California
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95-4249240
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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28040 West Harrison Parkway, Valencia, California
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91355-4162
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company x
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Class | Outstanding on July 30, 2013 | |
Class A common stock, $0.001 par value | 4,777,144 | |
Class B common stock, $0.001 par value | 762,612 |
TAITRON COMPONENTS INCORPORATED
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FORM 10-Q
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June 30, 2013
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TABLE OF CONTENTS
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Page
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PART I - FINANCIAL INFORMATION
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Item 1.
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1
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2
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3
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4
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Item 2.
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8
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Item 3.
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10
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Item 4.
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10
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PART II - OTHER INFORMATION
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Item 1.
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11
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Item 2.
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11
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Item 3.
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11
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Item 4.
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11
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Item 5.
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11
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Item 6.
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11
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12
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June 30,
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December 31,
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|||||||
2013
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2012
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Assets
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(Unaudited)
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Current Assets:
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Cash and cash equivalents
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$ | 2,522,000 | $ | 2,475,000 | ||||
Restricted cash (Note 4)
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100,000 | 100,000 | ||||||
Accounts receivable, less allowances of $66,000 and $87,000, respectively
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609,000 | 853,000 | ||||||
Inventories, less reserves for obsolescence of $5,486,000, and $5,108,000, respectively
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10,369,000 | 10,986,000 | ||||||
Prepaid expenses and other current assets
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89,000 | 66,000 | ||||||
Total current assets
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13,689,000 | 14,480,000 | ||||||
Property and equipment, net
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4,542,000 | 4,630,000 | ||||||
Other assets (Note 5)
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1,598,000 | 1,297,000 | ||||||
Total assets
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$ | 19,829,000 | $ | 20,407,000 | ||||
Liabilities and Shareholders’ Equity
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Current Liabilities:
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Accounts payable
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$ | 617,000 | $ | 668,000 | ||||
Accrued liabilities
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355,000 | 428,000 | ||||||
Current portion of long-term debt from related party (Note 6)
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- | 1,500,000 | ||||||
Total current liabilities
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972,000 | 2,596,000 | ||||||
Long-term debt from related party (Note 6)
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1,500,000 | - | ||||||
Total Liabilities
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2,472,000 | 2,596,000 | ||||||
Commitments and contingencies (Notes 6, 8 and 9)
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Shareholders’ Equity:
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Preferred stock, $0.001 par value. Authorized 5,000,000 shares;
None issued or outstanding
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- | - | ||||||
Class A common stock, $0.001 par value. Authorized 20,000,000 shares; 4,777,144 shares issued and outstanding
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5,000 | 5,000 | ||||||
Class B common stock, $0.001 par value. Authorized, issued and outstanding 762,612 shares
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1,000 | 1,000 | ||||||
Additional paid-in capital
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10,647,000 | 10,635,000 | ||||||
Accumulated other comprehensive income
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131,000 | 128,000 | ||||||
Retained earnings
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6,451,000 | 6,892,000 | ||||||
Total Shareholders’ Equity - Taitron Components Inc
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17,235,000 | 17,661,000 | ||||||
Noncontrolling interest in subsidiary
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122,000 | 150,000 | ||||||
Total Shareholders’ Equity
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17,357,000 | 17,811,000 | ||||||
Total Liabilities and Shareholders’ Equity
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$ | 19,829,000 | $ | 20,407,000 |
Three Months Ended June 30,
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Six Months Ended June 30,
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2013
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2012
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2013
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2012
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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Net sales
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$ | 1,663,000 | $ | 1,416,000 | $ | 3,295,000 | $ | 3,100,000 | ||||||||
Cost of goods sold
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1,324,000 | 1,144,000 | 2,604,000 | 2,474,000 | ||||||||||||
Gross profit
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339,000 | 272,000 | 691,000 | 626,000 | ||||||||||||
Selling, general and administrative expenses
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605,000 | 603,000 | 1,209,000 | 1,240,000 | ||||||||||||
Operating loss
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(266,000 | ) | (331,000 | ) | (518,000 | ) | (614,000 | ) | ||||||||
Interest expense, net
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(8,000 | ) | (8,000 | ) | (16,000 | ) | (17,000 | ) | ||||||||
Other income, net
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34,000 | 28,000 | 66,000 | 46,000 | ||||||||||||
Loss before income taxes
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(240,000 | ) | (311,000 | ) | (468,000 | ) | (585,000 | ) | ||||||||
Income tax provision
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- | - | (1,000 | ) | (1,000 | ) | ||||||||||
Net loss
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(240,000 | ) | (311,000 | ) | (469,000 | ) | (586,000 | ) | ||||||||
Net loss attributable to noncontrolling interest in subsidiary
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(19,000 | ) | (10,000 | ) | (29,000 | ) | (16,000 | ) | ||||||||
Net loss attributable to Taitron Components Inc.
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$ | (221,000 | ) | $ | (301,000 | ) | $ | (440,000 | ) | $ | (570,000 | ) | ||||
Net loss per share: Basic & Diluted
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$ | (0.04 | ) | $ | (0.06 | ) | $ | (0.08 | ) | $ | (0.11 | ) | ||||
Weighted average common shares outstanding: Basic & Diluted
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5,539,756 | 5,539,756 | 5,539,756 | 5,539,756 | ||||||||||||
Net loss
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$ | (240,000 | ) | $ | (311,000 | ) | $ | (469,000 | ) | $ | (586,000 | ) | ||||
Other comprehensive income (loss) :
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Foreign currency translation adjustment
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4,000 | - | 3,000 | 4,000 | ||||||||||||
Comprehensive loss
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(236,000 | ) | (311,000 | ) | (466,000 | ) | (582,000 | ) | ||||||||
Comprehensive loss attributable to noncontrolling interests
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(17,000 | ) | (11,000 | ) | (28,000 | ) | (16,000 | ) | ||||||||
Comprehensive loss attributable to Taitron Components Inc.
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$ | (219,000 | ) | $ | (300,000 | ) | $ | (438,000 | ) | $ | (566,000 | ) |
Six Months Ended June 30,
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2013
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2012
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(Unaudited)
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(Unaudited)
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Operating activities:
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Net loss
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$ | (469,000 | ) | $ | (586,000 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities:
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Depreciation and amortization
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91,000 | 102,000 | ||||||
Provision for sales returns and doubtful accounts
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59,000 | 21,000 | ||||||
Stock based compensation
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12,000 | 8,000 | ||||||
Changes in assets and liabilities:
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Trade accounts receivable
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185,000 | 35,000 | ||||||
Inventory
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617,000 | 652,000 | ||||||
Prepaid expenses and other current assets
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(23,000 | ) | (7,000 | ) | ||||
Trade accounts payable
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(51,000 | ) | (40,000 | ) | ||||
Accrued liabilities
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(73,000 | ) | (35,000 | ) | ||||
Other assets and liabilities
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- | (6,000 | ) | |||||
Total adjustments
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817,000 | 730,000 | ||||||
Net cash provided by operating activities
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348,000 | 144,000 | ||||||
Investing activities:
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Restricted cash
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- | 100,000 | ||||||
Acquisition of property & equipment
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(3,000 | ) | (15,000 | ) | ||||
Payments for investments in securities
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(303,000 | ) | (341,000 | ) | ||||
All other investing activity
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2,000 | 1,000 | ||||||
Net cash used for investing activities
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(304,000 | ) | (255,000 | ) | ||||
Impact of exchange rates on cash
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3,000 | 4,000 | ||||||
Net increase (decrease) in cash and cash equivalents
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47,000 | (107,000 | ) | |||||
Cash and cash equivalents, beginning of period
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2,475,000 | 1,905,000 | ||||||
Cash and cash equivalents, end of period
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$ | 2,522,000 | $ | 1,798,000 | ||||
Supplemental disclosures of cash flow information:
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Cash paid for interest
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$ | 26,000 | $ | 26,000 | ||||
Cash paid for income taxes, net
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$ | 3,000 | $ | 3,000 |
June 30,
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December 31,
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2013
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2012
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(Unaudited)
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Investment in securitites - Zowie Technology
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$ | 432,000 | $ | 423,000 | ||||
Investment in joint venture - Taiteam Technology
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147,000 | 147,000 | ||||||
Investment in joint venture - Grand Shine Mgmt
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997,000 | 703,000 | ||||||
Other
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22,000 | 24,000 | ||||||
Other Assets
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$ | 1,598,000 | $ | 1,297,000 |
Number of Shares
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Weighted Average Exercise Price
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Weighted Average Years Remaining Contractual Term
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Aggregate Intrinsic Value
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Outstanding at December 31, 2012
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454,500 | $ | 1.35 | 4.6 | $ | 12,000 | ||||||||||
Grants
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20,000 | 0.92 | 8.7 | |||||||||||||
Forfeited
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(20,000 | ) | 1.73 | |||||||||||||
Outstanding at June 30, 2013
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454,500 | 1.31 | 4.4 | $ | 3,800 | |||||||||||
Exercisable at June 30, 2013
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271,502 | $ | 1.47 | 3.1 | $ | 2,900 |
Exhibit
Number
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Description of Document
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31.1 *
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31.2 *
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32 *
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101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase | |
* Filed herewith.
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2 - BASIS OF PRESENTATION (Details)
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6 Months Ended |
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Jun. 30, 2013
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Disclosure Text Block [Abstract] | |
Subsidiary or Equity Method Investee, Cumulative Percentage Ownership after All Transactions | 60.00% |
Consolidated Statements of Operations (USD $)
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3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Net sales | $ 1,663,000 | $ 1,416,000 | $ 3,295,000 | $ 3,100,000 |
Cost of goods sold | 1,324,000 | 1,144,000 | 2,604,000 | 2,474,000 |
Gross profit | 339,000 | 272,000 | 691,000 | 626,000 |
Selling, general and administrative expenses | 605,000 | 603,000 | 1,209,000 | 1,240,000 |
Operating loss | (266,000) | (331,000) | (518,000) | (614,000) |
Interest expense, net | (8,000) | (8,000) | (16,000) | (17,000) |
Other income, net | 34,000 | 28,000 | 66,000 | 46,000 |
Loss before income taxes | (240,000) | (311,000) | (468,000) | (585,000) |
Income tax provision | (1,000) | (1,000) | ||
Net loss | (240,000) | (311,000) | (469,000) | (586,000) |
Net loss attributable to noncontrolling interest in subsidiary | (19,000) | (10,000) | (29,000) | (16,000) |
Net loss attributable to Taitron Components Inc. | (221,000) | (301,000) | (440,000) | (570,000) |
Net loss per share: Basic & Diluted (in Dollars per share) | $ (0.04) | $ (0.06) | $ (0.08) | $ (0.11) |
Weighted average common shares outstanding: Basic & Diluted (in Shares) | 5,539,756 | 5,539,756 | 5,539,756 | 5,539,756 |
Net loss | (240,000) | (311,000) | (469,000) | (586,000) |
Other comprehensive income (loss) : | ||||
Foreign currency translation adjustment | 4,000 | 3,000 | 4,000 | |
Comprehensive loss | (236,000) | (311,000) | (466,000) | (582,000) |
Comprehensive loss attributable to noncontrolling interests | (17,000) | (11,000) | (28,000) | (16,000) |
Comprehensive loss attributable to Taitron Components Inc. | $ (219,000) | $ (300,000) | $ (438,000) | $ (566,000) |
5 - OTHER ASSETS
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Disclosure Text Block Supplement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets Disclosure [Text Block] |
5
– OTHER ASSETS
Our
$432,000 investment in securities as of June 30, 2013 relates
to our ownership of 154,808 common shares and 1,007,902
preferred shares of Zowie Technology Corporation (Taipei
Hsien, Taiwan), a supplier of electronic component
products. Our investment relates to 3.3% of their
total outstanding shares and we do not have significant
influence or control. This investment is accounted
for under the cost method basis of accounting.
Our
$147,000 investment in joint venture as of June 30, 2013
relates to our 49% ownership of Taiteam (Yangzhou) Technology
Corporation Limited (Yangzhou, China), a joint venture with
its 51% owner, Full Harvest Development
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. This joint venture is not operational
and as such, there has been no material activity in this
joint venture since 2009.
Our
$997,000 investment in joint venture as of June 30, 2013,
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. |
4 - RESTRICTED CASH (Details) (USD $)
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Jun. 30, 2013
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Dec. 31, 2012
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Policy Text Block [Abstract] | ||
Restricted Cash and Cash Equivalents, Current | $ 100,000 | $ 100,000 |
9 - COMMITMENTS AND CONTINGENCIES (Details) (USD $)
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Jun. 30, 2013
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Commitments and Contingencies Disclosure [Abstract] | |
Purchase Commitment, Remaining Minimum Amount Committed | $ 1,500,000 |
1 - ORGANIZATION
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6 Months Ended |
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Jun. 30, 2013
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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 is for regional
distribution, sales and marketing purposes and our Taiwan and
China locations are for supporting inventory sourcing,
purchases and coordinating the manufacture of our
products. Our China location also serves as the
engineering center responsible for making component
datasheets and test specifications, arranging pre-production
and mass production at our outsourced manufacturers,
preparing samples, monitoring quality of shipments,
performing failure analysis reports, and designing circuits
with partners for our projects.
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3 - RECENT ACCOUNTING DEVELOPMENTS
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6 Months Ended |
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Jun. 30, 2013
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements and Changes in Accounting Principles [Text Block] |
3
– RECENT ACCOUNTING DEVELOPMENTS
Recently
Adopted Accounting Pronouncements
Effective
January 2013, we adopted FASB ASU No. 2011-11, Balance Sheet
(Topic 210): Disclosures about Offsetting Assets
and Liabilities (ASU 2011-11). The amendments in
ASU 2011-11 require the disclosure of information on
offsetting and related arrangements for financial and
derivative instruments to enable users of its financial
statements to understand the effect of those arrangements on
its financial position. Amendments under ASU
2011-11 will be applied retrospectively for fiscal years, and
interim periods within those years, beginning after January
1, 2013. The adoption of this update did not have
a material impact on the consolidated financial
statements.
Effective
January 2013, we adopted FASB ASU No. 2013-02, Reporting of
Amounts Reclassified Out of Accumulated Other Comprehensive
(ASU 2013-02). This guidance is the culmination
of the FASB’s deliberation on reporting
reclassification adjustments from accumulated other
comprehensive income (AOCI). The amendments in
ASU 2013-02 do not change the current requirements for
reporting net income or other comprehensive
income. However, the amendments require
disclosure of amounts reclassified out of AOCI in its
entirety, by component, on the face of the statement of
operations or in the notes thereto. Amounts that
are not required to be reclassified in their entirety to
net income must be cross-referenced to other disclosures
that provide additional detail. This standard is
effective prospectively for annual and interim reporting
periods beginning after December 15, 2012. The
adoption of this update did not have a material impact on
the consolidated financial statements.
New
Accounting Pronouncements Not Yet Adopted
In
February 2013, the FASB issued ASU No. 2013-04, Liabilities
(Topic 405): Obligations Resulting from Joint and Several
Liability Arrangements for Which the Total Amount of the
Obligation Is Fixed at the Reporting Date. The
amendments in ASU 2013-04 provide guidance for the
recognition, measurement, and disclosure of obligations
resulting from joint and several liability arrangements for
which the total amount of the obligation within the scope of
this Update is fixed at the reporting date, except for
obligations addressed within existing guidance in U.S. GAAP.
The guidance requires an entity to measure those obligations
as the sum of the amount the reporting entity agreed to pay
on the basis of its arrangement among its co-obligors and any
additional amount the reporting entity expects to pay on
behalf of its co-obligors. The guidance in this Update also
requires an entity to disclose the nature and amount of the
obligation as well as other information about those
obligations. The
amendments in this standard are effective retrospectively for
fiscal years, and interim periods within those years,
beginning after December 15, 2013. We are evaluating the
effect, if any, adoption of ASU No. 2013-04 will have on our
consolidated financial statements.
In
March 2013, the FASB issued ASU No. 2013-05, Foreign Currency
Matters (Topic 830): Parent’s Accounting for the
Cumulative Translation Adjustment upon Derecognition of
Certain Subsidiaries or Groups of Assets within a Foreign
Entity or of an Investment in a Foreign Entity. The
amendments in ASU No. 2013-05 resolve the diversity in
practice about whether Subtopic 810-10,
Consolidation—Overall, or Subtopic 830-30, Foreign
Currency Matters—Translation of Financial Statements,
applies to the release of the cumulative translation
adjustment into net income when a parent either sells a part
or all of its investment in a foreign
entity or no longer holds a controlling financial interest in
a subsidiary or group of assets that is a nonprofit activity
or a business (other than a sale of in substance real estate
or conveyance of oil and gas mineral rights)
within a foreign
entity. In addition, the amendments in this Update resolve
the diversity in practice for the treatment of business
combinations achieved in stages (sometimes also referred to
as step acquisitions) involving a foreign entity. The
amendments in this standard are effective prospectively for
fiscal years, and interim reporting periods within those
years, beginning December 15, 2013. We are evaluating the
effect, if any, adoption of ASU No. 2013-05 will have on our
consolidated financial statements. |
6 - LONG-TERM DEBT FROM RELATED PARTY
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6 Months Ended |
---|---|
Jun. 30, 2013
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Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] |
6
– 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. On
April 12, 2013 we renewed and extended maturities to June 30,
2015 and beyond. Credit is available in $500,000
advances, each advance payable in monthly interest only
installments, at the rate of Prime + 0.25% per
annum. As of June 30, 2013 and December 31, 2012,
the aggregate outstanding balance on this credit facility was
$1,500,000. The advance history of the credit line
is such that on June 3, 2008, we borrowed $500,000, on April
3, 2009, we borrowed $500,000 and on April 1, 2010, we
borrowed $500,000. All advances are due from June
30, 2015 to June 30, 2017. |
4 - RESTRICTED CASH
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6 Months Ended |
---|---|
Jun. 30, 2013
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Policy Text Block [Abstract] | |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] |
4
– RESTRICTED CASH
At
June 30, 2013 and December 31, 2012, we had $100,000 of
restricted cash on deposit as collateral for our irrevocable
letter of credit in favor of a trade vendor for inventory
purchasing.
|