top><font size="2"></font></TD>
    <TD WIDTH=2%><font size="2"></font></TD>
    <TD WIDTH=94% ALIGN=left VALIGN=top><font size="2"><b><font face="Times New Roman, Times, Serif">For
      the quarterly period ended March 31, 2005 </font></b></font></TD>
  </TR>
  <TR>
    <TD WIDTH=4% ALIGN=left VALIGN=top>&nbsp;</TD>
    <TD WIDTH=2%>&nbsp;</TD>
    <TD WIDTH=94% ALIGN=left VALIGN=top>&nbsp;</TD>
  </TR>
  <TR>
    <TD WIDTH=4% ALIGN=left VALIGN=top><b><font size="2">|_| </font></b></TD>
    <TD WIDTH=2%><b></b></TD>
    <TD WIDTH=94% ALIGN=left VALIGN=top><b><font size="2">TRANSITION REPORT UNDER
      SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></TD>
  </TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Flush 05" FSL="Workstation" --> <BR>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Commission File
Number 0-25844 </B></FONT></P>

<div align="center">
  <p><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B><font size="4">TAITRON
    COMPONENTS INCORPORATED</font><BR>
    </B><font size="2">(Exact name of small business issuer as specified in its
    charter) </font></FONT></p>
  <table border="0" width="100%">
    <tr>
      <td width="11%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
      <td width="38%">
        <div align="center"><b><font size="2">California<br>
          </font></b><font size="2">(State or Other Jurisdiction of <br>
          Incorporation or Organization) </font></div>
      </td>
      <td width="11%">
        <div align="center">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</div>
      </td>
      <td width="25%">
        <div align="center"><b><font size="2">95-4249240<br>
          </font></b><font size="2">(I.R.S. Employer<br>
          Identification No.)</font><!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
          <font size="2"> </font></div>
      </td>
      <td width="15%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</td>
    </tr>
  </table>
  <br>
  <FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>28040 West Harrison Parkway<BR>
  Valencia, California 91355-4162</B><BR>
  (Address Of Principal Executive Offices) </FONT></div>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>(661) 257-6060</B><BR>
                           (Issuer&#146;s Telephone Number) </FONT></P>

<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>NONE</B><BR>
                       (Former Name, Address and Fiscal Year, if Changed Since Last
Report) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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. Yes
  |X| No </FONT><font size="2">|_| </font></P>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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 border="0" width="100%">
  <tr>
    <td width="33%" height="56">
      <div align="center"><font size="2">Class</font>
        <hr noshade size="1">
      </div>
    </td>
    <td width="28%" height="56">
      <div align="center"></div>
    </td>
    <td width="39%" height="56">
      <div align="center"><font size="2">Outstanding on April 30, 2005<br>
        </font>
        <hr noshade size="1">
      </div>
    </td>
  </tr>
  <tr>
    <td width="33%"><font size="2">Class A Common Stock, $.001 par value</font></td>
    <td width="28%">&nbsp;</td>
    <td width="39%">
      <div align="center"><font size="2">4,698,479</font></div>
    </td>
  </tr>
  <tr>
    <td width="33%"><font size="2">Class B Common Stock, $.001 par value</font></td>
    <td width="28%">&nbsp;</td>
    <td width="39%">
      <div align="center"><font size="2">762,612</font> </div>
    </td>
  </tr>
</table>
<FONT FACE="Times New Roman, Times, Serif" SIZE=2><br>
Transitional Small Business Disclosure Format (check one): Yes </FONT><font size="2">|_|
</font><FONT FACE="Times New Roman, Times, Serif" SIZE=2>No&nbsp;</FONT><font size="2">|X|
</font><!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" --> <BR>
&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>




<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 1; page: 1" -->




<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=Left><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I. FINANCIAL
INFORMATION </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush 05" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Item
1. Financial Statements </FONT></TD>
</TR>
</TABLE>
<div align="center">
  <p><BR>
    <b><font size="3"><!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
    <FONT FACE="Times New Roman, Times, Serif">TAITRON COMPONENTS INCORPORATED</FONT></font></b><FONT FACE="Times New Roman, Times, Serif" SIZE=2><br>
    Condensed Consolidated Balance Sheets<BR>
    (Dollars in Thousands) </FONT></p>
  <p>&nbsp; </p>
</div>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2>&nbsp;</TH>
    <TH COLSPAN=2><FONT SIZE=2> March 31,<BR>
      2005</FONT>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=87% ALIGN=LEFT>
      <div align="center"><b><font size=2>Assets</font></b></div>
    </TD>
    <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=8% ALIGN=RIGHT><font size=2>(Unaudited)</font></TD>
    <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=87% ALIGN=LEFT><FONT SIZE=2>Current assets:</FONT></TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=8% ALIGN=RIGHT>&nbsp;</TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;706</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Restricted cash (Note
      4)</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,000</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts receivable,
      net</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,048</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Inventory, net</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>17,945</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other
      current assets</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>409</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current assets</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>21,108</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Property and equipment, net</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4,578</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Other assets</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>77</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      assets</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;25,763</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>
      <div align="center"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b>&nbsp;&nbsp;&nbsp;&nbsp;Liabilities
        and Shareholders&#146; Equity</b></FONT></div>
    </TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Current liabilities:</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts payable</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;749</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities and
      other</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>387</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Current portion of long
      term debt</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>158</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      current liabilities</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,294</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Long-term debt, less current portion</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,133</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      liabilities</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,427</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Commitments and contingencies (Notes 3 and 4)</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Shareholders&#146; equity:</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $.001
      par value. Authorized 5,000,000 shares</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None issued
      or outstanding</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class A common
      stock, $.001 par value. Authorized 20,000,000 shares; issued</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and outstanding
      4,698,479 shares</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class B common
      stock, $.001 par value. Authorized, issued and outstanding</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;762,612 shares</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>10,415</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive
      loss, net of tax</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(3</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>12,918</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      shareholders&#146; equity</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>23,336</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      liabilities and shareholders&#146; equity</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;25,763</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2>
    </TD>
  </TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to condensed consolidated financial statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
Page
2</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>
<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 2; page: 2" --> <!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<div align="center"> <FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>TAITRON
  COMPONENTS INCORPORATED<BR>
  </B>Condensed Consolidated Statements of Operations<BR>
  (Dollars in thousands, except per share amounts) <br>
  </FONT>
<p>&nbsp; </p>
</div>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2>&nbsp;</TH>
    <TH COLSPAN=4><FONT SIZE=2> Three months ended March 31,</FONT> </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2>&nbsp;</TH>
    <TH COLSPAN=2><FONT SIZE=2>2005</FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=2>2004</FONT>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=61% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=19% ALIGN=RIGHT colspan="2">
      <div align="center"><font size=2>(Unaudited)</font></div>
    </TD>
    <TD WIDTH=16% ALIGN=RIGHT colspan="2">
      <div align="center"><font size=2>(Unaudited)</font></div>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=61% ALIGN=LEFT><FONT SIZE=2>Net sales</FONT></TD>
    <TD WIDTH=4% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,842</FONT></TD>
    <TD WIDTH=5% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=14% ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,491</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cost of goods sold</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,341</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,842</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>501</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>649</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Selling, general and administrative expenses</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>618</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>609</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Loss) income from
      operations</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(117</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>40</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Interest expense, net</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(12</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(62</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Other income, net</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>32</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Loss) income before
      income taxes</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(129</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>10</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Income tax provision</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><font size=2>&#151;</font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><font size=2>&#151;</font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net (loss) income</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(129</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Loss per share</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Basic</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.02</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Diluted</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.02</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Weighted average common shares outstanding</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Basic</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,460,619</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,479,708</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Diluted</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,460,619</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,014,708</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
  </TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to condensed consolidated financial statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
Page
3</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>





<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 3; page: 3" -->



<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>TAITRON COMPONENTS
INCORPORATED</B><BR>                  Condensed Consolidated Statements of Cash Flows<BR>
                             (Dollars in thousands) </FONT></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2>&nbsp;</TH>
    <TH COLSPAN=4><FONT SIZE=2>Three months ended March 31,</FONT> </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TH COLSPAN=2>&nbsp;</TH>
    <TH COLSPAN=2><FONT SIZE=2>2005</FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=2>2004</FONT>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=81% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
    <TD WIDTH=9% ALIGN=RIGHT colspan="2"><font size=2>(Unaudited)</font></TD>
    <TD WIDTH=8% ALIGN=RIGHT colspan="2"><font size=2>(Unaudited)</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD WIDTH=81% ALIGN=LEFT><FONT SIZE=2>Cash flows from operating activities:</FONT></TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=6% ALIGN=RIGHT>&nbsp;</TD>
    <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=6% ALIGN=RIGHT>&nbsp;</TD>
    <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Net (loss) income</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$(129</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile
      net (loss) income to net cash provided by operating</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;activities:</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount
      related to options issued</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;with
      notes payable</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><font size=2>&#151;</font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>4</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>59</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>66</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Provision for sales returns
      and doubtful accounts</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>17</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>21</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets and
      liabilities:</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts
      receivable</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>34</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(181</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>308</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>512</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses
      and other current assets</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>8</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(25</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(13</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><font size=2>&#151;</font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts
      payable</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(57</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>195</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities
      and other</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(16</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(102</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      adjustments</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>340</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>490</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      cash provided by operating activities</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>211</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>500</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cash flows from investing activities:</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisitions
      of property and equipment</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(4</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(24</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      cash used by investing activities</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(4</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(24</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cash flows from financing activities:</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Payments on notes payable</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(35</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(139</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Repurchase of Class A
      Common Stock</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><font size=2>&#151;</font></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(323</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from exercise
      of stock options and issuance of stock</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>25</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      cash used in financing activities</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(34</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(437</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Impact of exchange rate changes on cash</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(6</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>11</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      increase in cash and cash equivalents</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>167</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>50</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cash and cash equivalents, beginning of period</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>539</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,953</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=1 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cash and cash equivalents, end of period</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;706</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;3,003</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <HR noshade COLOR=#000000 SIZE=2 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Supplemental disclosure of cash flow information:</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;23</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;61</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income taxes</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;23</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR>
    <TD COLSPAN=2></TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
    <TD COLSPAN=2 ALIGN=RIGHT>
      <hr noshade color=#000000 size=2 width="90%" align="right">
    </TD>
  </TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes
to condensed consolidated financial statements. </FONT></P>

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<!-- MARKER FORMAT-SHEET="Center Head 2-Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>TAITRON COMPONENTS
  INCORPORATED<br>
  </B></FONT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes
  to Condensed Consolidated Financial Statements<BR>
  March 31, 2005<BR>
  (All amounts are unaudited) </FONT></P>

<!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Note 1 - Basis of
Presentation </B></FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
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-KSB for the fiscal year
ended December 31, 2004, 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>

<!-- MARKER FORMAT-SHEET="Left Head 2 Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Note 2 - Summary of
Significant Accounting Policies and Estimates </B></FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Principles
of Consolidation </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
unaudited condensed consolidated financial statements include the        accounts of the
Company and its majority-owned subsidiary. All        significant intercompany
transactions and balances have been eliminated        in consolidation. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Revenue
Recognition </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Revenue
is typically recognized upon shipment of merchandise and sales        are recorded net of
discounts, rebates, and returns. 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 March 31,
2005 and 2004 were $17,000 and        $47,000, respectively. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Allowance
for Sales Returns and Doubtful Accounts </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
On
a case-by-case basis, the Company accepts returns of products from its        customers,
without restocking charges, when they can demonstrate an        acceptable cause for the
return. Requests by a distributor to return        products purchased for its own
inventory generally are not included under        this policy. The Company will, on a
case-by-case basis, accept returns of        products upon payment of a restocking fee,
which is generally 15% to 30%        of the net sales price. The Company will not accept
returns of any        products that were special-ordered by a customer or that otherwise
are        not generally included in inventory. The allowance for sales returns and
       doubtful accounts at March 31, 2005 aggregated $59,000. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Inventory </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
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 $1,177,000 at March 31, 2005. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Income
Taxes </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company accounts for income taxes under the asset and liability        method. Deferred
tax assets and liabilities are recognized for future tax        consequences attributable
to differences between the financial statement        carrying amounts of existing assets
and liabilities and their respective        tax bases. Deferred tax assets and
liabilities are measured using enacted        tax rates expected to apply to taxable
income in the years in which the        temporary differences are expected to be
recovered or settled. The effect        on deferred tax assets and liabilities of a
change in tax rates is        recognized in income in the period that includes the
enactment date.        Valuation allowances are recorded, when necessary, to reduce
deferred tax        assets to the amount expected to be realized. The Company has fully
       reserved against 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>

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<BR>&nbsp;
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Net
Income (Loss) Per Share </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Basic
income (loss) per share is computed by dividing net income (loss)        available to
common shareholders by the weighted-average number of common        shares outstanding
during the period. Diluted income per share reflects        the potential dilution that
could occur if securities or other contracts        to issue common stock were exercised
or converted into common stock or        resulted in the issuance of common stock that
then shared in the earnings        of the Company. Common equivalent shares of
approximately 588,000 shares        for the three months ended March 31, 2005, are
excluded from the        computation of diluted (loss) per share as their effect is
anti-dilutive. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Stock
Option Plan </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
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 employee        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. 25,
&#147;Accounting for Stock Issued        to Employees.&#148; The Company has elected to continue to
follow the        provisions of APB Opinion No. 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. 123. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Accordingly,
under SFAS No. 123, the Company&#146;s net earnings and diluted        earnings per share for
the quarters ended March 31, 2005 and 2004, would        have been changed to the pro
forma amounts indicated below: </FONT></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<div align="center">
  <table cellpadding=0 cellspacing=0 border=0 width=600>
    <tr valign=Bottom>
      <th colspan=2>&nbsp;</th>
      <th colspan=2>&nbsp;</th>
      <th colspan=4><font size=2>Three Month<br>
        Period Ended March 31,</font>
        <hr width=95% size="1" noshade>
      </th>
    </tr>
    <tr valign=Bottom>
      <th colspan=2>&nbsp;</th>
      <th colspan=2>&nbsp;</th>
      <th colspan=2><font size=2>2005</font>
        <hr width=95% size="1" noshade>
      </th>
      <th colspan=2><font size=2>2004</font>
        <hr width=95% size="1" noshade>
      </th>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width=236><font size=2>Net (loss) earnings</font></td>
      <td align=LEFT width=5><font size=2>&nbsp;</font></td>
      <td align=LEFT width=125><font size=2>As reported</font></td>
      <td align=LEFT width=22><font size=2>&nbsp;</font></td>
      <td align=RIGHT width=85><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;(129,000</font></td>
      <td align=LEFT width=24><font size=2>)</font></td>
      <td align=right width=74><font size=2>$10,000</font></td>
      <td align=LEFT width=29><font size=2>&nbsp;</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="236"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
      <td align=LEFT width="5"><font size=2>&nbsp;</font></td>
      <td align=LEFT width="125"><font size=2>Pro Forma</font></td>
      <td align=LEFT width="22"><font size=2>&nbsp;</font></td>
      <td align=RIGHT width="85"><font size=2>&nbsp;&nbsp;&nbsp;$&nbsp;&nbsp;&nbsp;&nbsp;(124,000</font></td>
      <td align=LEFT width="24"><font size=2>)</font></td>
      <td align=right width="74"><font size=2>$20,000</font></td>
      <td align=LEFT width="29"><font size=2>&nbsp;</font></td>
    </tr>
    <tr>
      <td colspan=2></td>
      <td colspan=2></td>
      <td colspan=2></td>
      <td colspan=2 align="right"></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="236">&nbsp;</td>
      <td align=LEFT width="5">&nbsp;</td>
      <td align=LEFT width="125">&nbsp;</td>
      <td align=LEFT width="22">&nbsp;</td>
      <td align=RIGHT width="85">&nbsp;</td>
      <td align=LEFT width="24">&nbsp;</td>
      <td align=right width="74">&nbsp;</td>
      <td align=LEFT width="29">&nbsp;</td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="236"><font size=2>Diluted (loss) earnings</font></td>
      <td align=LEFT width="5"><font size=2>&nbsp;</font></td>
      <td align=LEFT width="125"><font size=2>As reported</font></td>
      <td align=LEFT width="22"><font size=2>&nbsp;</font></td>
      <td align=RIGHT width="85"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.02</font></td>
      <td align=LEFT width="24"><font size=2>)</font></td>
      <td align=right width="74"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</font></td>
      <td align=LEFT width="29"><font size=2>&nbsp;</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="236"><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
        share</font></td>
      <td align=LEFT width="5"><font size=2>&nbsp;</font></td>
      <td align=LEFT width="125"><font size=2>Pro Forma</font></td>
      <td align=LEFT width="22"><font size=2>&nbsp;</font></td>
      <td align=RIGHT width="85"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.02</font></td>
      <td align=LEFT width="24"><font size=2>)</font></td>
      <td align=right width="74"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</font></td>
      <td align=LEFT width="29"><font size=2>&nbsp;</font></td>
    </tr>
    <tr>
      <td colspan=2></td>
      <td colspan=2></td>
      <td colspan=2></td>
      <td colspan=2></td>
    </tr>
  </table>
  <br>
  <!-- MARKER FORMAT-SHEET="Para Flush 05" FSL="Workstation" --> </div>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
total weighted average fair value of options granted for the quarter        ended March
31, 2005 and 2004 was $0, as there were no options granted        during either period.
At March 31, 2005, the number of options        exercisable was 588,000 and the weighted
average exercise price of those        options was $1.82. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Reclassification </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Certain
amounts in the 2004 condensed consolidated financial statements        have been
reclassified to conform with the 2005 presentation. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Use
of Estimates </B></FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
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>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Note 3 - Long-Term Debt </B></FONT></P>


<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom>
    <th colspan=2>&nbsp;</th>
    <th colspan=2><font size=2>March 31,<br>
      2005</font>
      <hr width=95% size="1" noshade>
    </th>
  </tr>
  <tr valign=Bottom>
    <td width=82% align=LEFT><font size=2>Long-term debt is summarized as follows:</font></td>
    <td width=3% align=LEFT><font size=2>&nbsp;</font></td>
    <td width=13% align=RIGHT>&nbsp;</td>
    <td width=2% align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Note payable collateralized by real property,
      due</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr>
    <td colspan=2><font size=2>&nbsp;&nbsp;December 31, 2009, monthly principal
      and interest payments of<br>
      </font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;$20,000, bearing an interest
      rate of 6.875%</font><font size=2>&nbsp;</font><font size=2>&nbsp;</font></td>
    <td align=RIGHT valign="bottom"><font size=2>$&nbsp;1,291,000</font></td>
    <td align=RIGHT>&nbsp;</td>
  </tr>
  <tr>
    <td colspan=2></td>
    <td colspan=2 align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>Less current maturities</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>(158,000</font></td>
    <td align=LEFT><font size=2>)</font></td>
  </tr>
  <tr>
    <td colspan=2></td>
    <td colspan=2 align=RIGHT>
      <hr noshade color=#000000 size=1>
    </td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
    <td align=RIGHT><font size=2>$&nbsp;1,133,000</font></td>
    <td align=LEFT><font size=2>&nbsp;</font></td>
  </tr>
  <tr>
    <td colspan=2></td>
    <td colspan=2 align=RIGHT>
      <hr noshade color=#000000 size=2>
    </td>
  </tr>
</table>
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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Note 4 - Restricted
Cash </B></FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
On
March 31, 2005, the Company had $1,000,000 of restricted cash invested        in 1-year
certificate of deposit maturing on July 9, 2005. On July 8,        2004, the Company
entered into a revolving line of credit facility        providing up to $3 million for
operating purposes. As of the date of this        Report, the Company has not yet used
this credit facility. The agreement        governing this credit facility contains
security agreements covering        essentially all assets of the Company and financial
covenants that        require the Company to retain a $1,000,000 certificate of deposit
and        maintain compliance with certain financial ratios. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item  2.  MANAGEMENT&#146;S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS </FONT></P>

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<P><i><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
  following discussion 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 our most recent annual report on Form 10-KSB for the year
  ended December 31, 2004. Also, several of the matters discussed in this document
  contain forward-looking statements that involve risks and uncertainties. Forward-looking
  statements usually are 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 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-KSB. In addition to the other information contained in this
  document, readers should carefully consider the information contained in our
  most recent annual report on Form 10-KSB under the heading &#147;Cautionary
  Statements and Risk Factors.&#148; </FONT></i></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;References
to &#147;Taitron,&#148; &#147;the Company,&#148; &#147;we,&#148; &#147;our&#148; and &#147;us&#148; refer to Taitron Components
Incorporated and its majority-owned subsidiary, unless the context otherwise requires. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Overview </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are a national distributor of electronic components, primarily focused on transistors,
diodes and other discrete semiconductors, optoelectronic devices and passive components
with a reputation of in-depth inventories and knowledge of the products we sell. Our
customers consist of other electronic distributors, contract electronic manufacturers
(CEMs) and original equipment manufacturers (OEMs). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that demand for discrete semiconductors in the U.S. market had drastically
declined since 2000. This declining demand has resulted from the accelerated trend of
moving the production capacity of OEM/CEM customers abroad and the consolidation of CEM
customers domestically. In response, we are refocusing our business strategy beyond the
traditional role of electronic components fulfillment to the additional role of
engineering and turn-key services for our existing OEM and CEM customers by outsourcing
their product design and manufacturing work offshore. We formed some strategic business
partnerships with a few customers and are providing them with original design and
manufacturing (ODM) services for their multi-year turn-key projects. We expect to see
some new opportunities and results from these additional services during 2005. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
core strategy of electronic components fulfillment, however, consists of carrying a
substantial quantity and variety of products in inventory to meet the rapid delivery
requirements of our customers. This strategy allows us to fill customer orders
immediately from stock on hand. Although we believe better market conditions may return,
we are focused on lowering our inventory balances and increasing our cash holdings. Our
long-term strategy is to rely not only on our core strategy of component fulfillment
service, but also the value-added engineering and turn-key services. In accordance with
Generally Accepted Accounting Principles, we classify 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. We cannot assure you that demand
in the discrete semiconductor market will increase and that market conditions will
improve. Therefore, it is possible that further declines in our carrying values of
inventory may result. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Critical Accounting
Policies and Estimates </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Use
Of Estimates &#151; 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 its 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>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue
  Recognition &#151; 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 March 31, 2005 and 2004 were $17,000 and $46,000. The
  allowance for sales returns and doubtful accounts at March 31, 2005 aggregated
  $59,000. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory
  &#151; Inventory, consisting principally of products held for resale, is recorded
  at the lower of cost (determined using the first in-first out method) or estimated
  market value. We had inventory balances in the amount of $17,945,000 at March
  31, 2005, which is presented net of valuation allowances of $1,177,000. We evaluate
  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, we rely upon our 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, 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>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred
  Taxes &#151; We review the nature of each component of our deferred income taxes
  for reasonableness. If determined that it is more likely than not that we will
  not realize all or part of our net deferred tax assets in the future, we record
  a valuation allowance against the deferred tax assets, which allowance will
  be charged to income tax expense in the period of such determination. We also
  consider the scheduled reversal of deferred tax liabilities, tax planning strategies
  and future taxable income in assessing the realizability of deferred tax assets.
  We also consider the weight of both positive and negative evidence in determining
  whether a valuation allowance is needed. Based upon recent operating results
  and the difficulty of estimating future market conditions, we have fully reserved
  a $669,000 allowance against our net deferred tax assets. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Results of Operations </I></FONT></P>

<!-- MARKER FORMAT-SHEET="Left Head 2 Italic" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Three month Period
Ended March 31, 2005 Compared To The Three month Period Ended March 31, 2004. </I></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
sales for the three months ended March 31, 2005 were $1,842,000, compared with $2,491,000
for the same period last year, a decrease of $649,000 or 26.1%. The decrease is primarily
due to a decrease in demand for our discrete and passive and semiconductor components. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost
of goods sold for the quarter ended March 31, 2005 decreased to $1,341,000 from
$1,842,000 for the same period last year, a decrease of $501,000 or 27.2%. Consistent
with the decrease in net sales, cost of goods sold decreased. Gross profit increased as a
percentage of net sales to 27.2% for the quarter ended March 31, 2005 from  </FONT></P>

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<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26.1% for the same period last year.
Gross profit decreased by $148,000 to $501,000 for the quarter ended March 31, 2005 from
$649,000 for the same period in 2004. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
general and administrative (&#147;SG&amp;) expenses increased by $9,000 or 1.5% for the quarter
ended March 31, 2005 compared to the same period of 2004. The increase is primarily
attributable to personnel-related expenses increasing by $8,000, outside sales
representative commissions decreasing by $16,000 and depreciation decreasing by $5,000,
with no other individual item significantly impacting the change during the quarter ended
March 31, 2005. The corresponding average employee base declined to 26 from 28 employees,
which represents a 7.1% reduction in overall workforce. As a percentage of net sales, SG&amp;A increased
to 33.6% from 24.5% for the three months ended March 31, 2005 and 2004, respectively. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating
loss was $117,000 for the quarter ended March 31, 2005 as compared to an operating income
of $40,000 for the same period last year. Operating results decreased primarily from
lower gross profits and lower net sales, as discussed above. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
expense, net of interest income, for the quarter ended March 31, 2005 decreased by
$50,000 compared to the same period last year. The decrease is primarily due to lower
outstanding borrowing levels during the current quarter, when compared to the same period
last year. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
tax provision was $0 during the quarter ended March 31, 2005 as compared to $0 for the
same period last year. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
loss was $129,000 for the quarter ended March 31, 2005 as compared with $10,000 net
income for the same period last year. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Liquidity and Capital
Resources </I></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&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 nine months ended March 31, 2005 and 2004 are as follows: </FONT></P>



<div align="center">
  <table cellpadding=0 cellspacing=0 border=0 width=600>
    <tr valign=Bottom>
      <th colspan=2>&nbsp;</th>
      <th colspan=4><font size=2> Three months ended March 31,</font>
        <hr width=95% size="1" noshade>
      </th>
    </tr>
    <tr valign=Bottom>
      <td colspan=2 align="center" valign="baseline"> <font size="2">(Dollars
        in thousands)</font> </td>
      <th colspan=2><font size="2">2005</font>
        <hr width=95% size="1" noshade>
      </th>
      <th colspan=2><font size="2">2004</font>
        <hr width=95% size="1" noshade>
      </th>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT colspan="2">
        <div align="center"></div>
      </td>
      <td align=RIGHT colspan="2">
        <div align="center"><font size=2>(Unaudited)</font></div>
      </td>
      <td align=RIGHT colspan="2">
        <div align="center"><font size=2>(Unaudited)</font></div>
      </td>
    </tr>
    <tr valign=Bottom>
      <td width=53% align=LEFT><font size=2>Operating activities</font></td>
      <td width=9% align=LEFT><font size=2>&nbsp;</font></td>
      <td width=14% align=RIGHT><font size=2>$&nbsp;211</font></td>
      <td width=5% align=LEFT><font size=2>&nbsp;</font></td>
      <td width=14% align=RIGHT><font size=2>$&nbsp;500</font></td>
      <td width=5% align=LEFT><font size=2>&nbsp;</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="53%"><font size=2>Investing activities</font></td>
      <td align=LEFT width="9%"><font size=2>&nbsp;</font></td>
      <td align=RIGHT width="14%"><font size=2>(4</font></td>
      <td align=LEFT width="5%"><font size=2>)</font></td>
      <td align=RIGHT width="14%"><font size=2>(24</font></td>
      <td align=LEFT width="5%"><font size=2>)</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="53%"><font size=2>Financing activities</font></td>
      <td align=LEFT width="9%"><font size=2>&nbsp;</font></td>
      <td align=RIGHT width="14%"><font size=2>(34</font></td>
      <td align=LEFT width="5%"><font size=2>)</font></td>
      <td align=RIGHT width="14%"><font size=2>(437</font></td>
      <td align=LEFT width="5%"><font size=2>)</font></td>
    </tr>
    <tr valign=Bottom>
      <td align=LEFT width="53%">&nbsp;</td>
      <td align=LEFT width="9%">&nbsp;</td>
      <td align=RIGHT width="14%">&nbsp;</td>
      <td align=LEFT width="5%">&nbsp;</td>
      <td align=RIGHT width="14%">&nbsp;</td>
      <td align=LEFT width="5%">&nbsp;</td>
    </tr>
  </table>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash
flows provided by operating activities decreased to $211,000 during the three months
ended March 31, 2005, as compared to $500,000 during the same period last year. The
overall decrease was affected by a decrease in inventory of $308,000 during the first
three months of 2005, as compared to a decrease of $512,000 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>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash
flows used in investing activities was $4,000 during the three months ended March 31,
2005 compared with cash flows provided by of $24,000 during the same period last year. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash
flows used in financing activities decreased to $34,000 from $437,000 during the nine
months ended March 31, 2005 and 2004, respectively. The decrease was primarily the result
of using operating cash flow of $323,000 for repurchase of Class A Common Stocks during
the 2004 period. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory
is included in current assets; however, it will take over one year for the inventory to
turn. Hence, inventory would not be as readily marketable or liquid as other items
included in current assets, such as cash. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that funds generated from operations, in addition to existing cash balances, and
the revolving line of credit facility is likely to be sufficient to finance our working
capital and capital expenditure requirements for the foreseeable future or until balloon
principal payments are due under our outstanding note payable. If these funds are not
sufficient, we may secure new sources of asset-based lending on accounts receivables or
issue debt or equity securities. Otherwise, we may need to liquidate assets to generate
the necessary working capital. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&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, except as disclosed in Note 3 &#151; Long-Term
  Debt. </FONT></P>

<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item  3.  Controls and
Procedures </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s management, including its Chief Executive Officer and Chief Financial Officer,
have evaluated the effectiveness of the Company&#146;s disclosure controls and procedures (as
such term is defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the
&#147;Exchange Act&#148;)) as of the end of the reporting period covered by this quarterly report.
Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of the period covered by this quarterly report, the
Company&#146;s disclosure controls and procedures are effective such that material information
required to be disclosed by the Company (including its consolidated subsidiary) in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified by the Securities and Exchange
Commission&#146;s rules and forms relating to the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the quarterly period covered by this report, there have been no changes to the Company&#146;s
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company&#146;s internal control over financial
reporting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II.  OTHER
INFORMATION </FONT></P>

<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 1.  Legal
Proceedings. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 2.  Changes In
Securities and Small Business Issuer Purchases of Equity Securities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
were no issuances or sales of our securities by us during the first quarter of 2005 that
were not registered under the Securities Act. </FONT></P>

<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 3.  Defaults Upon
Senior Securities. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 4.  Submission of
Matters to a Vote of Security Holders. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 5.  Other
Information. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 6.  Exhibits. </FONT></P>

<!-- MARKER FORMAT-SHEET="Footnote Right" FSL="Workstation" -->
<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=7% ALIGN=right VALIGN=top><font size="2"> a. </font></TD>
    <TD WIDTH=2%><font size="2"></font></TD>
    <TD WIDTH=87% ALIGN=left VALIGN=top><font size="2">Certification Pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.</font></TD>
  </TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Footnote Right" FSL="Workstation" -->
<TABLE WIDTH=100%>
  <TR>
    <TD WIDTH=7% ALIGN=right VALIGN=top><font size="2"> b. </font></TD>
    <TD WIDTH=2%><font size="2"></font></TD>
    <TD WIDTH=87% ALIGN=left VALIGN=top><font size="2">Certification Pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.</font></TD>
  </TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" -->
<BR>&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
Page
10</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>





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<!-- MARKER FORMAT-SHEET="Left no bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&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 border="0" width="100%">
  <tr>
    <td width="26%">&nbsp;</td>
    <td width="36%">&nbsp;</td>
    <td colspan="2"><font size="2">TAITRON COMPONENTS INCORPORATED</font></td>
  </tr>
  <tr>
    <td width="26%" valign="top">&nbsp;&nbsp;</td>
    <td width="36%">&nbsp;</td>
    <td align="right" valign="top" width="3%">&nbsp;</td>
    <td width="35%">&nbsp;</td>
  </tr>
  <tr>
    <td width="26%" valign="top"><font size="2">Date: May 16, 2005</font></td>
    <td width="36%">&nbsp;</td>
    <td align="right" valign="top" width="3%">
      <div align="right"><font size="2">By:</font></div>
    </td>
    <td width="35%"><font size="2">/s/ Stewart Wang<br>
      </font>
      <hr noshade size="1">
    </td>
  </tr>
  <tr>
    <td width="26%">&nbsp;</td>
    <td width="36%">&nbsp;</td>
    <td width="3%">&nbsp;</td>
    <td width="35%"><font size="2">Stewart Wang<br>
      Chief Executive Officer, President, <br>
      Chief Financial Officer and Director <br>
      (Principal Executive, Financial and Accounting Officer) </font></td>
  </tr>
</table>
<!-- MARKER FORMAT-SHEET="Page Break CENTER" FSL="Workstation" --> <BR>
&nbsp;
<TABLE WIDTH=100%><TR><TD WIDTH=20% ALIGN=left><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=60% ALIGN=center><FONT SIZE="2">
Page
11</FONT></TD><TD WIDTH=20% ALIGN=right><FONT SIZE="1">&nbsp;</FONT></TD></TR></TABLE><HR SIZE=5 noshade WIDTH=100% ALIGN=LEFT>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>e20894-ex31.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>


<!-- MARKER FORMAT-SHEET="Right Head 2 Bold" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Exhibit 31  </B></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang 05" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
    <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit&nbsp;31&#151;

      </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certification
of Principal Executive Officer and Principal              Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act              of 2002. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><u>Certification</u>
  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Stewart Wang, certify that: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I
have reviewed this quarterly report on Form 10-QSB of Taitron          Components
Incorporated; </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Based
on my knowledge, this report does not contain any untrue          statement of a material
fact or omit to state a material fact necessary          to make the statements made, in
light of the circumstances under which          such statements were made, not misleading
with respect to the period          covered by this report; </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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 small business issuer as
of, and for, the periods presented in          this report; </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
small business issuer&#146;s other certifying officer(s) and I are          responsible for
establishing and maintaining disclosure controls and          procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e))          and internal control over financial
reporting (as defined in Exchange          Act Rules 13a-15(f) and 15d-15(f)) for the
small business issuer and          have: </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 15" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(a)
Designed such disclosure controls and procedures, or                   caused such
disclosure controls and procedures to be designed                   under our
supervision, to ensure that material information                   relating to the small
business issuer, including its                   consolidated subsidiaries, is made known
to us by others                   within those entities, particularly during the period
in which                   this report is being prepared;  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 15" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(b)
Designed such internal control over financial reporting,                   or caused such
internal control over financial reporting to be                   designed under our
supervision, to provide reasonable                   assurance regarding the reliability
of financial reporting and                   the preparation of financial statements for
external purposes                   in accordance with generally accepted accounting
principles;  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 15" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(c)
Evaluated the effectiveness of the small business issuer&#146;s
                  disclosure controls and procedures and presented in this
                  report our conclusions about the effectiveness of the
                  disclosure controls and procedures, as of the end of the
                  period covered by this report based on such evaluation; and  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 15" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(d)
Disclosed in this report any change in the small business                   issuer&#146;s
internal control over financial reporting that                   occurred during the
small business issuer&#146;s most recent fiscal                   quarter (the small
business issuer&#146;s fourth fiscal quarter in                   the case of an annual
report) that has materially affected, or                   is reasonably likely to
materially affect, the small business                   issuer&#146;s internal control
over financial reporting; and  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
small business issuer&#146;s other certifying officer(s) and I have          disclosed, based
on our most recent evaluation of internal control over          financial reporting, to
the small business issuer&#146;s auditors and the          audit committee of the small
business issuer&#146;s board of directors (or          persons performing the equivalent
functions): </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 15" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(a)
All significant deficiencies and material weaknesses in                   the design or
operation of internal control over financial                   reporting which are
reasonably likely to adversely affect the                   small business issuer&#146;s
ability to record, process, summarize                   and report financial information;
and  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 15" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
(b)
Any fraud, whether or not material, that involves                   management or other
employees who have a significant role in                   the small business issuer&#146;s
internal control over financial                   reporting. &nbsp; </FONT></TD>
</TR>
</TABLE>
<BR>



<table border="0" width="100%">
  <tr>
    <td width="34%"><font size="2">Dated May 16, 2005. </font></td>
    <td width="30%">&nbsp; </td>
    <td align="right" width="4%">
      <div align="right"><font size="2">By:</font></div>
    </td>
    <td width="32%"><font size="2"><u>/s/ Stewart Wang </u></font></td>
  </tr>
  <tr>
    <td width="34%">&nbsp;</td>
    <td width="30%">&nbsp;</td>
    <td width="4%">&nbsp;</td>
    <td width="32%"><font size="2">Stewart Wang <br>
      Principal Executive Officer and <br>
      Principal Financial Officer </font></td>
  </tr>
</table>
<font size="2"><BR>
</font>
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</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>3
<FILENAME>e20894-ex32.htm
<DESCRIPTION>CERTIFICATION
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>
<!-- MARKER FORMAT-SHEET="Para Hang 05" FSL="Workstation" -->
<p align="right"><font face="Times New Roman, Times, Serif" size=2><b>Exhibit
  32</b></font></p>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
    <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit&nbsp;32&#151;

      </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certification
of Principal Executive Officer and                   Principal Financial Officer Pursuant
to Section 906 of the                   Sarbanes-Oxley Act of 2002. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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 March 31, 2005 of
Taitron Components Incorporated. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Stewart Wang, the Principal
Executive Officer and Principal Financial Officer of registrant, certify that to the best
of my knowledge: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Hang 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     (i)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
quarterly report on 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>

<!-- MARKER FORMAT-SHEET="Para Hang 10" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>     (ii)  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
information contained in such report fairly presents, in all                material
respects, the financial condition and results of                operations of the
registrant. </FONT></TD>
</TR>
</TABLE>
<p>&nbsp;</p>
<table border="0" width="100%">
  <tr>
    <td width="33%"><font size="2">Dated May 16, 2005. </font></td>
    <td width="19%">&nbsp;</td>
    <td align="right" width="10%">
      <div align="right"><font size="2">By:</font></div>
    </td>
    <td width="38%"><font size="2"><u>/s/ Stewart Wang </u></font></td>
  </tr>
  <tr>
    <td width="33%">&nbsp;</td>
    <td width="19%">&nbsp;</td>
    <td width="10%">&nbsp;</td>
    <td width="38%"><font size="2">Stewart Wang<br>
      Principal Executive Officer and <br>
      Principal Financial Officer </font></td>
  </tr>
</table>
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