Taitron Components (TAIT) 10-Q 14 Aug 17 2017 Q2 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 31, 2017
Document Information [Line Items]
Entity Registrant Name	TAITRON COMPONENTS INC
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Amendment Flag	false
Entity Central Index Key	942,126
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		4,808,235
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		762,612

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Current Assets:
Cash and cash equivalents	$ 3,707,000	$ 4,018,000
Accounts receivable, less allowances of $47,000 and $49,000, respectively	737,000	233,000
Inventories, less reserves for obsolescence of $8,630,000, and $8,537,000, respectively (Note 3)	5,169,000	5,055,000
Prepaid expenses and other current assets	326,000	227,000
Total current assets	9,939,000	9,533,000
Property and equipment, net	3,939,000	4,032,000
Other assets (Note 4)	494,000	471,000
Total assets	14,372,000	14,036,000
Current Liabilities:
Accounts payable	947,000	857,000
Accrued liabilities	484,000	492,000
Current portion, long-term debt (Note 5)	500,000	0
Total current liabilities	1,931,000	1,349,000
Long-term debt from related party (Note 5)	500,000	1,000,000
Total Liabilities	2,431,000	2,349,000
Commitments and contingencies (Notes 6 and 8)
Shareholders’ Equity:
Preferred stock, $0.001 par value. Authorized 5,000,000 shares; None issued or outstanding	0	0
Additional paid-in capital	10,743,000	10,701,000
Accumulated other comprehensive income	129,000	156,000
Retained earnings	961,000	720,000
Total Shareholders’ Equity - Taitron Components Inc	11,839,000	11,583,000
Noncontrolling interest in subsidiary	102,000	104,000
Total Shareholders’ Equity	11,941,000	11,687,000
Total Liabilities and Shareholders’ Equity	14,372,000	14,036,000
Common Class A [Member]
Shareholders’ Equity:
Common Stock, value, issued	5,000	5,000
Common Class B [Member]
Shareholders’ Equity:
Common Stock, value, issued	$ 1,000	$ 1,000

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parentheticals) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Accounts receivable, allowances (in Dollars)	$ 47,000	$ 49,000
Inventories, reserves for obsolescence (in Dollars)	$ 8,630,000	$ 8,537,000
Preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common Class A [Member]
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	4,808,235	4,768,235
Common stock, shares outstanding	4,808,235	4,768,235
Common Class B [Member]
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	762,612	762,612
Common stock, shares issued	762,612	762,612
Common stock, shares outstanding	762,612	762,612

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net sales	$ 1,773,000	$ 1,932,000	$ 3,940,000	$ 3,602,000
Cost of goods sold	1,016,000	1,245,000	2,310,000	2,346,000
Gross profit	757,000	687,000	1,630,000	1,256,000
Selling, general and administrative expenses	542,000	544,000	1,082,000	1,085,000
Operating income	215,000	143,000	548,000	171,000
Interest expense, net	(11,000)	(7,000)	(20,000)	(22,000)
Loss on investments	(19,000)	(60,000)	(73,000)	(134,000)
Other income, net	31,000	12,000	60,000	27,000
Income before income taxes	216,000	88,000	515,000	42,000
Income tax provision	(1,000)	(6,000)	(1,000)	(6,000)
Net income	215,000	82,000	514,000	36,000
Net loss attributable to noncontrolling interest in subsidiary	(2,000)	(1,000)	(3,000)	(4,000)
Net income attributable to Taitron Components Inc.	$ 217,000	$ 83,000	$ 517,000	$ 40,000
Net income per share: Basic & Diluted (in Dollars per share)	$ 0.04	$ 0.01	$ 0.09	$ 0.01
Cash dividends declared per common share (in Dollars per share)	$ 0.025	$ 0.025	$ 0.05	$ 0.025
Weighted average common shares outstanding: Basic (in Shares)	5,540,847	5,530,847	5,550,847	5,530,847
Weighted average common shares outstanding: Diluted (in Shares)	5,841,847	5,940,847	5,907,847	5,940,847
Net income	$ 215,000	$ 82,000	$ 514,000	$ 36,000
Other comprehensive income (loss) :
Foreign currency translation adjustment	(9,000)	(4,000)	(27,000)	(28,000)
Comprehensive income(loss)	206,000	78,000	487,000	8,000
Comprehensive income(loss) attributable to noncontrolling interests	(2,000)	(1,000)	(2,000)	1,000
Comprehensive income attributable to Taitron Components Inc.	$ 208,000	$ 79,000	$ 489,000	$ 7,000

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating activities:
Net income	$ 514,000	$ 36,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	118,000	90,000
Provision for sales returns and doubtful accounts	148,000	69,000
Stock based compensation	2,000	(3,000)
Loss on investments	73,000	134,000
Changes in assets and liabilities:
Trade accounts receivable	(652,000)	(639,000)
Inventories	(114,000)	1,065,000
Prepaid expenses and other current assets	(99,000)	(66,000)
Trade accounts payable	90,000	(481,000)
Accrued liabilities	(8,000)	91,000
Other assets and liabilities	(2,000)	7,000
Total adjustments	(444,000)	267,000
Net cash provided by operating activities	70,000	303,000
Investing activities:
Acquisition of property & equipment	(25,000)	(6,000)
Investment in securities	(93,000)	0
Net cash used for investing activities	(118,000)	(6,000)
Financing activities:
Dividend payments	(276,000)	(138,000)
Proceeds from stock options exercised	40,000	0
Net cash used for financing activities	(236,000)	(138,000)
Impact of exchange rates on cash	(27,000)	(28,000)
Net decrease in cash and cash equivalents	(311,000)	131,000
Cash and cash equivalents, beginning of period	4,018,000	3,692,000
Cash and cash equivalents, end of period	3,707,000	3,823,000
Supplemental disclosures of cash flow information:
Cash paid for interest	20,000	28,000
Cash paid for income taxes, net	$ 3,000	$ 1,000

1 - ORGANIZATION

1 - ORGANIZATION	6 Months Ended
	Jun. 30, 2017
Disclosure Text Block [Abstract]
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]	1 – ORGANIZATION In 1989, we were formed and incorporated in California. We maintain a majority-owned subsidiary in Mexico (since 1998) and two subsidiaries in each of Taiwan (since 1998) and China (since 2005). Our Mexico location closed all operations in May 2013 (final closure is pending sale of our local 15,000 sqft office and warehouse facility) and our Taiwan and China locations are for supporting overseas customers, inventory sourcing, purchases and coordinating the manufacture of our products. Our China location also serves as the engineering center responsible for designing circuits, arranging pre-production scheduling and mass production runs with joint venture partners for our projects, making component datasheets and test specifications, preparing samples, monitoring quality of shipments and performing failure analysis reports.

2 - BASIS OF PRESENTATION

2 - BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 2017
Disclosure Text Block [Abstract]
Business Description and Basis of Presentation [Text Block]	2 – BASIS OF PRESENTATION The unaudited condensed consolidated interim financial statements include the accounts of the Company and all wholly owned subsidiaries, including its 60% majority-owned subsidiary, Taitron Components Mexico, S.A. de C.V. 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 presentation 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 condensed consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. 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. 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.

3 - INVENTORY

3 - INVENTORY	6 Months Ended
	Jun. 30, 2017
Inventory Disclosure [Abstract]
Inventory Disclosure [Text Block]	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) or estimated market value. We had inventory balances in the amount of $5,169,000 and $5,055,000 at June 30, 2017 and December 31, 2016, respectively, which is presented net of valuation allowances of $8,630,000 and $8,537,000, 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. 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.

4 - OTHER ASSETS

4 - OTHER ASSETS	6 Months Ended
	Jun. 30, 2017
Disclosure Text Block Supplement [Abstract]
Other Assets Disclosure [Text Block]	4 – OTHER ASSETS June 30, December 31, 2017 2016 (Unaudited) Investment in securities - Zowie Technology $ 193,000 $ 100,000 Investment in joint venture - Grand Shine Mgmt 274,000 347,000 Other 27,000 24,000 Other Assets $ 494,000 $ 471,000 Our $193,000 investment in securities as of June 30, 2017 relates to our ownership of 1,322,552 common shares of Zowie Technology Corporation (New Taipei City, Taiwan), a supplier of electronic component products. Our investment relates to approximately 8.9% of their total outstanding shares although we do not have significant influence or control. This investment is accounted for under the cost method basis of accounting. Our $274,000 investment in joint venture as of June 30, 2017, relates to our 49% ownership of Grand Shine Management Limited (Dong Guan, China), an electronic device contract manufacturer, and joint venture with its 51% owner, Teamforce Company Limited. This joint venture is not considered to be a “Variable Interest Entity”, and as such, is accounted for under the equity method basis of accounting. As of June 30, 2017 and December 31, 2016, we have recorded cumulative unrealized loss from the inception of our investment in Grand Shine Management of $902,000 and $829,000, respectively.

5 - LONG-TERM DEBT FROM RELATED

5 - LONG-TERM DEBT FROM RELATED PARTY	6 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
Debt Disclosure [Text Block]	5 – LONG-TERM DEBT FROM RELATED PARTY Secured credit facility - On April 21, 2008 we entered into a $3,000,000 credit facility, collateralized by real property, from K.S. Best International Co. Ltd., a company controlled by the brother of our Chief Executive Officer. Credit is available in $500,000 advances, each advance payable in monthly interest only installments, at the rate of Prime + 0.25% per annum. On August 11, 2016 we renewed and extended maturities to June 30, 2018 and beyond. As of June 30, 2017 and December 31, 2016, the aggregate outstanding balance on this credit facility was $1,000,000.

6 - RELATED PARTY TRANSACTIONS

6 - RELATED PARTY TRANSACTIONS	6 Months Ended
	Jun. 30, 2017
Related Party Transactions [Abstract]
Related Party Transactions Disclosure [Text Block]	6 – RELATED PARTY TRANSACTIONS We made payments to K.S. Best International Co. Ltd., a company controlled by the brother of our Chief Executive Officer of approximately $6,000 for both of the quarters ending June 30, 2017 and 2016. These payments were for professional fees related to the operational management of our Taiwan office. In addition, we also made payments of approximately $11,000 and $13,000 for the quarters ended June 30, 2017 and 2016, respectively, for interest expense on our credit facility from K.S. Best International Co. Ltd. See Note 5. We have a $3,000,000 credit facility, collateralized by real property, from K.S. Best International Co. Ltd., a company controlled by the brother of our Chief Executive Officer. See Note 5.

7 - SHARE BASED COMPENSATION

7 - SHARE BASED COMPENSATION	6 Months Ended
	Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	7 – 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 year from the date of grant and are subject to termination provisions as defined in our 2005 Stock Incentive Plan. The option activity during the six months ended June 30, 2017 is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Years Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2016 376,000 $ 1.07 4.1 $ 72,000 Grants - - - - Exercised (40,000 ) Forfeited (5,000 ) - - - Outstanding at June 30, 2017 331,000 1.08 4.0 $ 189,000 Exercisable at June 30, 2017 304,666 $ 1.08 3.9 $ 153,000 At June 30, 2017 the range of individual outstanding weighted average exercise prices was $0.98 to $1.10.

8 - COMMITMENTS AND CONTINGENCI

8 - COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies Disclosure [Text Block]	8 – COMMITMENTS AND CONTINGENCIES Inventory Purchasing Outstanding commitments to purchase inventory from suppliers aggregated $1,600,000 as of June 30, 2017

4 - OTHER ASSETS (Tables)

4 - OTHER ASSETS (Tables)	6 Months Ended
	Jun. 30, 2017
Disclosure Text Block Supplement [Abstract]
Schedule of Other Assets [Table Text Block]	June 30, December 31, 2017 2016 (Unaudited) Investment in securities - Zowie Technology $ 193,000 $ 100,000 Investment in joint venture - Grand Shine Mgmt 274,000 347,000 Other 27,000 24,000 Other Assets $ 494,000 $ 471,000

7 - SHARE BASED COMPENSATION (T

7 - SHARE BASED COMPENSATION (Tables)	6 Months Ended
	Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based Compensation, Stock Options, Activity [Table Text Block]	The option activity during the six months ended June 30, 2017 is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Years Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2016 376,000 $ 1.07 4.1 $ 72,000 Grants - - - - Exercised (40,000 ) Forfeited (5,000 ) - - - Outstanding at June 30, 2017 331,000 1.08 4.0 $ 189,000 Exercisable at June 30, 2017 304,666 $ 1.08 3.9 $ 153,000

2 - BASIS OF PRESENTATION (Deta

2 - BASIS OF PRESENTATION (Details)	6 Months Ended
	Jun. 30, 2017
Taitron Components Mexico [Member]
2 - BASIS OF PRESENTATION (Details) [Line Items]
Subsidiary or Equity Method Investee, Cumulative Percentage Ownership after All Transactions	60.00%

3 - INVENTORY (Details)

3 - INVENTORY (Details) - USD ($)	Jun. 30, 2017	Dec. 31, 2016
Inventory Disclosure [Abstract]
Inventory, Net	$ 5,169,000	$ 5,055,000
Inventory Valuation Reserves	$ 8,630,000	$ 8,537,000

4 - OTHER ASSETS (Details)

4 - OTHER ASSETS (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Zowie Technology [Member]
4 - OTHER ASSETS (Details) [Line Items]
Equity Method Investments	$ 193,000	$ 100,000
Equity Method Investment, Ownership Percentage	8.90%
Zowie Technology [Member] | Common Stock [Member]
4 - OTHER ASSETS (Details) [Line Items]
Investment Owned, Balance, Shares (in Shares)	1,322,552
Grand Shine Management Limited [Member]
4 - OTHER ASSETS (Details) [Line Items]
Equity Method Investments	$ 274,000	347,000
Equity Method Investment, Ownership Percentage	49.00%
Unrealized Gain (Loss) on Investments	$ (902,000)	$ (829,000)
Grand Shine Management Limited [Member] | Teamforce Company Limited [Member]
4 - OTHER ASSETS (Details) [Line Items]
Equity Method Investment, Ownership Percentage	51.00%

4 - OTHER ASSETS (Details) -

4 - OTHER ASSETS (Details) - Schedule of Other Assets - USD ($)	Jun. 30, 2017	Dec. 31, 2016
4 - OTHER ASSETS (Details) - Schedule of Other Assets [Line Items]
Investment	$ 27,000	$ 24,000
Other Assets	494,000	471,000
Zowie Technology [Member]
4 - OTHER ASSETS (Details) - Schedule of Other Assets [Line Items]
Investments	193,000	100,000
Grand Shine Management Limited [Member]
4 - OTHER ASSETS (Details) - Schedule of Other Assets [Line Items]
Investments	$ 274,000	$ 347,000

5 - LONG-TERM DEBT FROM RELAT20

5 - LONG-TERM DEBT FROM RELATED PARTY (Details) - Immediate Family Member of Management or Principal Owner [Member] - Line of Credit [Member] - USD ($)	Apr. 21, 2008	Jun. 30, 2017	Dec. 31, 2016
5 - LONG-TERM DEBT FROM RELATED PARTY (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,000,000	$ 3,000,000
Line of Credit Facility, Collateral	collateralized by real property, from K.S. Best International Co.
Line of Credit Facility, Description	Credit is available in $500,000 advances
Line of Credit Facility, Frequency of Payment and Payment Terms	each advance payable in monthly interest only installments
Debt Instrument, Maturity Date, Description	June 30, 2018 and beyond
Long-term Line of Credit		$ 1,000,000	$ 1,000,000
Prime Rate [Member]
5 - LONG-TERM DEBT FROM RELATED PARTY (Details) [Line Items]
Debt Instrument, Basis Spread on Variable Rate	0.25%

6 - RELATED PARTY TRANSACTIONS

6 - RELATED PARTY TRANSACTIONS (Details) - USD ($)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Apr. 21, 2008
6 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Paid	$ 20,000	$ 28,000
Immediate Family Member of Management or Principal Owner [Member]
6 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Costs and Expenses, Related Party	$ 6,000	$ 6,000
Related Party Transaction, Description of Transaction	professional fees related to the operational management of our Taiwan office	professional fees related to the operational management of our Taiwan office
Immediate Family Member of Management or Principal Owner [Member] | Line of Credit [Member]
6 - RELATED PARTY TRANSACTIONS (Details) [Line Items]
Interest Paid	$ 11,000	$ 13,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,000,000		$ 3,000,000

7 - SHARE BASED COMPENSATION (D

7 - SHARE BASED COMPENSATION (Details)	6 Months Ended
	Jun. 30, 2017$ / shares
7 - SHARE BASED COMPENSATION (Details) [Line Items]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit	$ 0.98
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit	$ 1.10
2005 Stock Incentive Plan [Member]
7 - SHARE BASED COMPENSATION (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	vest in three equal annual installments beginning one year from the date of grant and are subject to termination provisions as defined in our 2005 Stock Incentive Plan.

7 - SHARE BASED COMPENSATION

7 - SHARE BASED COMPENSATION (Details) - Schedule of Share-based Compensation, Stock Options, Activity - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Schedule of Share-based Compensation, Stock Options, Activity [Abstract]
Number of Options Outstanding	331,000	376,000
Weighted Average Exercise Price of Options Outstanding (in Dollars per share)	$ 1.08	$ 1.07
Weighted Average Years Remaining Contractual Term of Options Outstanding	4 years	4 years 36 days
Aggregate Intrinsic Value of Options Outstanding (in Dollars)	$ 189,000	$ 72,000
Number of Options Grants	0
Number of Options Exercised	(40,000)
Number of Options Forfeited	(5,000)
Number of Options Exercisable	304,666
Weighted Average Exercise Price of Options Excercisable (in Dollars per share)	$ 1.08
Weighted Average Years Remaining Contractual Term of Options Exercisable	3 years 328 days
Aggregate Intrinsic Value of Options Exercisable (in Dollars)	$ 153,000

8 - COMMITMENTS AND CONTINGEN24

8 - COMMITMENTS AND CONTINGENCIES (Details)	Jun. 30, 2017USD ($)
Commitments and Contingencies Disclosure [Abstract]
Purchase Commitment, Remaining Minimum Amount Committed	$ 1,600,000