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<SEC-DOCUMENT>0000891092-05-001598.txt : 20050816
<SEC-HEADER>0000891092-05-001598.hdr.sgml : 20050816
<ACCEPTANCE-DATETIME>20050815175300
ACCESSION NUMBER:		0000891092-05-001598
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20050630
FILED AS OF DATE:		20050816
DATE AS OF CHANGE:		20050815

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:		051028468

	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>e22331_10qsb.htm
<DESCRIPTION>FORM 10QSB
<TEXT>

<HTML>
<HEAD>
<TITLE></TITLE>
</HEAD>
<BODY>







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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>UNITED STATES
SECURITIES AND EXCHANGE COMMISSION <BR></B> </FONT>
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Washington, D.C. 20549</B> </FONT> </P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=4><B>FORM 10-QSB </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><b>|X| </b> </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><b>QUARTERLY REPORT
      UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </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> <b>For the quarterly
      period ended June 30, 2005 </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><b>|_| </b> </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><b>TRANSITION
      REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
      </b></FONT></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Commission File
Number 0-25844 </B></FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="4"><B>TAITRON COMPONENTS
INCORPORATED</B> </FONT> <BR>
  <FONT FACE="Times New Roman, Times, Serif" SIZE="2">(Exact name of small business
  issuer as specified in its charter) </FONT> </P>

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<TABLE WIDTH=100%>
  <TR ALIGN="center" VALIGN=top>
    <TD WIDTH=30%><FONT SIZE=2><b>California</b> <br>
      (State or Other Jurisdiction of <br>
      Incorporation or Organization) </FONT></TD>
    <TD WIDTH=5%>&nbsp;&nbsp;</TD>
    <TD WIDTH=30%><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=5%>&nbsp;&nbsp;</TD>
    <TD WIDTH=30%><FONT SIZE=2>&nbsp;<b>95-4249240</b> <br>
      (I.R.S. Employer <br>
      Identification No.) </FONT></TD>
  </TR>
 </TABLE>



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<P ALIGN=CENTER><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> </P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>(661) 257-6060 <BR>
</B>(Issuer&#146;s Telephone Number) </FONT> </P>

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

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<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. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Yes |X| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
  |_| </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>

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<TABLE WIDTH=100%>
  <TR ALIGN="center" VALIGN=top>
    <TD WIDTH=33%><font size=2>Class</font>
      <hr noshade size="1">
    </TD>
    <TD WIDTH=4%>&nbsp;</TD>
    <TD WIDTH=28%>&nbsp;</TD>
    <TD WIDTH=5%>&nbsp;</TD>
    <TD WIDTH=30%><font size=2>Outstanding on July 31, 2005</font>
      <hr noshade size="1">
    </TD>
  </TR>
  <TR ALIGN="center" VALIGN=top>
    <TD WIDTH=33% align="left"><FONT SIZE=2>Class A Common Stock, $.001 par value
      <br>
      Class B Common Stock, $.001 par value </FONT></TD>
    <TD WIDTH=4%>&nbsp;&nbsp;</TD>
    <TD WIDTH=28%><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD WIDTH=5%>&nbsp;&nbsp;</TD>
    <TD WIDTH=30%><FONT SIZE=2>4,700,145 <br>
      &nbsp;&nbsp;&nbsp;762,612 </FONT></TD>
  </TR>
</TABLE>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Transitional Small Business
Disclosure Format (check one):     Yes  |_|    No  |X| </FONT></P>



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<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>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I. FINANCIAL INFORMATION </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>
Item
1. Financial Statements </FONT></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><font size="3">TAITRON
  COMPONENTS INCORPORATED</font> </B><BR>
Condensed Consolidated Balance Sheets <BR>
(Dollars in Thousands) </FONT> </P>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600 align="center">
  <TR VALIGN=Bottom>
    <TH>&nbsp; </TH>
    <TH COLSPAN=2><FONT SIZE=1>June 30,<BR>
      2005 </FONT>
      <hr noshade size="1">
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=center><font size=1><b><font size="2">Assets</font></b></font></TD>
    <TD ALIGN=center colspan="2"><font size=1>(Unaudited)</font> </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Current assets:</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2></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 and cash equivalents</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;1,100</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=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=RIGHT><FONT SIZE=2>1,372</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=RIGHT><FONT SIZE=2>17,478</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=RIGHT><FONT SIZE=2>329</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>21,279</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=RIGHT><FONT SIZE=2>4,536</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=RIGHT><FONT SIZE=2>78</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>$&nbsp;25,893</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=center><FONT SIZE=2><b>Liabilities and Shareholders&#146; Equity</b></FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Current liabilities:</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts payable</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;733</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=RIGHT><FONT SIZE=2>579</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=RIGHT><FONT SIZE=2>159</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>1,471</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=RIGHT><FONT SIZE=2>1,094</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>2,565</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Commitments and contingencies (Notes 3 and 4)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Shareholders&#146; equity:</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>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None issued
      or outstanding</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>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and outstanding
      4,700,145 shares</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, $.001 par value. Authorized, issued and outstanding</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;762,612 shares</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>10,416</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive
      loss, net of tax</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(4</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Retained earnings</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>12,910</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      shareholders&#146; equity</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>23,328</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
      liabilities and shareholders&#146; equity</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;25,893</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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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<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>







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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><font size="3">TAITRON
  COMPONENTS INCORPORATED</font> </B><BR>
Condensed Consolidated Statements of Operations <BR>
(Dollars in thousands, except per share amounts) </FONT> </P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600 align="center">
  <TR VALIGN=Bottom>
    <TH><font size="1"></font></TH>
    <TH COLSPAN=4><font size="1">Three months ended June 30,</font><font size="1"></font></TH>
    <TH COLSPAN=4><font size="1">Six months ended June 30, </font><font size="1"></font></TH>
  </TR>
  <TR VALIGN=Bottom>
    <TH><FONT SIZE=1></FONT></TH>
    <TH COLSPAN=2><FONT SIZE=1>2005<BR>
      </FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2004<BR>
      </FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2005<BR>
      </FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2004<BR>
      </FONT>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=center colspan="2" valign="top"><font size=1>(Unaudited)</font></TD>
    <TD ALIGN=center colspan="2" valign="top"><font size=1>(Unaudited)</font>
    </TD>
    <TD ALIGN=center colspan="2" valign="top"><font size=1>(Unaudited)</font>
    </TD>
    <TD ALIGN=center colspan="2" valign="top"><font size=1>(Unaudited)</font>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Net sales</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,202</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,647</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;4,044</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$5,138</FONT></TD>
    <TD 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=RIGHT><FONT SIZE=2>1,616</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,888</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>2,957</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>3,730</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross
      profit</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>586</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>759</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,087</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,408</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT rowspan="2"><FONT SIZE=2>Selling, general and administrative</FONT><FONT SIZE=2>&nbsp;<br>
      &nbsp;&nbsp;&nbsp;&nbsp;expenses</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=RIGHT><FONT SIZE=2>628</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>662</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,246</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,271</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Loss) income from
      operations</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(42</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>97</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(159</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>137</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=RIGHT><FONT SIZE=2>(5</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(54</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(17</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(116</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Other income (expense), net</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>39</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(19</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>39</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>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>(8</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>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(137</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>34</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=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>
    <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 VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
      (loss) income</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(137</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$34</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>(Loss) income per share</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(.00</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.00</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(.03</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.01</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(.00</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.00</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(.03</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;.01</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Weighted average common shares outstanding</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,462,479</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,459,425</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,461,549</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,469,566</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,462,479</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,008,425</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>5,461,549</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>6,038,566</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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 no bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B><font size="3">TAITRON
  COMPONENTS INCORPORATED </font></B><BR>
Condensed Consolidated Statements of Cash Flows <BR>
(Dollars in thousands) </FONT> </P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600 align="center">
  <TR VALIGN=Bottom>
    <TH><font size="1"></font></TH>
    <TH COLSPAN=4><font size="1">Six months ended June 30, </font><font size="1"></font></TH>
  </TR>
  <TR VALIGN=Bottom>
    <TH><FONT SIZE=1></FONT></TH>
    <TH COLSPAN=2><FONT SIZE=1>2005</FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2004</FONT>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=center colspan="2" valign="top"><font size="1">(Unaudited)&nbsp;</font></TD>
    <TD ALIGN=center colspan="2" valign="top"><font size="1">(Unaudited)&nbsp;</font></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cash flows from operating activities:</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Net (loss) income</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;(137</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;34</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;activities:</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>
  </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=RIGHT><FONT SIZE=2>&#151;</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>7</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=RIGHT><FONT SIZE=2>120</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>128</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=RIGHT><FONT SIZE=2>9</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>&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets and
      liabilities:</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=RIGHT><FONT SIZE=2>(282</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(218</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,
      net</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>775</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,006</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=RIGHT><FONT SIZE=2>88</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(135</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=RIGHT><FONT SIZE=2>(14</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</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;&nbsp;&nbsp;Trade accounts
      payable</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(73</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>215</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=RIGHT><FONT SIZE=2>176</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(44</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>799</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,010</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>662</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>1,044</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cash flows from investing activities:</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=RIGHT><FONT SIZE=2>(23</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(26</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>(23</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(26</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cash flows from financing activities:</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Payments on notes payable</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(73</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(664</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=RIGHT><FONT SIZE=2>&#151;</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(322</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=RIGHT><FONT SIZE=2>2</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>27</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>(71</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(959</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Impact of exchange rate changes on cash</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(7</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>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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=RIGHT><FONT SIZE=2>561</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>69</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=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 VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Cash and cash equivalents, end of period</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;1,100</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;3,022</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Supplemental disclosure of cash flow information:</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;45</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;115</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income taxes</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><font size="3">TAITRON
  COMPONENTS INCORPORATED </font></B></FONT></P>
<font size="3"><!-- MARKER FORMAT-SHEET="Center no bold" FSL="Workstation" -->
</font>
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Notes to Condensed
Consolidated Financial Statements <BR>
                                  June 30, 2005 <BR>
                           (All amounts are unaudited) </FONT></P>

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<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 June 30,
2005 and 2004 were $44,000 and        $5,000, respectively, and for the six months ended
June 30, 2005 and 2004        aggregated $61,000 and $53,000, 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 June 30, 2005 aggregated $64,000. </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 $1,231,000 at June 30, 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  </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>
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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<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>(Loss)
Income 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
(loss) income per share is computed by dividing net (loss) income        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 for both the
quarter and six        months ended June 30, 2005, of approximately 603,000, 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--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
       stock options issued under 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 (loss) and        diluted earnings
(loss) per share for the quarters and six months ended        June 30, 2005 and 2004,
would have been changed to the pro forma amounts        indicated below: </FONT></TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 align="center" WIDTH=600>
  <TR VALIGN=Bottom>
    <TH width="225">&nbsp;</TH>
    <TH COLSPAN=4><font size="1">Three Month <br>
      Period Ended June 30, </font>
      <hr noshade size="1" width="150">
    </TH>
    <TH COLSPAN=4><font size="1">Six Month <br>
      Period Ended June 30, </font>
      <hr noshade size="1" width="150">
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TH width="225"><FONT SIZE=1></FONT></TH>
    <TH COLSPAN=2><FONT SIZE=1>2005</FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2004</FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2005</FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2004</FONT>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT WIDTH=225><FONT SIZE=2>Net (loss) income As reported</FONT></TD>
    <TD ALIGN=RIGHT WIDTH=63><FONT SIZE=2>$(8,000</FONT></TD>
    <TD ALIGN=LEFT WIDTH=28><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT WIDTH=65><FONT SIZE=2>$24,000</FONT></TD>
    <TD ALIGN=LEFT WIDTH=29><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT WIDTH=74><FONT SIZE=2>$(137,000</FONT></TD>
    <TD ALIGN=LEFT WIDTH=25><font size=2>)</font></TD>
    <TD ALIGN=RIGHT WIDTH=65><font size=2>$&nbsp;34,000</font></TD>
    <TD ALIGN=LEFT WIDTH=26>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="225"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro
      Forma</FONT></TD>
    <TD ALIGN=RIGHT width="63"><FONT SIZE=2>(2,000</FONT></TD>
    <TD ALIGN=LEFT width="28"><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT width="65"><FONT SIZE=2>34,000</FONT></TD>
    <TD ALIGN=LEFT width="29"><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT width="74"><FONT SIZE=2>(125,000</FONT></TD>
    <TD ALIGN=LEFT width="25"><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT width="65"><FONT SIZE=2>54,000</FONT></TD>
    <TD ALIGN=LEFT width="26">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="225"><FONT SIZE=2>Diluted (loss) income As reported</FONT></TD>
    <TD ALIGN=RIGHT width="63"><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</FONT></TD>
    <TD ALIGN=LEFT width="28"><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT width="65"><FONT SIZE=2>$&nbsp;&nbsp;&nbsp;&nbsp;0.00</FONT></TD>
    <TD ALIGN=LEFT width="29">&nbsp;</TD>
    <TD ALIGN=RIGHT width="74"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.03</font></TD>
    <TD ALIGN=LEFT width="25"><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT width="65"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.01</font></TD>
    <TD ALIGN=LEFT width="26">&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="225"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
      share&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pro
      Forma</FONT></TD>
    <TD ALIGN=RIGHT width="63"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;</font></TD>
    <TD ALIGN=LEFT width="28">&nbsp;</TD>
    <TD ALIGN=RIGHT width="65"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;0.01</font></TD>
    <TD ALIGN=LEFT width="29"><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT width="74"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(0.02</font></TD>
    <TD ALIGN=LEFT width="25"><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT width="65"><font size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0.01</font></TD>
    <TD ALIGN=LEFT width="26">&nbsp;</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&#146;s 1995 Stock Incentive Plan expired by its terms in March 2005. Since no new
grants can be awarded out of this plan, the total weighted average fair value of options
granted for the quarter and six months ended June 30, 2005 was $0.  At June 30, 2005, the
number of options exercisable was 618,000 and the weighted average exercise price
of those options was $1.74.  </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 align="center">
  <TR VALIGN=Bottom>
    <TH><FONT SIZE=1></FONT></TH>
    <TH COLSPAN=2><FONT SIZE=1>June 30, 2005</FONT>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Long-term debt is summarized as follows:</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2></FONT></TD>
    <TD 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>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;December 31, 2009, monthly principal
      and interest payments of</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;$20,000, bearing an interest
      rate of 6.875%</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;1,253,000</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>Less current maturities</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>(159,000</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=1>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT><FONT SIZE=2>$&nbsp;1,094,000</FONT></TD>
    <TD ALIGN=LEFT><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT>&nbsp;</TD>
    <TD ALIGN=RIGHT>
      <hr noshade color=#000000 size=2>
    </TD>
    <TD ALIGN=LEFT>&nbsp;</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
June 30, 2005, the Company had $1,000,000 of restricted cash invested        in 1-year
certificate of deposit maturing on July 9, 2005 held as        security for our revolving
line of credit facility providing up to $3        million for operating purposes. The
agreement governing this credit        facility contains security agreements covering
essentially all assets of        the Company and financial covenants requiring compliance
with certain        financial ratios. As of the date of this report, the Company has not
yet        used this credit facility. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Note 5 - Subsequent
Events </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>
As
of July 15, 2005, the Company completely repaid its note payable        collateralized by
real property and renewed its revolving line of credit        facility provided up to $3
million for operating purposes with an        expiration date of June 17, 2006. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><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><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>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;</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;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  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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 - 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 - Revenue is recognized upon shipment of the merchandise, which is when legal
transfer of title occurs. Reserves for sales allowances and customer returns are
established based upon historical experience and our estimates of future returns. Sales
returns for the quarters ended June 30, 2005 and 2004 were $44,000 and $5,000,
respectively, and for the six months ended June 30, 2005 and 2004 aggregated $61,000 and
$53,000, respectively. The allowance for sales returns and doubtful accounts at June 30,
2005 aggregated $64,000. </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
- - 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 $17,478,000 at June 30, 2005, which is presented
net of valuation allowances of $1,231,000. 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;Impact
of Governmental Regulation - Our worldwide operations are subject to local laws and
regulations. As such, of particular interest is the European Union (&#147;EU&#148;)
directive relating to the Restriction of Certain Hazardous Substance (&#147;RoHS&#148;).
Effective July 1, 2006, this directive restricts the distribution of products within the
EU containing certain substances, including lead. While the enabling legislation of a
number of EU member countries has not yet been adopted, it is clear we will not be able
to distribute non-RoHS compliant products to most customers who intend to sell their
finished goods in the EU after the effective date. At the present time, much of our
inventory contains substances prohibited by the RoHS directive. Further, many of our
suppliers are not yet supplying RoHS compliant products. Upon effectiveness of the RoHS
legislation, some of our inventory may become obsolete and unsaleable and, as a result,
have to be written off. While we are working closely with our customers and suppliers to
minimize this impact, at this time, it is difficult to quantify the financial impact, if
any, of such obsolete inventory. </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 - 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>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Three month Period
Ended June 30, 2005 Compared To The Three month Period Ended June 30, 2004. </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;Net
sales for the three months ended June 30, 2005 were $2,202,000, compared with $2,647,000
for the same period last year, a decrease of $445,000 or 16.8%. 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 June 30, 2005 decreased to $1,616,000 from $1,888,000
for the same period last year, a decrease of $272,000 or 14.4%. Consistent with the
decrease in net sales, cost of goods sold decreased. Gross profit decreased as a
percentage of net sales to 26.6% for the quarter ended June 30, 2005 from 28.7% for the
same period last year. Gross profit decreased by $173,000 to $586,000 for the quarter
ended June 30, 2005 from $759,000 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;A&#148;) expenses decreased by $34,000 or 5.1%
for the quarter ended June 30, 2005 compared to the same period of 2004. The decrease is
primarily attributable to personnel-related expenses. The corresponding average employee
base declined to 27 from 28 employees, which represents a 3.6% reduction in overall
workforce. As a percentage of net sales, SG&amp;A increased to 28.5% from 25% for the
three months ended June 30, 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 $42,000 for the quarter ended June 30, 2005 as compared to an operating income
of $97,000 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 June 30, 2005 decreased by $49,000
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 June 30, 2005 as compared to $0 for the
same period last year. (No net income tax provision or benefit was recorded during the
quarters ended June 30, 2005 and 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;Net
loss was $8,000 for the quarter ended June 30, 2005 as compared with $24,000 net income
for the same period last year. </FONT></P>

<!-- MARKER FORMAT-SHEET="Left Head 2 Italic" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Six month Period Ended
June 30, 2005 Compared To The Six month Period Ended June 30, 2004. </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;Net
sales for the six months ended June 30, 2005 were $4,044,000 compared with net sales for
the six months ended June 30, 2004 of $5,138,000, a decrease of $1,094,000 or 21.3%. </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 decreased by $773,000 to $2,957,000 for the six months ended June 30, 2005,
a decrease of 20.7% from the same period in 2004. Consistent with the decrease in net
sales, cost of goods sold decreased, however at a slower rate, resulting in gross profit
decreasing as a percentage of net sales to 26.9% for the first six months of this year
from 27.4% for the same period last year. Gross profit decreased by $321,000 to
$1,087,000 for the six months ended June 30, 2005 from $1,408,000 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;SG&amp;A
expenses decreased by $25,000 or 2.0% for the six months ended June 30, 2005 compared to
the same period in 2004. The decrease is primarily attributable to personnel-related
expenses. As a percentage of net sales, SG&amp;A increased to 30.8% for the six months
ended June 30, 2005 from 24.7% 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;Operating
loss was $159,000 for the six months ended June 30, 2005 as compared to operating income
$137,000 for the same period ended June 30, 2004. 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 six months ended June 30, 2005 decreased by
$99,000 compared to the six months ended June 30, 2004. The decrease is primarily due to
lower outstanding borrowing levels incurred during the current quarter, when compared to
the same period last year. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
net income tax provision or benefit was recorded during the six months ended June 30,
2005 and 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;Net
loss was $137,000 for the six months ended June 30, 2005 compared to a net income of
$34,000 for the same period in 2004, a decrease of $171,000 resulting from the same
reasons discussed above. </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 six months ended June 30, 2005 and 2004 are as follows: </FONT></P>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=600 align="center">
  <TR VALIGN=Bottom>
    <TH valign="top" width="308">&nbsp;</TH>
    <TH COLSPAN=4><font size="1">Six months ended June 30, </font>
      <hr noshade size="1">
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TH valign="top" width="308" align="left"><FONT SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;(Dollars
      in thousands)</FONT> </TH>
    <TH COLSPAN=2><FONT SIZE=1>2005<BR>
      </FONT>
      <hr width=95% size="1" noshade>
    </TH>
    <TH COLSPAN=2><FONT SIZE=1>2004<BR>
      </FONT>
      <hr width=95% size="1" noshade>
    </TH>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT WIDTH=308>&nbsp;</TD>
    <TD ALIGN=center colspan="2" valign="top"><font size=1>(Unaudited)</font></TD>
    <TD ALIGN=center colspan="2" valign="top"><font size=1>(Unaudited)</font>
    </TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT WIDTH=308><FONT SIZE=2>Operating activities</FONT></TD>
    <TD ALIGN=RIGHT WIDTH=82><FONT SIZE=2>$&nbsp;662</FONT></TD>
    <TD ALIGN=LEFT WIDTH=56><FONT SIZE=2>&nbsp;</FONT></TD>
    <TD ALIGN=RIGHT WIDTH=94><FONT SIZE=2>$&nbsp;1,044</FONT></TD>
    <TD ALIGN=LEFT WIDTH=60><FONT SIZE=2>&nbsp;</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="308"><FONT SIZE=2>Investing activities</FONT></TD>
    <TD ALIGN=RIGHT width="82"><FONT SIZE=2>(23</FONT></TD>
    <TD ALIGN=LEFT width="56"><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT width="94"><FONT SIZE=2>(26</FONT></TD>
    <TD ALIGN=LEFT width="60"><FONT SIZE=2>)</FONT></TD>
  </TR>
  <TR VALIGN=Bottom>
    <TD ALIGN=LEFT width="308"><FONT SIZE=2>Financing activities</FONT></TD>
    <TD ALIGN=RIGHT width="82"><FONT SIZE=2>(71</FONT></TD>
    <TD ALIGN=LEFT width="56"><FONT SIZE=2>)</FONT></TD>
    <TD ALIGN=RIGHT width="94"><FONT SIZE=2>(959</FONT></TD>
    <TD ALIGN=LEFT width="60"><FONT SIZE=2>)</FONT></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 $662,000 during the six months ended
June 30, 2005, as compared to $1,044,000 during the same period last year. The overall
decrease was affected by a decrease in inventory of $775,000 during the first six months
of 2005, as compared to a decrease of $1,006,000 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 $23,000 during the six months ended June 30, 2005
compared with cash flows provided by of $26,000 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 $71,000 from $959,000 during the six
months ended June 30, 2005 and 2004, respectively. The decrease was primarily the result
of using operating cash flow of $322,000 for repurchase of Class A Common Stocks and
$664,000 for repayments of notes payable 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. 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>

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<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 - Long-Term Debt. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Subsequent Events </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;As
of July 15, 2005, the Company completely repaid its note payable collateralized by real
property and renewed its revolving line of credit facility provided up to $3 million for
operating purposes with an expiration date of June 17, 2006. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item  3.  Controls and Procedures </FONT></P>

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<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  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the 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>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II.  OTHER INFORMATION </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 1.  Legal Proceedings. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 2.  Changes In Securities and
Small Business Issuer Purchases of Equity Securities. </FONT></P>

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<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 second quarter of 2005 that
were not registered under the Securities Act. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 3.  Defaults Upon Senior
Securities. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 4.  Submission of Matters to a
Vote of Security Holders. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 5.  Other Information. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 6.  Exhibits. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></P>

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<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>

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    <TD WIDTH=56%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
    <TD WIDTH=44%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> TAITRON COMPONENTS
      INCORPORATED </FONT></TD>
</TR>
</TABLE>
<BR>



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    <TD WIDTH=53%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: August
      15, 2005</FONT></TD>
    <TD WIDTH=3%><font face="Times New Roman, Times, Serif" size=2>By: </font></TD>
    <TD WIDTH=44%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> /s/ Stewart
      Wang </FONT>
      <hr noshade size="1">
      <FONT FACE="Times New Roman, Times, Serif" 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>
<BR>



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<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>e22331ex31.htm
<DESCRIPTION>CERTIFICATION
<TEXT>

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    <TD WIDTH=8%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 31</FONT></TD>
    <TD width="2%" align="center"><font face="Times New Roman, Times, Serif" size=2>
      -</font></TD>
    <TD WIDTH=90%><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>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certification </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I, Stewart Wang, certify that: </FONT></P>

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<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>
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<BR>

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<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>

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<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>

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<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>
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<BR>

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<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>

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<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>
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<BR>

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<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>
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<BR>

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<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>

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<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>
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<BR>

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<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>
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<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. </FONT></TD>
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    <TD WIDTH=53%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated August
      15, 2005.</FONT></TD>
    <TD WIDTH=3%><font face="Times New Roman, Times, Serif" size=2>By: </font></TD>
    <TD WIDTH=44%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> /s/ Stewart
      Wang </FONT>
      <hr noshade size="1">
      <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stewart Wang <BR>
      Principal Executive Officer and Principal Financial Officer </FONT></TD>
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<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>3
<FILENAME>e22331ex32.htm
<DESCRIPTION>CERTIFICATION
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    <TD WIDTH=8%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 32
      </FONT></TD>
    <TD width="2%" align="center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-</FONT></TD>
    <TD WIDTH=90%><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>
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<!-- MARKER FORMAT-SHEET="Para Flush 00" FSL="Workstation" --><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 June 30, 2005 of Taitron Components Incorporated. </FONT><!-- 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>

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<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>
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<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>
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    <TD WIDTH=52%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated August
      15 , 2005.</FONT></TD>
    <TD WIDTH=3%><font face="Times New Roman, Times, Serif" size=2>By: </font></TD>
    <TD WIDTH=45%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> /s/ Stewart
      Wang </FONT>
      <hr noshade size="1">
      <FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stewart Wang <BR>
      Principal Executive Officer and Principal Financial Officer </FONT></TD>
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