UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934
        For the quarterly period ended June 30, 2007

[_]   TRANSITION REPORT UNDER 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 small business issuer as specified in its charter)

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

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

                                 (661) 257-6060
                           (Issuer's telephone number)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

           Class                                    Outstanding on July 31, 2007
-------------------------------------               ----------------------------
Class A common stock, $.001 par value                        4,775,144
Class B common stock, $.001 par value                          762,612


Transitional Small Business Disclosure Format: Yes [ ] No [X]


<PAGE>

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

                         TAITRON COMPONENTS INCORPORATED

                      Condensed Consolidated Balance Sheet
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                                                                       June 30, 2007
                                                                                                                        (Unaudited)
                                      Assets                                                                           -------------
<S>                                                                                                                          <C>
Current assets:
    Cash and cash equivalents                                                                                                $ 1,196
    Trade accounts receivable, net                                                                                             1,344
    Inventory, net                                                                                                            15,311
    Prepaid expenses and other current assets                                                                                    233
                                                                                                                             -------
           Total current assets                                                                                               18,084
Property and equipment, net                                                                                                    4,283
Other assets                                                                                                                   1,788
                                                                                                                             -------
           Total assets                                                                                                      $24,155
                                                                                                                             =======
                      Liabilities and Shareholders' Equity
Current liabilities:
    Trade accounts payable                                                                                                   $   767
    Accrued liabilities and other                                                                                                431
    Current portion of long-term debt                                                                                             89
                                                                                                                             -------
           Total current liabilities                                                                                           1,287
 Long-term debt, less current portion (Note 3)                                                                                   465
                                                                                                                             -------
           Total liabilities                                                                                                   1,752
                                                                                                                             -------
Commitments and contingencies (Note 4)
Shareholders' equity:
    Preferred stock, $.001 par value.  Authorized 5,000,000 shares.                                                               --
      None issued or outstanding.
      Class A common stock, $.001 par value.  Authorized 20,000,000 shares;                                                        6
      issued and outstanding 4,775,144 shares.
      Class B common stock, $.001 par value.  Authorized, issued and outstanding                                                   1
      762,612 shares.
    Additional paid-in capital                                                                                                10,535
    Accumulated other comprehensive income, net of tax                                                                            25
    Retained earnings                                                                                                         11,836
                                                                                                                             -------
           Total shareholders' equity                                                                                         22,403
                                                                                                                             -------
           Total liabilities and shareholders' equity                                                                        $24,155
                                                                                                                             =======
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                     Page 2
<PAGE>

                         TAITRON COMPONENTS INCORPORATED

                 Condensed Consolidated Statements of Operations
                (Dollars in Thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                 Three months ended June 30,            Six months ended June 30,
                                                                  2007                2006               2007               2006
                                                               -----------        -----------        -----------        -----------
                                                               (Unaudited)        (Unaudited)        (Unaudited)        (Unaudited)
<S>                                                                  <C>                <C>                <C>                <C>
Net sales                                                      $     1,623        $     2,996        $     3,478        $     4,985
Cost of goods sold                                                   1,171              2,133              2,526              3,642
                                                               -----------        -----------        -----------        -----------
         Gross profit                                                  452                863                952              1,343
Selling, general and administrative
    expenses                                                           703                704              1,394              1,340
                                                               -----------        -----------        -----------        -----------
     (Loss) income from operations                                    (251)               159               (442)                 3
Interest income, net                                                    13                 22                 34                 37
Other income (expense), net                                              4                (19)               (14)               (36)
                                                               -----------        -----------        -----------        -----------
     (Loss) income before income taxes                                (234)               162               (422)                 4
Income tax provision                                                    (1)                --                 (3)                (4)
                                                               -----------        -----------        -----------        -----------
         Net (loss) income                                     $      (235)       $       162        $      (425)       $        --
                                                               ===========        ===========        ===========        ===========
Other comprehensive (loss) income:
     Foreign currency translation adjustment                            --                 11                  4                 23
                                                               -----------        -----------        -----------        -----------
Comprehensive (loss) income                                    $      (235)       $       173        $      (421)       $        23
                                                               ===========        ===========        ===========        ===========
(Loss) income per share
         Basic                                                 $      (.04)       $       .03        $      (.08)       $       .00
                                                               ===========        ===========        ===========        ===========
         Diluted                                               $      (.04)       $       .03        $      (.08)       $       .00
                                                               ===========        ===========        ===========        ===========
Weighted average common shares outstanding
         Basic                                                   5,536,089          5,479,423          5,527,895          5,475,812
                                                               ===========        ===========        ===========        ===========
         Diluted                                                 5,536,089          5,918,423          5,527,895          5,948,812
                                                               ===========        ===========        ===========        ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                     Page 3
<PAGE>

                         TAITRON COMPONENTS INCORPORATED

                 Condensed Consolidated Statements of Cash Flows
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                         Six months ended June 30,

                                                                                                          2007               2006
                                                                                                       -----------       -----------
                                                                                                       (Unaudited)       (Unaudited)
<S>                                                                                                      <C>                <C>
Cash flows from operating activities:
    Net loss                                                                                             $  (425)           $    --
                                                                                                         -------            -------
    Adjustments to reconcile net loss to net cash provided by operating
         activities:
    Depreciation and amortization                                                                            116                106
    Provision for sales returns and doubtful accounts                                                        142                 15
    Stock-based compensation                                                                                  14                 10
    Changes in assets and liabilities:
      Trade accounts receivable                                                                             (239)              (813)
      Inventory, net                                                                                         382                582
      Prepaid expenses and other current assets                                                             (128)                31
      Other assets                                                                                          (157)               (41)
      Trade accounts payable                                                                                (453)               311
      Accrued liabilities and other                                                                           51                (21)
                                                                                                         -------            -------
              Total adjustments                                                                             (272)               180
                                                                                                         -------            -------
              Net cash (used in) provided by operating activities                                           (697)               180
                                                                                                         -------            -------
Cash flows from investing activities:
      Acquisitions of property and equipment                                                                  (2)               (31)
      Purchase of long-term investments                                                                     (305)                --
                                                                                                         -------            -------
              Net cash used in investing activities                                                         (307)               (31)
                                                                                                         -------            -------
Cash flows from financing activities:
    Payments on notes payable                                                                                (44)                --
    Proceeds from exercise of stock options and issuance of stock                                             65                 24
    Payments on dividends declared                                                                          (552)                --
                                                                                                         -------            -------
              Net cash (used in) provided by financing activities                                           (531)                24
                                                                                                         -------            -------
Impact of exchange rate changes on cash                                                                        4                 23
                                                                                                         -------            -------
              Net (decrease) increase in cash and cash equivalents                                        (1,531)               196
Cash and cash equivalents, beginning of period                                                             2,727              1,962
                                                                                                         -------            -------
Cash and cash equivalents, end of period                                                                 $ 1,196            $ 2,158
                                                                                                         =======            =======
Supplemental disclosure of cash flow information:
    Cash paid for interest                                                                               $    20            $    --
                                                                                                         =======            =======
    Cash paid for income taxes                                                                           $     1            $    13
                                                                                                         =======            =======
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                     Page 4
<PAGE>

                         TAITRON COMPONENTS INCORPORATED

              Notes to Condensed Consolidated Financial Statements
                                  June 30, 2007
                           (All amounts are unaudited)

Note 1 - Basis of Presentation

      The accompanying unaudited condensed consolidated financial statements of
      Taitron Components Incorporated ("the Company") were prepared in
      accordance with accounting principles generally accepted in the United
      States of America and reflect all adjustments, consisting of normal
      recurring accruals and adjustments, which are, in the opinion of
      management, necessary for a fair presentation of the consolidated
      financial position and results of operations at and for the periods
      presented. Such financial statements do not include all the information or
      notes necessary for a complete presentation. Therefore, they should be
      read in conjunction with the Company's Annual Report on Form 10-KSB for
      the fiscal year ended December 31, 2006, and the notes thereto, which
      include significant accounting policies and estimates. The results of
      operations for the interim periods are not necessarily indicative of
      results for the full year.

Note 2 - Summary of Significant Accounting Policies and Estimates

      Principles of Consolidation

      The unaudited condensed consolidated financial statements include the
      accounts of the Company and its 60% majority-owned subsidiary, Taitron
      Components Mexico SA de CV. All significant intercompany transactions and
      balances have been eliminated in consolidation.

      Revenue Recognition

      Revenue is typically recognized upon shipment of merchandise and sales are
      recorded net of discounts, rebates, and returns. Reserves for sales
      allowances and customer returns are established based upon historical
      experience and management's estimates as shipments are made. Sales returns
      for the quarters ended June 30, 2007 and 2006 were $119,000 and $81,000,
      respectively, and for the six months ended June 30, 2007 and 2006
      aggregated $136,000 and $96,000, respectively.

      Allowance for Sales Returns and Doubtful Accounts

      On a case-by-case basis, the Company accepts returns of products from its
      customers, without restocking charges, when they can demonstrate an
      acceptable cause for the return. Requests by a distributor to return
      products purchased for its own inventory generally are not included under
      this policy. The Company will, on a case-by-case basis, accept returns of
      products upon payment of a restocking fee, which is generally 15% to 30%
      of the net sales price. The Company will not accept returns of any
      products that were special-ordered by a customer or that otherwise are not
      generally included in inventory. The allowance for sales returns and
      doubtful accounts at June 30, 2007 aggregated $88,000.

      Inventory

      Inventory, consisting principally of products held for resale, is recorded
      at the lower of cost (determined using the first in-first out method) or
      estimated market value. Inventory is presented net of valuation allowances
      of $1,451,000 at June 30, 2007.


                                     Page 5
<PAGE>

      Income Taxes

      In June 2006, FASB issued Interpretation No. 48, Accounting for
      Uncertainty in Income Taxes (FIN48), which defines the threshold for
      recognizing the benefits of tax return positions in the financial
      statements as "more-likely-than-not" to be sustained by the taxing
      authority. A tax position that meet the "more-likely-than-not" criterion
      shall be measured at the largest amount of benefit that is more than 50%
      likely of being realized upon ultimate settlement. FIN48 applies to all
      tax positions accounted for under SFAS No. 109, Accounting for Income
      Taxes. FIN48 is effective for fiscal years beginning after December 15,
      2006.

      The Company adopted FIN48 as of January 1, 2007, the beginning of its
      current fiscal year. Based on the Company's preliminary analysis, the
      Company believes that its income tax filing positions and deductions will
      be sustained on audit and does not anticipate any adjustments that will
      result in a material change to its financial position including its
      effective tax rate. Therefore, no reserves for uncertain income tax
      positions have been recorded pursuant to FIN 48 and the Company did not
      record a cumulative effect adjustment related to the adoption of FIN 48.
      In addition, the Company has not recorded any accrued interest and
      penalties related to income tax. It is the Company's policy to classify
      interest and penalties related to income tax as income taxes in its
      financial statements.

      The following tax years that remain subject to examination by major tax
      jurisdictions are as follows: Federal - 2004, 2005 and 2006; and
      California (State) - 2003, 2004, 2005 and 2006.

      However, the Company has certain tax attribute carry forwards which will
      remain subject to review and adjustment by the relevant tax authorities
      until the statute of limitations closes with respect to the year in which
      such attributes are utilized.

      Per Share Data

      Basic earnings per share data are based upon the weighted average number
      of common shares outstanding. Diluted earnings per share data are based
      upon the weighted average number of common shares outstanding, plus the
      number of common shares potentially issuable for dilutive securities such
      as stock options and warrants. The weighted average number of common
      shares outstanding for each of the three and six month periods ended June
      30, 2007 and 2006 is set forth in the following table:

<TABLE>
<CAPTION>
                                                                     Three months ended                      Six months ended
                                                                           June 30                                June 30
                                                                -----------------------------          -----------------------------
                                                                   2007                2006               2007                2006
                                                                ---------           ---------          ---------           ---------
<S>                                                             <C>                 <C>                <C>                 <C>
Basic weighted average shares
     outstanding                                                5,536,089           5,479,423          5,527,895           5,475,812
Potentially dilutive stock options                                344,000             439,000            373,000             473,000
Anti-dilutive stock options due to net
     loss in period                                              (344,000)                 --           (373,000)                 --
                                                                ---------           ---------          ---------           ---------
Diluted weighted average shares
     outstanding                                                5,536,089           5,918,423          5,527,895           5,948,812
                                                                =========           =========          =========           =========
</TABLE>

      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 these condensed consolidated financial
      statements in conformity with accounting principles generally accepted in
      the United States. These estimates have a significant impact on the
      Company's valuation and reserve accounts relating to the allowance for
      sales returns, doubtful accounts, inventory reserves and deferred income
      taxes. Actual results could differ from these estimates.


                                     Page 6
<PAGE>

      Stock-Based Compensation

      In September 2006, the Company' 2005 Stock Incentive Plan (the "2005
      Plan") was approved by state regulators, which authorizes the issuance of
      up to 1,000,000 shares pursuant to options or awards granted under the
      plan.

      Effective January 1, 2006, the Company adopted SFAS No. 123 (revised
      2004), "Share-Based Payment" (SFAS 123R). SFAS 123R requires that the
      Company account for all stock-based compensation using a fair-value method
      and recognize the fair value of each award as an expense over the service
      period.

      Stock option activity during the six months ended June 30, 2007 is as
      follows:

<TABLE>
<CAPTION>

                                                                             Weighted
                                                              Weighted     Average Years
                                                               Average       Remaining       Aggregate
                                                Number        Exercise      Contractual      Intrinsic
                                              of Shares         Price           Term           Value
                                              ---------       --------     -------------     ----------
<S>                                            <C>              <C>              <C>          <C>
Outstanding at December 31, 2006               502,000          $1.82            5.28         309,000
   Exercised                                   (58,333)          1.11              --
   Forfeited                                   (18,667)          2.94              --
                                               -------
Outstanding at June 30, 2007                   425,000           1.87            4.86         312,000
                                               =======
Exercisable at June 30, 2007                   335,999           1.74            3.64         292,000
                                               =======
</TABLE>

      At June 30, 2007, the range of individual outstanding weighted average
      exercise prices was $1.70 to $2.45.

Note 3 - Note Payable

                                                                   June 30, 2007
                                                                   -------------
Bank loan payable in fixed monthly principal installments of
$7,381, plus interest at the rate of one year LIBOR + 1.8% per
annum, due September  20, 2013.                                         554,000
     Less current portion                                               (89,000)
                                                                        -------
Long-term debt, less current portion                                    465,000
                                                                        =======

      On September 21, 2006, the Company borrowed $620,000 in connection with
      its deposit on a real estate purchase contract related to the acquisition
      of approximately 4,500 square feet of office space (consisting of 2
      separate units on the same floor) in Shanghai, China with a total purchase
      price of $1,240,000. The overall office building project is substantially
      complete, while interior decorative construction is estimated to be
      completed in September 2007. The investment will be used as rental
      property for lease to others and for the Company's project design and
      engineering center.

Note 4 - Commitments and Contingencies

      On July 1, 2006, the European Union ("EU") directive relating to the
      Restriction of Certain Hazardous Substance ("RoHS") restricted the
      distribution of products within the EU containing certain substances,
      including lead. Further, many of our suppliers are not yet supplying RoHS
      compliant products. The legislation is effective and some of our inventory
      has become obsolete. Management has estimated the impact of the
      legislation and have written down or reserved for related inventories
      based on amounts expected to be realized given all available current
      information. Actual amounts realized from the ultimate disposition of
      related inventories could be different from those estimated.


                                     Page 7
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

      The following discussion should be read in conjunction with the condensed
consolidated financial statements, including the related notes, appearing in
Item 1 of this report as well as our most recent annual report on Form 10-KSB
for the year ended December 31, 2006. Also, several of the matters discussed in
this document contain forward-looking statements that involve risks and
uncertainties. Forward-looking statements usually are denoted by words or
phrases such as "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. Factors associated with the forward looking statements that
could cause the forward looking statements to be inaccurate and could otherwise
impact our future results are set forth in detail in our most recent annual
report on Form 10-KSB. In addition to the other information contained in this
document, readers should carefully consider the information contained in our
most recent annual report on Form 10-KSB under the heading "Cautionary
Statements and Risk Factors."

      References to "Taitron," "the Company," "we," "our" and "us" refer to
Taitron Components Incorporated and its majority-owned subsidiary, 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 its condensed
consolidated financial statements in conformity with accounting principles
generally accepted in the United States. These estimates have a significant
impact on the Company's valuation and reserve accounts relating to the allowance
for sales returns, doubtful accounts, inventory reserves and deferred income
taxes. Actual results could differ from these estimates.

      Revenue Recognition - Revenue is recognized upon shipment of the
merchandise, which is when legal transfer of title occurs. Reserves for sales
allowances and customer returns are established based upon historical experience
and our estimates of future returns. Sales returns for the quarters ended June
30, 2007 and 2006 were $119,000 and $81,000, respectively, and for the six
months ended June 30, 2007 and 2006 aggregated $136,000 and $96,000,
respectively. The allowance for sales returns and doubtful accounts at June 30,
2007 aggregated $88,000.

      Inventory - Inventory, consisting principally of products held for resale,
is recorded at the lower of cost (determined using the first in-first out
method) or estimated market value. We had inventory balances in the amount of
$15,311,000 at June 30, 2007, which is presented net of valuation allowances of
$1,451,000. 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.

      Impact of Governmental Regulation - Our worldwide operations are subject
to local laws and regulations. As such, of particular interest is the European
Union ("EU") directive relating to the Restriction of Certain Hazardous
Substance ("RoHS"). On July 1, 2006, this directive restricted the distribution
of products within the EU containing certain substances, including lead. At the
present time, much of our inventory contains substances prohibited by the RoHS
directive. Further, many of our suppliers are not yet supplying RoHS compliant
products. The legislation is effective and some of our inventory has become
obsolete. Management has estimated the impact of the legislation and have
written down or reserved for related inventories based on amounts expected to be
realized given all available current information. Actual amounts realized from
the ultimate disposition of related inventories could be different from those
estimated.


                                     Page 8
<PAGE>

      Deferred Taxes - In June 2006, FASB issued Interpretation No. 48,
Accounting for Uncertainty in Income Taxes (FIN48), which defines the threshold
for recognizing the benefits of tax return positions in the financial statements
as "more-likely-than-not" to be sustained by the taxing authority. A tax
position that meet the "more-likely-than-not" criterion shall be measured at the
largest amount of benefit that is more than 50% likely of being realized upon
ultimate settlement. FIN48 applies to all tax positions accounted for under SFAS
No. 109, Accounting for Income Taxes. FIN48 is effective for fiscal years
beginning after December 15, 2006. The Company adopted FIN48 as of January 1,
2007, the beginning of its current fiscal year. Based on the Company's
preliminary analysis, the Company believes that its income tax filing positions
and deductions will be sustained on audit and does not anticipate any
adjustments that will result in a material change to its financial position
including its effective tax rate. Therefore, no reserves for uncertain income
tax positions have been recorded pursuant to FIN 48 and the Company did not
record a cumulative effect adjustment related to the adoption of FIN 48. In
addition, the Company has not recorded any accrued interest and penalties
related to income tax. It is the Company's policy to classify interest and
penalties related to income tax as income taxes in its financial statements. The
following tax years that remain subject to examination by major tax
jurisdictions are as follows: Federal - 2004, 2005 and 2006; and California
(State) - 2003, 2004, 2005 and 2006.

Selected Recent Accounting Policies

      In February 2007, the Financial Accounting Standard Board (FASB) issued
SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities (SFAS 159), which creates an alternative measurement method for
certain financial assets and liabilities. SFAS 159 permits fair value to be used
for both the initial and subsequent measurements on a contract-by-contract
election, with changes in fair value to be recognized in earnings as those
changes occur. This election is referred to as the "fair value option." SFAS 159
also requires additional disclosures to compensate for the lack of comparability
that will arise from the use of the fair value option. SFAS 159 is effective for
fiscal years beginning after November 15, 2007, with early adoption permitted as
of the beginning of a company's fiscal year, provided the company has not yet
issued financial statements for that fiscal year. The Company is currently
evaluating the impact the adoption of SFAS 159 will have on its financial
position and results of operations.

Overview

      We distribute discrete semiconductors, optoelectronic devices and passive
components to other electronic distributors, CEMs and OEMs, who incorporate them
in their products and supply ODM products for our customer's multi-year turn-key
projects.

      We continue to be impacted by the severe decline in demand for discrete
semiconductors from the U.S. market, which began in late 2000. As a result, we
have experienced declining sales in such components since early 2001. In
response to this declining demand, we placed emphasis on increasing our sales to
existing customers through further expansion of the number of different types of
discrete components and other integrated circuits in our inventory and by
attracting additional contract electronic manufacturers (CEMs), original
equipment manufacturers (OEMs) and electronics distributor customers. In
addition, over the last three years we have developed our ODM service
capabilities and added products developed through partnership agreements with
offshore solution providers (OEMs and CEMs). Looking forward, we plan to offer
commodity Integrated Circuits (ICs) as an extension of current discrete
semiconductor lines in 2007.

      Our core strategy of electronic components fulfillment, however, consists
of carrying a substantial quantity and variety of products in inventory to meet
the rapid delivery requirements of our customers. This strategy allows us to
fill customer orders immediately from stock on hand. Although we believe better
market conditions may return, we are focused on lowering our inventory balances
and increasing our cash holdings. Our long-term strategy is to rely not only on
our core strategy of component fulfillment service, but also the value-added
engineering and turn-key services. In accordance with Generally Accepted
Accounting Principles, we classify inventory as a current asset. However, if all
or a substantial portion of the inventory was required to be immediately
liquidated, the inventory would not be as readily marketable or liquid as other
items included or classified as a current asset, such as cash. We cannot assure
you that demand in the discrete semiconductor market will increase and that
market conditions will improve. Therefore, it is possible that further declines
in our carrying values of inventory may result.


                                     Page 9
<PAGE>

      In accordance with Generally Accepted Accounting Principles, we have
classified inventory as a current asset in our June 30, 2007, consolidated
financial statements representing approximately 85% of current assets and 63% 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.

      Since the beginning of 2001, our gross profit margins in general have been
stable. Our gross profit margins are subject to a number of factors, including
product demand, a strong U.S. dollar, our ability to purchase inventory at
favorable prices and our sales product mix.

Results of Operations

Second quarter of 2007 versus Second quarter of 2006.

      Net sales in the second quarter of 2007 totaled $1,623,000 versus
$2,996,000 in the comparable period for 2006, a decrease of $1,373,000 or 45.8%
over the same period last year. The overall decline came from our ODM Product
sales decreasing by $980,000, when comparing the second quarter of 2007 over the
same period last year.

      Gross profit for the second quarter of 2007 was $452,000 versus $863,000
in the comparable period for 2006, and gross margin percentage of net sales was
27.9% in the second quarter of 2007 versus 28.8% in the comparable period for
2006.

      Selling, general and administrative ("SG&A") expenses in the second
quarter of 2007 totaled $703,000 versus $704,000 in the comparable period for
2006. Effective January 1, 2006, we adopted SFAS 123(R) and such had a $7,000
financial impact to our SG&A for the second quarter of 2007, as compared to a
minimal financial impact for the same period last year.

      Interest income, net of interest expense, was $13,000 for the second
quarter of 2007 versus $22,000 in the comparable period for 2006, primarily due
to $9,000 of interest expense incurred related to our borrowing (see Note 3) for
the second quarter of 2007, when comparing $0 in the same period last year.

      Income tax provision was $1,000 for the second quarter of 2007 and $0 in
the comparable period for 2006, as we do not expect significant taxable income
for fiscal year 2007.

      Net loss was $235,000 for the second quarter of 2007 versus net income of
$162,000 in the comparable period for 2006, a decrease of $397,000.

Six Months Ended June 30, 2007 versus Six Months Ended June 30, 2006.

      Net sales in the six months ended June 30, 2007 was $3,478,000 versus
$4,985,000 in the comparable period for 2006, a decrease of $1,507,000 or 30.2%
over the same period last year. The sales decrease was attributed to decline in
our ODM products by $1,120,000 comparing the six months ended June 30, 2007 over
the same period last year.

      Gross profit for the six months ended June 30, 2007 was $952,000 versus
$1,343,000 in the comparable period for 2006, and gross margin percentage of net
sales was approximately 27% for both periods. The dollar decrease was primarily
attributed to the impact from our ODM products.

      Selling, general and administrative ("SG&A") expenses in the six months
ended June 30, 2007 totaled $1,394,000 versus $1,340,000 in the comparable
period for 2006. The increase of $54,000 was primarily attributable to personnel
related expenses from our engineering center in China. Effective January 1,
2006, we adopted SFAS 123(R) and such had a $14,000 financial impact to our SG&A
for the six months ended June 30, 2007 versus $10,000 in the comparable period
for 2006.


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<PAGE>

      Interest income, net of interest expense, was $34,000 for the six months
ended June 30, 2007 versus $37,000 in the comparable period for 2006.

      Income tax provision was $3,000 for the six months ended June 30, 2007
versus $4,000 in the comparable period for 2006.

      Net loss was $425,000 for the six months ended June 30, 2007 versus $0 in
the comparable period for 2006, an increase of $425,000 resulting from the
reasons discussed above.

Liquidity and Capital Resources

      We have satisfied our liquidity requirements principally through cash
generated from operations and short-term commercial loans. A summary of our cash
flows resulting from our operating, investing and financing activities for the
six months ended June 30, 2007 and 2006 are as follows:

                                                    Six months ended June 30,
                                                  ------------------------------
                (Dollars in thousands)               2007                2006
                                                  -----------        -----------
                                                  (Unaudited)        (Unaudited)
Operating activities....................           (697,000)           180,000
Investing activities....................           (307,000)           (31,000)
Financing activities....................           (531,000)            24,000

      Cash used in operating activities for the six months ended June 30, 2007
was $697,000 versus $180,000 cash provided by during the comparable period in
2006. The decrease was primarily attributed to receivables increasing by
$239,000 for the six months ended June 30, 2007 and payables decreasing by
$453,000, as compared to the comparable period in 2006.

      Cash used in investing activities for the six months ended June 30, 2007
was $307,000 and 2006 was $31,000, respectively. The increase came from our
$305,000 investment in the preferred stock of Zowie Technology Corporation in
the six months ended June 30, 2007.

      Cash used in financing activities for the six months ended June 30, 2007
was $531,000 versus $24,000 cash provided by, during the comparable period in
2006. The increase is for our cash dividend payment of $0.10 per share, or
$552,000 paid on January 31, 2007, to shareholders of record at the close of
business on January 22, 2007.

      Inventory is included in current assets; however, it will take over one
year for the inventory to turn. Hence, inventory would not be as readily
marketable or liquid as other items included in current assets, such as cash.

      We believe that funds generated from operations, in addition to existing
cash balances 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 short-term commercial loans,
asset-based lending on accounts receivables or issue debt or equity securities.

Item 3. Controls and Procedures.

      The Company's management, including its Chief Executive Officer and Chief
Financial Officer, have evaluated the effectiveness of the Company's disclosure
controls and procedures (as such term is defined in Rules 13a-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the
reporting period covered by this quarterly report. Based on such evaluation, the
Chief Executive Officer and Chief Financial Officer has concluded that, as of
the end of the period covered by this quarterly report, the Company's disclosure
controls and procedures are effective such that material information required to
be disclosed by the Company (including its consolidated subsidiary) in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified by the Securities and
Exchange Commission's rules and forms relating to the Company.


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<PAGE>

      During the quarterly period covered by this report, there have been no
changes to the Company's internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

      None.

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

      There were no issuances or sales of our securities by us during the
quarter ended June 30, 2007 that were not registered under the Securities Act.

Item 3. Defaults Upon Senior Securities.

      None.

Item 4. Submission of Matters to a Vote of Security Holders.

      None.

Item 5. Other Information.

      None.

Item 6. Exhibits.

            a.    Certification Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.

            b.    Certification Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.

                                   SIGNATURES

            In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                         TAITRON COMPONENTS INCORPORATED

Date:  August 14, 2007            By:  /s/ Stewart Wang
                                       ----------------
                                  Stewart Wang
                                  Chief Executive Officer, President,
                                  Chief Financial Officer and Director
                                  (Principal Executive, Financial and
                                    Accounting Officer)


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