UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2025

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

For the transition period from __________ to __________

Commission File Number: 0-25844

TAITRON COMPONENTS INCORPORATED

(Exact name of registrant as specified in its charter)

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

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

(661) 257-6060

(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock		TAIT		NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☑	Smaller reporting company ☑
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

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

Classes of common stock		Outstanding on July 31, 2025
Class A		5,258,568
Class B		762,612

TAITRON COMPONENTS INCORPORATED

INDEX

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2
	Condensed Consolidated Statements of Shareholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures	12

PART II - OTHER INFORMATION

Item 1.	Legal proceedings	13
Item 1A.	Risk Factors	13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3.	Defaults Upon Senior Securities	13
Item 4.	Mine Safety Disclosures	13
Item 5.	Other Information	13
Item 6.	Exhibits	14
	Signatures	15

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Condensed Financial Statements (Unaudited)

TAITRON COMPONENTS INCORPORATED

Condensed Consolidated Balance Sheets

	June 30,			December 31,
	2025			2024
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,776,000		$	4,208,000
Accounts receivable, less allowances of $7,000		1,046,000			421,000
Short-term investments (Note 2)		5,512,000			5,179,000
Inventories, less reserves for obsolescence of $5,161,000, and $5,152,000, respectively (Note 3)		2,182,000			2,949,000
Prepaid expenses and other current assets		159,000			122,000
Total current assets		12,675,000			12,879,000
Property and equipment, net		2,917,000			3,029,000
Deferred taxes		1,543,000			1,542,000
Other assets (Note 4)		128,000			186,000
Total assets	$	17,263,000		$	17,636,000

Liabilities and Equity
Current liabilities:
Accounts payable	$	60,000		$	251,000
Accrued liabilities		298,000			822,000
Accrued restructuring reserve		1,579,000			-
Total current liabilities		1,937,000			1,073,000

Commitments and contingencies (Note 6)

Equity:
Shareholders’ equity:
Preferred stock, $0.001 par value. Authorized 5,000,000 shares; None issued or outstanding		-			-
Class A common stock, $0.001 par value. Authorized 20,000,000 shares; 5,258,568 shares issued and outstanding		5,000			5,000
Class B common stock, $0.001 par value. Authorized, issued and outstanding 762,612 shares		1,000			1,000
Additional paid-in capital		11,486,000			11,484,000
Accumulated other comprehensive loss		(73,000	)		(49,000	)
Retained earnings		3,907,000			5,122,000
Total equity		15,326,000			16,563,000
Total liabilities and equity	$	17,263,000		$	17,636,000

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of Contents

TAITRON COMPONENTS INCORPORATED

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Net product revenue	$	1,167,000		$	1,224,000		$	2,249,000		$	2,187,000
Cost of products sold		450,000			562,000			907,000			1,029,000
Gross profit		717,000			662,000			1,342,000			1,158,000

Selling, general and administrative expenses		575,000			583,000			1,135,000			1,153,000
Restructuring and severance expenses		1,680,000			-			1,680,000			-
Operating income (loss)		(1,538,000	)		79,000			(1,473,000	)		5,000

Interest income, net		54,000			77,000			104,000			155,000
Other income (expense), net		1,159,000			257,000			764,000			813,000
Income (loss) before income taxes		(325,000	)		413,000			(605,000	)		973,000

Income tax provision		(2,000	)		(7,000	)		(8,000	)		(15,000	)

Net income (loss)	$	(327,000	)	$	406,000		$	(613,000	)	$	958,000

Net income (loss) per share: Basic	$	(0.05	)	$	0.07		$	(0.10	)	$	0.16
Diluted	$	(0.05	)	$	0.07		$	(0.10	)	$	0.16

Weighted average shares outstanding: Basic		6,021,180			6,021,180			6,021,180			6,021,180
Diluted		6,021,180			6,022,180			6,021,180			6,017,180

Cash dividends declared per common share	$	0.050		$	0.050		$	0.100		$	0.100

Net income (loss)	$	(327,000	)	$	406,000		$	(613,000	)	$	958,000
Other comprehensive income (loss):
Foreign currency translation adjustment		(24,000	)		(36,000	)		(10,000	)		(28,000	)
Comprehensive income (loss)		(351,000	)		370,000			(623,000	)		930,000

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of Contents

TAITRON COMPONENTS INCORPORATED

Condensed Consolidated Statements of Shareholders’ Equity

(Unaudited)

											Accumulated
	Common Stock								Additional		Other
	Class A				Class B				Paid-in		Comprehensive			Retained			Total
	Shares		Amount		Shares		Amount		capital		Loss			Earnings			Equity
Three months ending March 31, 2025 and June 30, 2025 (unaudited)
Balance at December 31, 2024		5,258,568	$	5,000		762,612	$	1,000	$	11,484,000	$	(49,000	)	$	5,122,000		$	16,563,000
Consolidated net loss		-		-		-		-		-		-			(286,000	)	$	(286,000	)
Other comprehensive loss		-		-		-		-		-		(14,000	)		-		$	(14,000	)
Stock based compensation expense		-		-		-		-		1,000		-			-		$	1,000
Cash dividends		-		-		-		-		-		-			(301,000	)	$	(301,000	)
Balance at March 31, 2025		5,258,568	$	5,000		762,612	$	1,000	$	11,485,000	$	(63,000	)	$	4,535,000		$	15,963,000
Consolidated net loss		-		-		-		-		-		-			(327,000	)	$	(327,000	)
Other comprehensive loss		-		-		-		-		-		(10,000	)		-		$	(10,000	)
Stock based compensation expense		-		-		-		-		1,000		-			-		$	1,000
Cash dividends		-		-		-		-		-		-			(301,000	)	$	(301,000	)
Balance at June 30, 2025		5,258,568	$	5,000		762,612	$	1,000	$	11,486,000	$	(73,000	)	$	3,907,000		$	15,326,000

Three months ending March 31, 2024 and June 30, 2024 (unaudited)
Balance at December 31, 2023		5,233,568	$	5,000		762,612	$	1,000	$	11,474,000	$	(61,000	)	$	5,424,000		$	16,843,000
Consolidated net income		-		-		-		-		-		-			552,000		$	552,000
Other comprehensive income		-		-		-		-		-		8,000			-		$	8,000
Stock based compensation expense		-		-		-		-		4,000		-			-		$	4,000
Cash dividends		-		-		-		-		-		-			(301,000	)	$	(301,000	)
Balance at March 31, 2024		5,233,568	$	5,000		762,612	$	1,000	$	11,478,000	$	(53,000	)	$	5,675,000		$	17,106,000
Consolidated net income		-		-		-		-		-		-			406,000		$	406,000
Other comprehensive loss		-		-		-		-		-		(36,000	)		-		$	(36,000	)
Stock based compensation expense		-		-		-		-		3,000		-			-		$	3,000
Cash dividends		-		-		-		-		-		-			(301,000	)	$	(301,000	)
Balance at June 30, 2024		5,233,568	$	5,000		762,612	$	1,000	$	11,481,000	$	(89,000	)	$	5,780,000		$	17,178,000

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of Contents

TAITRON COMPONENTS INCORPORATED

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
	2025			2024
Operating activities:
Net income (loss)	$	(613,000	)	$	958,000
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization		125,000			76,000
Stock based compensation		2,000			7,000
Deferred income taxes		(1,000	)		(2,000	)
Changes in values of marketable securities		(333,000	)		(1,100,000	)
Changes in assets and liabilities:
Accounts receivable		(567,000	)		(327,000	)
Inventories		767,000			192,000
Prepaid expenses and other current assets		(37,000	)		119,000
Accounts payable		(191,000	)		(6,000	)
Accrued liabilities		(524,000	)		(259,000	)
Accrued restructuring reserve		1,579,000			-
Other assets and liabilities		(5,000	)		-
Total adjustments		815,000			(1,300,000	)
Net cash provided by (used for) operating activities		202,000			(342,000	)

Investing activities:
Acquisition of property and equipment		(8,000	)		(228,000	)
Net cash provided by (used for) investing activities		(8,000	)		(228,000	)

Financing activities:
Dividend payments		(602,000	)		(602,000	)
Net cash used for financing activities		(602,000	)		(602,000	)

Impact of exchange rates on cash		(24,000	)		(28,000	)

Net decrease in cash and cash equivalents		(432,000	)		(1,200,000	)
Cash and cash equivalents, beginning of period		4,208,000			6,205,000
Cash and cash equivalents, end of period	$	3,776,000		$	5,005,000

Supplemental disclosures of cash flow information:
Cash paid for income taxes, net	$	2,000		$	203,000

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of Contents

TAITRON COMPONENTS INCORPORATED

Notes to Condensed Consolidated Financial Statements (Unaudited)

1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Overview of Business

We are primarily a supplier of original designed and manufactured (“ODM”) electronic components (“ODM Components”) with our product offerings ranging from discrete semiconductors through small electronic devices. Our products include value-added engineering and turn-key solutions, focusing on providing contract electronic manufacturers (“CEMs”) and original equipment manufacturers (“OEMs”) with ODM products for their multi-year turn-key projects (“ODM Projects”). We also distribute brand name electronic components with a vast inventory available on hand. We are incorporated in California and were originally formed in 1989. We maintain divisions in Taiwan and China which were established in 1996 and 2005, respectively.

Basis of Presentation

The unaudited condensed consolidated interim financial statements include the accounts of the Company and all wholly owned divisions. All significant intercompany accounts and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature and considered necessary for a fair statement of its financial condition and results of operations for the interim periods presented in this Quarterly Report on Form 10-Q have been included. Operating results for the interim periods are not necessarily indicative of financial results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The Company operates as a single reportable segment and there have been no changes in the basis of segmentation since the December 31, 2024, Form 10-K.

Use of Estimates

In preparing these financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amount reported as revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s condensed consolidated financial statements relate to the allowance for sales returns, doubtful accounts, inventory reserves, accrued liabilities and deferred income taxes.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts. This guidance is effective for annual periods beginning after December 15, 2024, which will be the Company’s fiscal year 2025, with early adoption permitted. The adoption is expected to enhance the Company’s Notes to the Consolidated Financial Statements. The Company is currently evaluating the impact of the ASU on its Annual Report.

In November 2024, the FASB issued ASU 2024-03 “Disaggregation of Income Statement Expenses,” which requires the Company to disaggregate key expense categories such as employee compensation, depreciation and intangible asset amortization within its financial statements. ASU 2024-03 is effective for annuals periods beginning with the Company’s fiscal year 2027, and interim periods within the Company’s fiscal year 2028, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its Notes to the Consolidated Financial Statements.

Table of Contents

Revenue recognition

Revenue is recognized at the point at which control of the underlying products are transferred to the customer. Satisfaction of our performance obligations occur upon the transfer of control of products, either from our facilities or directly from suppliers to customers. We consider customer purchase orders to be the contracts with a customer. All revenue is generated from contracts with customers.

In determining the transaction price, we evaluate whether the price is subject to refund or adjustment to determine the net consideration to which we expect to receive.

Taxes assessed by a governmental authority on revenue-producing transactions are excluded from revenue.

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of products sold.

Based upon the nature of our contracts with customers and our performance obligations within those contracts, we have no contract assets or liabilities as of June 30, 2025 and December 31, 2024.

Nature of products

We are primarily a supplier of original designed and manufactured (“ODM”) products that include value-added engineering and turn-key solutions. The following is a description of major products lines from which we generate our revenue:

ODM Projects - Our custom made small devices for original equipment manufacturers (“OEMs”) and contract electronic manufacturers (CEMs) in their multi-year turn-key projects and marketed in specific industries such as: wild animal feeders, timers for DC motors, public street light controllers, and battery chargers.

ODM Components - Our private labeled electronic components.

Distribution Components - Our name brand electronic components.

Disaggregation of revenue

In the following table, revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition.

	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Primary geographical markets:
United States	$	1,152,000	$	1,120,000	$	2,202,000	$	2,014,000
Asia		10,000		101,000		40,000		168,000
Other		5,000		3,000		7,000		5,000
		1,167,000		1,224,000		2,249,000		2,187,000
Major product lines:
ODM projects	$	1,003,000	$	852,000	$	1,907,000	$	1,530,000
ODM components		160,000		370,000		336,000		652,000
Distribution components		4,000		2,000		6,000		5,000
		1,167,000		1,224,000		2,249,000		2,187,000
Timing of revenue recognition:
Products transferred at a point in time	$	1,167,000	$	1,224,000	$	2,249,000	$	2,187,000

Table of Contents

2 – SHORT-TERM INVESTMENTS

Short-term investments, consisting principally of marketable U.S. equity securities, are classified as short-term based on the nature of the securities and their availability for use in current operations. Measurement is based on fair value with gains and losses recognized in other income/(expense), net.

3 – INVENTORY

Inventory – Inventory, consisting principally of products held for resale, is recorded at the lower of cost (determined using the first in-first out method) and net realizable value. We had inventory balances in the amount of $2,182,000 and $2,949,000 at June 30, 2025 and December 31, 2024, respectively, which is presented net of valuation allowances of $5,161,000 and $5,152,000, respectively. We evaluate inventories to identify excess, high-cost, slow-moving or other factors rendering inventories as unmarketable at normal profit margins. Due to the complexity of managing and maintaining a large inventory of product offerings, estimates are made regarding adjustments to the carrying values of inventories. Based on our assumptions about future demand and market conditions, inventories are carried at the lower of cost and net realizable value. If our assumptions about future demand change, or market conditions are less favorable than those projected, additional write-downs of inventories or valuation allowances may be required. In any case, actual amounts could be different from those estimated.

4 – OTHER ASSETS

	Receivable - Zowie Technology			Other		Other Assets Total

Balance at December 31, 2024	$	186,000		$	-	$	186,000
Other changes		(58,000	)		-		(58,000	)
Balance at June 30, 2025	$	128,000		$	-	$	128,000

In prior filings the Company accounted for its receivable from preferred share repurchase with Zowie Technology (the “Zowie Repurchase”) under ASC 321 as an equity security without a readily determinable fair value. During the quarter ended June 30, 2025, management determined that the Zowie repurchase represents a contractual receivable rather than an equity security because (i) it is repayable in cash at the Company’s election and (ii) Zowie’s conversion option is not substantive. The receivable has an annual interest rate of 7%. Accordingly, the Company accounts for the receivable under ASC 310 and now evaluates it for credit losses under ASC 326. Management concluded that the reclassification is immaterial to the financial statements; therefore, prior-period amounts have not been restated. The reclassification had no impact on total assets, liabilities, shareholders’ equity, net income.

5 – SHARE BASED COMPENSATION

Accounting for stock options issued to employees measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the award. Outstanding options to purchase Class A common stock (“the Options”) vest in three equal annual installments beginning one (1) year from the date of grant and are subject to termination provisions as defined in our 2005 Stock Incentive Plan and 2018 Omnibus Incentive Plan (collectively referred to as “the Plans”). The Options activity during the three months ended June 30, 2025 is as follows:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Years Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding at December 31, 2024		201,600	$	3.22		5.2	$	30,000
Granted		-
Forfeited		-
Outstanding at June 30, 2025		201,600	$	3.22		4.7	$	14,000
Exercisable at June 30, 2025		188,200	$	3.25		4.5	$	14,000

At June 30, 2025, the range of individual outstanding weighted average exercise prices was $2.63 to $3.95 and the unrecognized compensation expense was approximately $2,000. Stock based compensation recorded in the three months ended June 30, 2025 and June 30, 2024 was $1,000 and $4,000, respectively, and is included in selling, general and administrative expenses on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

Table of Contents

6 – RESTRUCTURING AND SEVERANCE COMPENSATION EXPENSE

Background

On June 30, 2025, the Company’s Board of Directors approved a restructuring initiative that included a revision to the Company’s severance policy and compensation structure. Effective July 1, 2025, the Company implemented a reduction in base salaries for all employees by approximately 30% and amended the severance policy to provide one (1) week of severance pay per year of service (versus one (1) month previously). In connection with this amendment, the Company approved a one-time severance compensation payment due to employees based on service accrued through June 30, 2025, calculated in accordance with the prior severance policy.

The severance payment was based on service accrued under the prior severance policy in effect through June 30, 2025, which was replaced by a revised policy effective July 1, 2025 offering reduced benefits on a prospective-only basis.

Summary of Costs Incurred

As a result of this action, the Company recognized a one-time charge of approximately $1.6 million in the three months ended June 30, 2025. The amount accrued is the total cost that was approved related to the restructuring initiative. This amount reflects severance obligations earned through June 30, 2025, and includes payments due to all eligible employees and executive officers.

The restructuring charge was fully accrued in accrued restructuring reserve in the accompanying consolidated balance sheets in the second quarter of 2025 and primarily consists of termination benefits, as defined under ASC 420-10, Exit or Disposal Cost Obligations. The Company expects that the majority of these severance payments will be disbursed in the first quarter of 2026. The restructuring charge is recorded in restructuring and severance expense on the accompanying consolidated statements of operations.

Liability Rollforward Table

The following table summarizes the activity related to the severance accrual for the three months ended June 30, 2025:

	Severance Liability

Balance at March 31, 2025	$	-
Accrual recognized		1,579,000
Cash payments made		-
Balance at June 30, 2025	$	1,579,000

7 – COMMITMENTS AND CONTINGENCIES

Inventory Purchasing

Outstanding commitments to purchase inventory from suppliers aggregated $64,000 and $400,000 as of June 30, 2025 and December 31, 2024, respectively. Of our outstanding purchase commitment as of June 30, 2025, approximately $40,000 is due in the next nine months. The remainder is due in the year ended December 31, 2026 or later, which the timing is dependent on additional customer orders.

Table of Contents

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

The following discussion should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in Item 1 of Part 1 of this quarterly report on Form 10-Q, as well as our most recent annual report on Form 10-K for the year ended December 31, 2024.

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect to the financial condition, results of operations and business of the Company. Forward-looking statements usually are denoted by words or phrases such as “believes,” “expects,” “projects,” “estimates,” “anticipates,” “will likely result” or similar expressions. We wish to caution readers that all forward-looking statements are necessarily speculative and not to place undue reliance on forward-looking statements, which speak only as of the date made, and to advise readers that actual results could vary due to a variety of risks and uncertainties, including the risks described in our Annual Report on Form 10-K for the year ended December 31, 2024 and other reports we file with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update forward-looking statements.

References to “Taitron,” the “Company,” “we,” “our” and “us” refer to Taitron Components Incorporated and its wholly owned divisions, unless the context otherwise requires.

Critical Accounting Policies and Estimates

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

Revenue Recognition – Revenue is recognized upon shipment of the products, which is when legal transfer of title occurs and control of the product is transferred to the customer. Reserves for sales allowances and customer returns are established based upon historical experience and our estimates of future returns. Sales returns for each of the three months ended June 30, 2025 and 2024 were $0. The allowance for sales returns and doubtful accounts at June 30, 2025 and December 31, 2024 aggregated $7,000.

Inventory – Inventory, consisting principally of products held for resale, is recorded at the lower of cost (determined using the first in-first out method) and net realizable value. We had inventory balances in the amount of $2,182,000 and $2,949,000 at June 30, 2025 and December 31, 2024, respectively, which is presented net of valuation allowances of $5,161,000 and $5,152,000, respectively. We evaluate inventories to identify excess, high-cost, slow-moving or other factors rendering inventories as unmarketable at normal profit margins. Due to the large number of transactions and the complexity of managing and maintaining a large inventory of product offerings, estimates are made regarding adjustments to the cost of inventories. 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.

Deferred Taxes – 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 if deferred tax assets could be realized. We also consider the weight of both positive and negative evidence in determining whether a valuation allowance is needed.

Table of Contents

Overview

We are primarily focused on supplying ODM products for our OEM customer’s multi-year turn-key projects. We also distribute discrete semiconductors, commodity Integrated Circuits (ICs), optoelectronic devices and passive components to other electronic distributors, CEMs and OEMs, who incorporate them in their products.

Our core strategy has shifted to primarily focus on higher margin ODM Projects that require custom products designed for specific applications to OEM customers, and away from actively marketing our superstore strategy of maintaining a vast quantity of electronic components to fill customer orders immediately from available stock held in inventory. As a result, we expect our components inventory will be more passively marketed and distributed online for clearance through our internet sales portal, however at potentially lower rates due to the pricing pressures normally attributed with online shopping.

In accordance with generally accepted accounting principles, we have classified inventory as a current asset in our June 30, 2025, condensed consolidated financial statements representing approximately 17% of current assets and 13% of total assets. However, if all or a substantial portion of the inventory was required to be immediately liquidated, the inventory would not be as readily marketable or liquid as other items included or classified as a current asset, such as cash. We cannot assure you that demand in the discrete semiconductor market will increase and that market conditions will improve. Therefore, it is possible that further declines in our carrying values of inventory may result.

Our gross profit margins are subject to a number of factors, including product demand, provisions for inventory reserves, our ability to purchase inventory at favorable prices, our sales product mix, the imposition of tariffs, import and export controls, changes in governmental policies and the relative strength of the U.S. dollar.

Results of Operations

Significant Risks and Uncertainties

See the Risk Factors included in our Annual report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission as well as the additional Risk Factor included in Part II—Item 1A of this quarterly report.

Second quarter of 2025 versus 2024.

Net sales in the second quarter of 2025 totaled $1,167,000 versus $1,224,000 in the comparable period for 2024, a decrease of $57,000 or 4.7% over the same period last year. The decrease was primarily driven by a decrease of ODM components sales volume.

Gross profit for the second quarter of 2025 was $717,000 versus $662,000 in the comparable period for 2024, and gross margin percentage of net sales was 61.4% in the second quarter of 2025 versus 54.1% in the comparable period for 2024. The approximately 7.3% gross margin percentage increase was driven by selling higher margin products.

Selling, general and administrative expenses in the second quarter of 2025 totaled $575,000 versus $583,000 in the comparable period for 2024.

Restructuring expenses of $1,680,000 was driven by one-time severance compensation payments (see Note 6 – Restructuring and Severance Compensation Expense).

Other income, net, in the second quarter of 2025 was $1,159,000 versus $257,000 in the comparable period for 2024. Other income was primarily $727,000 from short-term investments and $426,000 from the recovery of excess tariff refunds.

Income tax provision was $2,000 for the second quarter of 2025 versus $7,000 in the comparable period for 2024.

Net loss was $327,000 for the second quarter of 2025 versus income of $406,000 in the comparable period for 2024, a decrease of $733,000 resulting from the reasons discussed above.

Table of Contents

Six Months Ended June 30, 2025 versus Six Months Ended June 30, 2024.

Net sales in the six months ended June 30, 2025 was $2,249,000 versus $2,187,000 in the comparable period for 2024, an increase of $62,000 or 2.8% over the same period last year. The increase was driven by an increase of ODM project and ODM components sales volume.

Gross profit for the six months ended June 30, 2025 was $1,342,000 versus $1,158,000 in the comparable period for 2024, and gross margin percentage of net sales was approximately 59.7% for the six months ended June 30, 2023 and 52.9% for 2024, respectively.

Selling, general and administrative expenses in the six months ended June 30, 2025 totaled $1,135,000 versus $1,153,000 in the comparable period for 2024.

Restructuring expenses of $1,680,000 was driven by one-time severance compensation payments (see Note 6 – Restructuring and Severance Compensation Expense).

Other income, net, in the six months ended June 30, 2025 was $764,000 versus $813,000 in the comparable period for 2024. Other income was primarily $321,000 from short-term investments and $426,000 from the recovery of excess tariff refunds.

Income tax provision was $8,000 for the six months ended June 30, 2025 versus $15,000 in the comparable period for 2024.

Net loss was $613,000 for the six months ended June 30, 2025 versus net income of $958,000 in the comparable period for 2024, a decrease of $1,680,000 resulting from the reasons discussed above (see Note 6 – Restructuring and Severance Compensation Expense).

Liquidity and Capital Resources

We historically have satisfied our liquidity requirements through cash generated from operations, short-term commercial loans, subordinated related party promissory notes and issuance of equity securities.

Cash flows provided by operating activities were $202,000 as opposed to ($342,000) used for in the six months ended June 30, 2025 and 2024, respectively. The increase of $544,000 in cash flows provided by operations compared with the prior period resulted from changes in operating assets and liabilities, primarily from accounts payable, inventory and restructuring expenses of $1,579,000 (see Note 6 – Restructuring and Severance Compensation Expense).

Cash flows used for investing activities were ($8,000) and ($228,000) in the six months ended June 30, 2025 and 2024, respectively.

Cash flows used for financing activities were $602,000 for the six months ended June 30, 2025 and 2024.

We believe that funds generated from operations, existing cash balances, short term investments and, if necessary, related party short-term loans, are likely to be sufficient to finance our working capital and capital expenditure requirements for the foreseeable future. If these funds are not sufficient, we may secure new sources of 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.

Table of Contents

Inventory is included and classified as a current asset. As of June 30, 2025, inventory represented approximately 17% of current assets and 13% of total assets. However, it is likely to take over one (1) year for the inventory to turn and therefore is likely not saleable within this time frame. Hence, inventory would not be as readily marketable or liquid as other items included in current assets, such as cash.

On June 30, 2025, the Board of Directors approved a modification of our dividend policy effectively reducing quarterly installment amounts by 30%. Under our modified policy, we will target a cash dividend to our stockholders in the amount of $0.14 per share per annum, payable in equal $0.035 per share quarterly installments. Dividend declarations and the establishment of record and payment dates for such dividend payments, if any, remain subject to the Board of Directors’ continuing determination that the dividend policy is in the best interests of our stockholders. The dividend policy may be suspended or cancelled at the discretion of the Board of Directors at any time.

Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements that have, or are likely to have, a current or future material effect on our operations other than our outstanding commitments to purchase inventory (see Item 1 - Note 6 – Commitments and Contingencies).

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

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

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

Table of Contents

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

In the ordinary course of business, we may become involved in legal proceedings from time to time. As of the date of this report, we are not aware of any material pending legal proceedings.

Item 1A. Risk Factors.

The discussion of our business and operations should be read together with the risk factor set forth below and the risk factors contained in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. As of August 14, 2025, there have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2024.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Table of Contents

Item 6. Exhibits.

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

Filed herewith.

Furnished herewith.

Table of Contents

SIGNATURES

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

	TAITRON COMPONENTS INCORPORATED

Date: August 14, 2025	/s/ Stewart Wang
	Stewart Wang,
	Chief Executive Officer and President
	(Principal Executive Officer)

	/s/ David Vanderhorst
	David Vanderhorst
	Chief Financial Officer and Secretary
	(Principal Financial Officer)

0000942126 false Q2 --12-31 0000942126 2025-01-01 2025-06-30 0000942126 us-gaap:CommonClassAMember 2025-07-31 0000942126 us-gaap:CommonClassBMember 2025-07-31 0000942126 2025-06-30 0000942126 2024-12-31 0000942126 us-gaap:CommonClassAMember 2025-06-30 0000942126 us-gaap:CommonClassAMember 2024-12-31 0000942126 us-gaap:CommonClassBMember 2025-06-30 0000942126 us-gaap:CommonClassBMember 2024-12-31 0000942126 2025-04-01 2025-06-30 0000942126 2024-04-01 2024-06-30 0000942126 2024-01-01 2024-06-30 0000942126 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2024-12-31 0000942126 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2024-12-31 0000942126 us-gaap:AdditionalPaidInCapitalMember 2024-12-31 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-12-31 0000942126 us-gaap:RetainedEarningsMember 2024-12-31 0000942126 us-gaap:RetainedEarningsMember 2025-01-01 2025-03-31 0000942126 2025-01-01 2025-03-31 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2025-01-01 2025-03-31 0000942126 us-gaap:AdditionalPaidInCapitalMember 2025-01-01 2025-03-31 0000942126 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2025-03-31 0000942126 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2025-03-31 0000942126 us-gaap:AdditionalPaidInCapitalMember 2025-03-31 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2025-03-31 0000942126 us-gaap:RetainedEarningsMember 2025-03-31 0000942126 2025-03-31 0000942126 us-gaap:RetainedEarningsMember 2025-04-01 2025-06-30 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2025-04-01 2025-06-30 0000942126 us-gaap:AdditionalPaidInCapitalMember 2025-04-01 2025-06-30 0000942126 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2025-06-30 0000942126 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2025-06-30 0000942126 us-gaap:AdditionalPaidInCapitalMember 2025-06-30 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2025-06-30 0000942126 us-gaap:RetainedEarningsMember 2025-06-30 0000942126 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2023-12-31 0000942126 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2023-12-31 0000942126 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-12-31 0000942126 us-gaap:RetainedEarningsMember 2023-12-31 0000942126 2023-12-31 0000942126 us-gaap:RetainedEarningsMember 2024-01-01 2024-03-31 0000942126 2024-01-01 2024-03-31 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-01-01 2024-03-31 0000942126 us-gaap:AdditionalPaidInCapitalMember 2024-01-01 2024-03-31 0000942126 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2024-03-31 0000942126 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2024-03-31 0000942126 us-gaap:AdditionalPaidInCapitalMember 2024-03-31 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-03-31 0000942126 us-gaap:RetainedEarningsMember 2024-03-31 0000942126 2024-03-31 0000942126 us-gaap:RetainedEarningsMember 2024-01-01 2024-06-30 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-01-01 2024-06-30 0000942126 us-gaap:AdditionalPaidInCapitalMember 2024-01-01 2024-06-30 0000942126 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2024-06-30 0000942126 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2024-06-30 0000942126 us-gaap:AdditionalPaidInCapitalMember 2024-06-30 0000942126 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-06-30 0000942126 us-gaap:RetainedEarningsMember 2024-06-30 0000942126 2024-06-30 0000942126 country:US 2025-04-01 2025-06-30 0000942126 country:US 2024-04-01 2024-06-30 0000942126 country:US 2025-01-01 2025-06-30 0000942126 country:US 2024-01-01 2024-06-30 0000942126 srt:AsiaMember 2025-04-01 2025-06-30 0000942126 srt:AsiaMember 2024-04-01 2024-06-30 0000942126 srt:AsiaMember 2025-01-01 2025-06-30 0000942126 srt:AsiaMember 2024-01-01 2024-06-30 0000942126 tait:OtherMember 2025-04-01 2025-06-30 0000942126 tait:OtherMember 2024-04-01 2024-06-30 0000942126 tait:OtherMember 2025-01-01 2025-06-30 0000942126 tait:OtherMember 2024-01-01 2024-06-30 0000942126 tait:ODMProjectsMember 2025-04-01 2025-06-30 0000942126 tait:ODMProjectsMember 2024-04-01 2024-06-30 0000942126 tait:ODMProjectsMember 2025-01-01 2025-06-30 0000942126 tait:ODMProjectsMember 2024-01-01 2024-06-30 0000942126 tait:ODMComponentsMember 2025-04-01 2025-06-30 0000942126 tait:ODMComponentsMember 2024-04-01 2024-06-30 0000942126 tait:ODMComponentsMember 2025-01-01 2025-06-30 0000942126 tait:ODMComponentsMember 2024-01-01 2024-06-30 0000942126 tait:DistributionComponentsMember 2025-04-01 2025-06-30 0000942126 tait:DistributionComponentsMember 2024-04-01 2024-06-30 0000942126 tait:DistributionComponentsMember 2025-01-01 2025-06-30 0000942126 tait:DistributionComponentsMember 2024-01-01 2024-06-30 0000942126 tait:ProductsTransferredAtAPointInTimeMember 2025-04-01 2025-06-30 0000942126 tait:ProductsTransferredAtAPointInTimeMember 2024-04-01 2024-06-30 0000942126 tait:ProductsTransferredAtAPointInTimeMember 2025-01-01 2025-06-30 0000942126 tait:ProductsTransferredAtAPointInTimeMember 2024-01-01 2024-06-30 0000942126 tait:ZowieTechnologyMember 2024-12-31 0000942126 us-gaap:OtherInvestmentsMember 2024-12-31 0000942126 tait:ZowieTechnologyMember 2025-01-01 2025-06-30 0000942126 us-gaap:OtherInvestmentsMember 2025-01-01 2025-06-30 0000942126 tait:ZowieTechnologyMember 2025-06-30 0000942126 us-gaap:OtherInvestmentsMember 2025-06-30 0000942126 tait:StockIncentivePlan2018Member 2025-01-01 2025-06-30 0000942126 srt:MinimumMember 2025-06-30 0000942126 srt:MaximumMember 2025-06-30 0000942126 2024-01-01 2024-12-31 0000942126 us-gaap:OneTimeTerminationBenefitsMember 2025-01-01 2025-06-30 0000942126 us-gaap:EmployeeSeveranceMember 2025-03-31 0000942126 us-gaap:EmployeeSeveranceMember 2025-04-01 2025-06-30 0000942126 us-gaap:EmployeeSeveranceMember 2025-06-30 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure

TAITRON COMPONENTS INC 10-Q