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 September 30, 2023 or ☐ 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) (State or other jurisdiction of incorporati ...

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, 2023 or UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☐ 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) (State or other jurisdiction of incorporation or ...

TAITRON COMPONENTS INCORPORATED (Exact name of registrant as specified in its charter) 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 March 31, 2023 or ☐ 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 (State or other jurisdiction of incorporation o ...

[Part I](index=4&type=section&id=PART%20I) [Business](index=4&type=section&id=Item%201%2E%20Business) The company supplies Original Designed and Manufactured (ODM) products, shifting focus from its prior "superstore" distribution model - The company's core strategy has shifted to primarily focus on **ODM Products**, which require custom services for OEM customers, and away from its "superstore" strategy of maintaining a large inventory of electronic components[15](index=15&type=chunk)[21](index=21&type=chunk)[88](index=88&type=chunk) ODM Product Sales | Year | ODM Product Sales | | :--- | :--- | | 2022 | $8,282,000 | | 2021 | $8,434,000 | - The company experiences significant customer concentration, with its two largest customers accounting for approximately **70% of net sales in 2022**, an increase from 59% in 2021[22](index=22&type=chunk) - A large portion of the products distributed by the company are **manufactured in Asia**, exposing the business to risks associated with foreign trade[32](index=32&type=chunk) [Risk Factors](index=7&type=section&id=Item%201A%2E%20Risk%20Factors) The company faces material risks from supplier and customer concentration, inventory obsolescence, tariffs, and reliance on key executives - The company depends heavily on **suppliers in Asia** for components and manufacturing, and a failure to deliver could negatively affect operations[39](index=39&type=chunk)[40](index=40&type=chunk) - A small number of customers account for a significant portion of business; in 2022, **two customers accounted for 46% and 24% of net sales**[46](index=46&type=chunk) - The shift away from the "superstore" strategy could lead to declines in the value of the company's existing inventory, which was **$3.9 million at year-end 2022, net of a $5.07 million valuation allowance**[49](index=49&type=chunk) - The company is impacted by **U.S. tariffs on certain products imported from China**, which could adversely affect operating profits and customer demand[50](index=50&type=chunk) - The company's success is **highly dependent on its senior management team**, and the loss of key executives could adversely affect the business[58](index=58&type=chunk) [Unresolved Staff Comments](index=14&type=section&id=Item%201B%2E%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments [Properties](index=14&type=section&id=Item%202%2E%20Properties) The company owns its primary facilities in California, Shanghai, and Taipei, which management believes are adequate for the foreseeable future - Owns a **50,000 sq. ft. headquarters** and distribution facility in Valencia, California[66](index=66&type=chunk) - Owns a **4,500 sq. ft. office in Shanghai**, China, and a **2,500 sq. ft. office in Taipei**, Taiwan[67](index=67&type=chunk) [Legal Proceedings](index=14&type=section&id=Item%203%2E%20Legal%20Proceedings) As of the report date, the company is not aware of any material pending legal proceedings [Mine Safety Disclosures](index=14&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This section is not applicable [Part II](index=15&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=15&type=section&id=Item%205%2E%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on Nasdaq, and it maintains a policy of paying quarterly dividends, which were increased in 2022 - The company's Class A common stock is traded on the Nasdaq Capital Market with the symbol **"TAIT"**[72](index=72&type=chunk) - In 2022, the company paid quarterly dividends, increasing the rate to **$0.05 per share** in Q4 and paying a **special one-time dividend of $0.10 per share**[74](index=74&type=chunk)[75](index=75&type=chunk) Equity Compensation Plan Information | Plan Category | Number of securities to be issued upon exercise | Weighted-average exercise price | Number of securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 224,567 | $3.10 | 521,767 | [[Reserved]](index=15&type=section&id=Item%206%2E%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%207%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales decreased slightly in 2022, but improved gross margins and a significant tax benefit drove a surge in net income [Critical Accounting Policies and Estimates](index=16&type=section&id=7%2E1%20Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant estimates for inventory valuation, revenue recognition, and deferred taxes - Inventory valuation requires significant estimates; the company increased its inventory reserves by **$180,000 in 2022** and held a total reserve of **$5,069,000** at year-end[85](index=85&type=chunk) - The company fully reversed the **$1,915,000 valuation allowance** against its net deferred tax assets during 2022 due to its recent history of profitability[86](index=86&type=chunk) [Results of Operations](index=17&type=section&id=7%2E2%20Results%20of%20Operations) Net sales decreased 2.5% in 2022, while gross profit, operating income, and net income all increased significantly Year-over-Year Performance Comparison | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $8,423,000 | $8,643,000 | -2.5% | | Gross Profit | $4,393,000 | $4,121,000 | +6.6% | | Gross Margin | 52.2% | 47.7% | +4.5 p.p. | | Operating Income | $2,235,000 | $2,092,000 | +6.8% | | Net Income | $3,208,000 | $2,010,000 | +59.6% | - The decrease in net sales was primarily attributed to **lower demand in ODM Projects** due to fluctuating customer project life cycles[91](index=91&type=chunk) - The income tax line shifted from a $388,000 provision in 2021 to a **$1,382,000 benefit in 2022**, mainly due to the reversal of the deferred tax asset valuation allowance[94](index=94&type=chunk) [Liquidity and Capital Resources](index=17&type=section&id=7%2E3%20Liquidity%20and%20Capital%20Resources) The company generated strong operating cash flow in 2022 and believes its existing capital is sufficient for future requirements Summary of Cash Flows | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Operating activities | $1,691,000 | $1,741,000 | | Investing activities | $(968,000) | $(1,523,000) | | Financing activities | $(1,495,000) | $(889,000) | - The increase in cash used for financing activities was due to **dividend payments of $1,703,000 in 2022** compared to $965,000 in 2021[98](index=98&type=chunk) - Management notes that inventory, representing **22.8% of total assets**, is not readily liquid and is likely to take over one year to turn[100](index=100&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=18&type=section&id=Item%207A%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable [Financial Statements and Supplementary Data](index=19&type=section&id=Item%208%2E%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements, with the auditor highlighting inventory reserves as a critical audit matter [Report of Independent Registered Public Accounting Firm](index=20&type=section&id=8%2E1%20Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion, identifying the assessment of inventory reserves as a critical audit matter - The auditor issued an **unqualified opinion** on the consolidated financial statements[109](index=109&type=chunk) - The assessment of **inventory reserves for slow-moving or obsolete stock** was identified as a critical audit matter[115](index=115&type=chunk) [Consolidated Balance Sheets](index=22&type=section&id=8%2E2%20Consolidated%20Balance%20Sheets) Total assets remained stable in 2022, while total liabilities decreased significantly and shareholders' equity increased Consolidated Balance Sheet Highlights (as of Dec 31) | Account | 2022 | 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $5,217,000 | $5,974,000 | | Inventories, net | $3,900,000 | $5,261,000 | | Total Assets | $17,137,000 | $17,122,000 | | Accounts payable | $211,000 | $1,813,000 | | Total Liabilities | $1,001,000 | $2,737,000 | | Total Equity | $16,136,000 | $14,385,000 | [Consolidated Statements of Operations](index=23&type=section&id=8%2E3%20Consolidated%20Statements%20of%20Operations) The company reported slightly lower revenue in 2022 but achieved substantially higher net income and diluted EPS Consolidated Statement of Operations Highlights | Account | 2022 | 2021 | | :--- | :--- | :--- | | Net product revenue | $8,423,000 | $8,643,000 | | Gross profit | $4,393,000 | $4,121,000 | | Operating income | $2,235,000 | $2,092,000 | | Net income | $3,208,000 | $2,010,000 | | Diluted EPS - Class A | $0.53 | $0.34 | [Notes to Consolidated Financial Statements](index=26&type=section&id=8%2E4%20Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant customer and supplier concentrations, revenue disaggregation, and geographic operations - **Customer Concentration**: In 2022, two customers accounted for **46% and 24% of net sales**, and one customer represented 78% of trade accounts receivable at year-end[135](index=135&type=chunk)[136](index=136&type=chunk) - **Supplier Concentration**: Two suppliers accounted for approximately **49.1% of net purchases** in 2022[134](index=134&type=chunk) Revenue by Product Line (2022) | Product Line | Revenue | | :--- | :--- | | ODM projects | $5,986,000 | | ODM components | $2,296,000 | | Distribution components | $141,000 | Revenue by Geography (2022) | Geography | Revenue | | :--- | :--- | | United States | $8,099,000 | | Asia | $298,000 | | Other | $26,000 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=37&type=section&id=Item%209%2E%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) None reported [Controls and Procedures](index=37&type=section&id=Item%209A%2E%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal controls over financial reporting were effective - Management concluded that **disclosure controls and procedures were effective** as of the end of the period[190](index=190&type=chunk) - Management evaluated the internal control over financial reporting and concluded that **it was effective** as of December 31, 2022[193](index=193&type=chunk) [Other Information](index=37&type=section&id=Item%209B%2E%20Other%20Information) None reported [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=37&type=section&id=Item%209C%2E%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) None reported [Part III](index=38&type=section&id=PART%20III) This section incorporates information by reference from the company's definitive proxy statement, to be filed separately [Directors, Executive Officers and Corporate Governance](index=38&type=section&id=Item%2010%2E%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The required information is incorporated by reference from the company's definitive proxy statement [Executive Compensation](index=38&type=section&id=Item%2011%2E%20Executive%20Compensation) The required information is incorporated by reference from the company's definitive proxy statement [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=38&type=section&id=Item%2012%2E%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The required information is incorporated by reference from the company's definitive proxy statement [Certain Relationships, Related Transactions and Director Independence](index=38&type=section&id=Item%2013%2E%20Certain%20Relationships%2C%20Related%20Transactions%20and%20Director%20Independence) The required information is incorporated by reference from the company's definitive proxy statement [Principal Accounting Fees and Services](index=38&type=section&id=Item%2014%2E%20Principal%20Accounting%20Fees%20and%20Services) The required information is incorporated by reference from the company's definitive proxy statement [Part IV](index=39&type=section&id=PART%20IV) [Exhibits, Financial Statement Schedules](index=39&type=section&id=Item%2015%2E%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Annual Report, including financial statements and various required certifications - All financial statement schedules have been omitted because the required information is included in the financial statements or the notes thereto[205](index=205&type=chunk) - Filed exhibits include the **Consent of Independent Registered Public Accounting Firm**, Section 302 and 906 Certifications, and Inline XBRL documents[207](index=207&type=chunk) [Form 10-K Summary](index=39&type=section&id=Item%2016%2E%20Form%2010-K%20Summary) None provided

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 September 30, 2022 or ☐ 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) (State or other jurisdiction of incorporati ...

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, 2022 or ☐ 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 jurisdicti ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or FORM 10-Q ☐ 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 (St ...

Financial Performance - Net sales increased to $8,643,000 in 2021, up $1,947,000 or 29.1% from $6,696,000 in 2020, primarily driven by higher demand in ODM Projects[86] - Gross profit for 2021 was $4,121,000, representing 48% of net sales, compared to $3,281,000 or 49% in 2020, impacted by tariff costs on imports from China[87] - Operating income rose to $2,092,000 in 2021, representing 24.2% of net sales, compared to $1,054,000 or 15.7% in 2020[88] - Net income for 2021 was $2,010,000, or 23.3% of net sales, compared to $1,359,000 or 20.3% in 2020[90] - Total revenue for the year 2021 was $8,643,000, up 29.0% from $6,696,000 in 2020, with ODM projects contributing $5,462,000, a 38.8% increase from $3,936,000[140] - Net income for the twelve months ended December 31, 2021, was $2,010,000, an increase of 48.0% compared to $1,359,000 in 2020[122] - Revenues from the United States for the year ended December 31, 2021, were $7,731,000, a 30% increase from $5,955,000 in 2020[186] Expenses and Costs - Selling, general and administrative expenses decreased to $2,029,000 in 2021, representing 23.5% of net sales, down from $2,227,000 or 33.3% in 2020[88] - Cash provided by operating activities decreased to $1,802,000 in 2021 from $2,052,000 in 2020, primarily due to changes in inventory and accounts receivable[91] - Cash used for investing activities increased to $1,584,000 in 2021 from $17,000 in 2020, attributed to the purchase of short-term investments[92] - Cash used in financing activities was $889,000 in 2021, compared to $592,000 in 2020, with dividend payments of $965,000 in 2021 versus $840,000 in 2020[93] Assets and Liabilities - Total assets increased to $17,122,000 as of December 31, 2021, up from $14,261,000 in 2020, representing a growth of 13%[115] - Total current liabilities rose to $2,737,000 in 2021, up from $856,000 in 2020, reflecting a significant increase[115] - Inventory balances were $5,261,000 and $3,518,000 at December 31, 2021 and 2020, respectively, with valuation allowances of $4,892,000 and $4,759,000[80] - The company has fully reserved $1,915,000 and $2,121,000 against net deferred tax assets at December 31, 2021 and 2020, respectively[81] - The company reported total deferred tax assets of $2,044,000 as of December 31, 2021, down from $2,267,000 in 2020[179] Shareholder Returns - The company declared cash dividends of $0.165 per common share in 2021, compared to $0.145 in 2020, an increase of 14%[117] - The company paid dividends totaling $965,000 in 2021, an increase from $840,000 in 2020, reflecting a commitment to returning value to shareholders[122] - The company declared and paid quarterly dividends of $0.045 per share for the quarter ended December 31, 2021, up from $0.04 per share in the previous quarter[178] Inventory and Supply Chain - The company recognized a provision for inventory reserves of $150,000 in 2021, compared to $0 in 2020, indicating a proactive approach to inventory management[145] - The company’s inventory valuation allowances were $4,892,000 and $4,759,000 at December 31, 2021, and 2020, respectively, indicating a slight increase in inventory risk management[144] - As of December 31, 2021, the company had outstanding commitments to purchase inventory from suppliers totaling $3,723,000, compared to $1,972,000 as of December 31, 2020[185] - The company’s operations are significantly influenced by foreign suppliers, with over 90% of products purchased produced in Asia, highlighting potential supply chain risks[127] Cash and Investments - Cash and cash equivalents decreased to $5,974,000 in 2021 from $6,652,000 in 2020, a decline of 10%[115] - Cash and cash equivalents at the end of the period decreased to $5,974,000 from $6,652,000, reflecting a net decrease of $678,000[122] - The company recorded net gains of $66,000 from short-term investments in the year ended December 31, 2021[164] - As of December 31, 2021, total short-term investments amounted to $2,810,000, with $1,566,000 classified as Level 1 and $1,244,000 as Level 2[157] Employee Compensation - The employer matching contributions to the defined contribution profit-sharing plan were approximately $36,000 for the year ended December 31, 2021, compared to $34,000 in 2020[182] - Stock-based compensation for the year ended December 31, 2021 had a weighted-average grant date fair value per share ranging from $0.59 to $0.76[174] - As of December 31, 2021, the outstanding stock options totaled 294,067 shares with an average exercise price of $2.45[174] Other Considerations - The impact of COVID-19 on operations remains uncertain, with potential implications for future cash flows and market conditions[130] - The company does not anticipate any material changes to its financial position from its income tax filing positions and has not recorded reserves for uncertain income tax positions[155] - The company received loan proceeds of $163,200 under the Paycheck Protection Program, which was fully forgiven on June 4, 2021[170][171] - Property and equipment net value decreased from $3,217,000 in 2020 to $3,055,000 in 2021, with depreciation expense recorded at $180,000 for 2021[167] - The investment in Zowie Technology Corporation was valued at $186,000 as of December 31, 2021, representing approximately 6% of their total outstanding shares[169] - The company’s major customers accounted for significant sales, with two customers representing approximately 41% and 18% of net sales in 2021[129]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements for Q3 and nine months ended September 30, 2021, reflect significant growth in revenue, net income, and total assets [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$15.75 million** by September 30, 2021, driven by current assets, while equity rose to **$14.20 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $12,461,000 | $10,855,000 | | **Total Assets** | $15,753,000 | $14,261,000 | | **Total Current Liabilities** | $1,553,000 | $856,000 | | Long-term debt | $0 | $163,000 | | **Total Liabilities** | $1,553,000 | $1,019,000 | | **Total Equity** | $14,200,000 | $13,242,000 | - The increase in total assets was primarily due to rises in accounts receivable (from **$639,000** to **$985,000**), short-term investments (from **$0** to **$1,423,000**), and inventories (from **$3,518,000** to **$3,948,000**)[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Net revenue for Q3 2021 grew **24.8%** to **$2.49 million**, and for the nine months, it increased **33.7%** to **$6.37 million**, driving substantial net income growth Q3 2021 vs Q3 2020 Performance (Unaudited) | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | Net product revenue | $2,485,000 | $1,991,000 | | Gross profit | $1,178,000 | $967,000 | | Operating income | $711,000 | $425,000 | | Net income | $678,000 | $443,000 | | Diluted EPS | $0.11 | $0.08 | Nine Months 2021 vs 2020 Performance (Unaudited) | Metric | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | | Net product revenue | $6,374,000 | $4,766,000 | | Gross profit | $2,969,000 | $2,257,000 | | Operating income | $1,442,000 | $598,000 | | Net income | $1,605,000 | $652,000 | | Diluted EPS | $0.27 | $0.11 | - Cash dividends declared per common share increased to **$0.040** in Q3 2021 from **$0.035** in Q3 2020[11](index=11&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased from **$13.24 million** at year-end 2020 to **$14.20 million** by September 30, 2021, driven by net income - Total equity grew from **$13,242,000** at the end of 2020 to **$14,200,000** as of September 30, 2021[14](index=14&type=chunk) - The increase in equity was primarily due to retained earnings from net income, which was partially offset by cash dividends paid to shareholders[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was **$1.42 million** for the nine months ended September 30, 2021, with significant cash used in investing activities for short-term investments Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $1,423,000 | $1,467,000 | | Net cash used for investing activities | ($1,439,000) | ($13,000) | | Net cash used for financing activities | ($645,000) | ($385,000) | | **Net change in cash** | **($686,000)** | **$1,064,000** | - The significant use of cash in investing activities was due to a **$1,423,000** purchase of short-term investments in 2021[16](index=16&type=chunk) - On June 4, 2021, the company's Paycheck Protection Program (PPP) loan of **$163,200** was fully forgiven by the SBA, reflected as a non-cash financing activity[16](index=16&type=chunk)[36](index=36&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue sources primarily from US-based ODM projects, inventory composition, and the forgiveness of the PPP loan - The company's primary business is supplying ODM electronic components, with a focus on providing turn-key solutions for contract electronic manufacturers (CEMs) and original equipment manufacturers (OEMs)[18](index=18&type=chunk) Revenue Disaggregation (Nine Months Ended Sep 30, 2021) | Category | Revenue | % of Total | | :--- | :--- | :--- | | **By Geography** | | | | United States | $5,700,000 | 89.4% | | Asia | $653,000 | 10.2% | | Other | $21,000 | 0.3% | | **By Product Line** | | | | ODM projects | $4,069,000 | 63.8% | | ODM components | $2,129,000 | 33.4% | | Distribution components | $176,000 | 2.8% | - As of September 30, 2021, the company had outstanding commitments to purchase inventory from suppliers aggregating approximately **$3,800,000**[39](index=39&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=11&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong 2021 financial performance to a strategic shift towards higher-margin ODM projects, with liquidity supported by operations despite illiquid inventory - The company's core strategy has shifted to focus primarily on higher-margin ODM Projects for OEM customers, moving away from its previous 'superstore' strategy of maintaining a vast inventory of electronic components[48](index=48&type=chunk) [Results of Operations](index=12&type=section&id=Results%20of%20Operations) Net sales for Q3 2021 increased **24.8%** to **$2.49 million**, and for the nine months, grew **33.7%** to **$6.37 million**, driven by ODM project sales and PPP loan forgiveness - Q3 2021 net sales increased **24.8%** YoY to **$2,485,000**, primarily driven by an increase in ODM project sales volume[52](index=52&type=chunk) - Net sales for the first nine months of 2021 increased **33.7%** YoY to **$6,374,000**, also driven by higher ODM project sales[56](index=56&type=chunk) - Other income for the nine months ended September 30, 2021, increased by **$122,000** compared to the prior year, primarily due to the **$163,000** forgiveness of the PPP loan[59](index=59&type=chunk) [Liquidity and Capital Resources](index=13&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is primarily from operations, with **$1.42 million** cash flow for nine months, though significant inventory is noted as not readily liquid - The company believes that funds from operations, existing cash balances, and short-term investments are likely sufficient to finance working capital and capital expenditure requirements for the foreseeable future[65](index=65&type=chunk) - Inventory represented approximately **31.7%** of current assets as of September 30, 2021, but is considered not readily marketable or liquid[66](index=66&type=chunk) - The increase in cash used for financing activities was partly due to a **14.3%** increase in the quarterly cash dividend, from **$0.035** to **$0.04** per share[64](index=64&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=14&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has indicated that this item is not applicable for this reporting period - The company states that this section is 'Not applicable'[69](index=69&type=chunk) [Item 4. Controls and Procedures](index=14&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes in internal control - Based on an evaluation, the principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of the end of the period[69](index=69&type=chunk) - No changes in internal control over financial reporting occurred during the period that have materially affected, or are reasonably likely to materially affect, internal controls[70](index=70&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=15&type=section&id=Item%201.%20Legal%20Proceedings) As of the date of this report, the company is not aware of any material pending legal proceedings - The company reports that it is not aware of any material pending legal proceedings[72](index=72&type=chunk) [Item 1A. Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company highlights key risks including the ongoing COVID-19 pandemic's impact on supply chains and international tariffs increasing product costs - The COVID-19 pandemic continues to negatively impact the global economy and supply chains, resulting in increased logistics costs, lower product demand, longer lead times, and shipping delays for the company[74](index=74&type=chunk) - Tariffs imposed by the U.S. and China have increased the prices of products the company purchases, which could adversely affect operating profits and customer demand if these costs cannot be passed on to customers[75](index=75&type=chunk) [Other Items (Items 2, 3, 4, 5, 6)](index=15&type=section&id=Other%20Items) The company reported 'None' for several items, with Item 4 'Not Applicable', and listed CEO/CFO certifications and XBRL data files as exhibits - The company reported no unregistered sales of equity securities, defaults upon senior securities, or other material information during the period[76](index=76&type=chunk)[78](index=78&type=chunk) - The exhibits filed with the report include certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act and Inline XBRL documents[80](index=80&type=chunk)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ 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) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) UNITED S ...