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EX-31 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002. * - SOLITRON DEVICES INCf10q1112ex31_solitrondevices.htm
EX-32 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002. ** - SOLITRON DEVICES INCf10q1112ex32_solitrondevices.htm
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EX-10.2 - EMPLOYMENT AGREEMENT AMENDMENT, DATED JANUARY 14, 2013, BY AND BETWEEN SOLITRON DEVICES, INC. AND SHEVACH SARAF.*+ - SOLITRON DEVICES INCf10q1112ex10ii_solitron.htm


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

FORM 10-Q
(Mark one)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended November 30, 2012

or
 
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______ to _______

Commission File No.  1-4978

SOLITRON DEVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Delaware    22-1684144
(State or Other Jurisdiction of   (I.R.S. Employer
Incorporation or Organization)    Identification No.)
     
3301 Electronics Way, West Palm Beach, Florida     33407
(Address of Principal Executive Offices)   (Zip Code)
 
(561) 848-4311
(Registrant’s Telephone Number, Including Area Code)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,”  “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)
 
  Large accelerated filer  ¨ Accelerated filer  ¨
     
  Non-accelerated filer    ¨ Smaller reporting company  x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes o   No x
 
The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of January 1, 2013 was 2,177,832.
 


 
 
 
 
 
SOLITRON DEVICES, INC.

TABLE OF CONTENTS
 
PART 1 - FINANCIAL INFORMATION

     
Page No.
Item
1.
Financial Statements
 
       
   
Condensed Balance Sheets
November 30, 2012 (unaudited) and February 29, 2012
3
       
   
Condensed Statements of Income (unaudited)
Three and Nine months Ended November 30, 2012 and 2011
4
   
 
 
   
Condensed Statements of Cash Flows (unaudited)
Nine months Ended November 30, 2012 and 2011
5
       
   
Notes to Condensed Financial Statements
6-12
 
 
 
 
Item
2.
M anagement’s Discussion and Analysis of Financial Condition and Results of Operations
13-17
       
Item
4.
Controls and Procedures
18
       
PART II – OTHER INFORMATION
 
       
Item
5.
Other Information
 
       
Item
6.
Exhibits
19
       
Signatures
 
20
 
 
2

 
 
PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
 
SOLITRON DEVICES, INC.
BALANCE SHEETS
AS OF NOVEMBER 30, 2012 AND FEBRUARY 29, 2012
 
    (unaudited)        
    Nov 30,    
Feb 29,
 
    2012    
2012
 
   
(in thousands, except for shares)
 
ASSETS
           
      CURRENT ASSETS
           
         Cash and cash equivalents
  $ 671     $ 985  
         Treasury bills and certificates of deposit
    5,888       6,614  
         Accounts receivable, less allowance for doubtful accounts of $2 and $95
    867       770  
         Inventories, net  (Note 5)
    3,940       2,982  
         Prepaid expenses
    123       142  
            TOTAL CURRENT ASSETS
    11,489       11,493  
                 
      PROPERTY, PLANT AND EQUIPMENT, net
    600       671  
                 
      OTHER ASSETS
    27       49  
            TOTAL ASSETS
  $ 12,116     $ 12,213  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
      CURRENT LIABILITIES
               
         Accounts payable
  $ 519     $ 279  
         Prepetition liabilities
    291       1,002  
         Customer deposits
    66       25  
         Accrued expenses  (Note 9)
    418       552  
            TOTAL CURRENT LIABILITIES
    1,294       1,858  
                 
      LONG-TERM LIABILITIES, net of current portion
    118       128  
            TOTAL LIABILITIES
    1,412       1,986  
                 
      COMMITMENTS AND CONTINGENCIES
               
                 
      STOCKHOLDERS’ EQUITY
               
         Preferred stock, $.01 par value, authorized 500,000 shares, none issued
    -       -  
         Common stock, $.01 par value, authorized 10,000,000 shares,
               
            2,177,832 shares issued and outstanding, net of 273,230 shares of treasury stock as of November 30, 2012.
            2,267,775 shares issued and outstanding, net of 173,287 shares of treasury stock as of February 29, 2012
    23       23  
         Additional paid-in capital
    2,743       2,736  
         Retained earnings
    8,213       7,468  
         Less treasury stock
    (275 )     -  
            TOTAL STOCKHOLDERS' EQUITY
    10,704       10,227  
            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 12,116     $ 12,213  
 
The accompanying notes are an integral part of the financial statements.
 
 
3

 
 
SOLITRON DEVICES, INC.
CONDENSED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2012 AND NOVEMBER 30, 2011
                        (Unaudited, in thousands except for share and per share amounts)

   
Three months
   
Nine months
 
   
2012
   
2011
   
2012
   
2011
 
                         
NET SALES
  $ 1,966     $ 2,112     $ 5,999     $ 6,412  
Cost of Sales
    1,547       1,729       4,691       4,839  
                                 
Gross Profit
    419       383       1,308       1,573  
                                 
Selling, General and Administrative Expenses
    249       293       825       797  
                                 
Operating Income
    170       90       483       776  
                                 
Other income (Note 7)
                               
    Income from cancellation of debt (Note 8)
    215       -       215       -  
    Other income
    4       8       16       8  
    Interest Income
    11       -       38       11  
    Total other income
    230       8       269       19  
                                 
Income before provision for income taxes
    400       98       752       795  
                                 
     Provision for income taxes
    (1 )     (5 )     (7 )     (12 )
                                 
Net Income
  $ 399     $ 93     $ 745     $ 783  
                                 
Net Income Per Share   : Basic
  $ .18     $ .04     $ .33     $ .35  
                                        : Diluted
  $ .17     $ .04     $ .30     $ .31  
                                 
Weighted Average
                               
Shares Outstanding    : Basic
    2,177,832       2,267,775       2,232,256       2,267,489  
                                       : Diluted
    2,395,453       2,489,454       2,446,814       2,489,162  
 
The accompanying notes are an integral part of the financial statements.
 
 
4

 
 
SOLITRON DEVICES, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED NOVEMBER 30, 2012 AND NOVEMBER 30, 2011
(Unaudited)
 
   
2012
   
2011
 
   
(in thousands)
 
             
   Net income
  $ 745     $ 783  
      Adjustments to reconcile net income to net cash
               
         provided by operating activities:
               
         Depreciation and amortization
    224       143  
      Decrease (increase) in operating assets and liabilities:
               
         Accounts receivable
    (97 )     (6 )
         Inventories, net
    (958 )     66  
         Prepaid expenses
    19       (20 )
         Other assets
    22       1  
      Increase (decrease) in:
               
         Accounts payable
    240       (9 )
         Prepetition liabilities
    (711 )     (21 )
         Customer deposit
    41       (1 )
         Accrued expenses
    (134 )     (231 )
         Long-term liabilities
    (10 )     (10 )
     Total adjustments
    (1,364 )     (89 )
            NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES
    (619 )     694  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
   Sales of Treasury Bills and Certificates of Deposit
    3,309       3,813  
   Purchases of Treasury Bills and Certificates of Deposit
    (2,583 )     (4,175 )
   Purchases of property, plant and equipment
    (153 )     (140 )
                 
            NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES
    573       (502 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
   Purchase of treasury stock
    (275 )     -  
   Cash from exercise of employee stock options
    7       1  
                 
            NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES
    (268 )     1  
                 
Net (decrease)/increase in cash and cash equivalents
    (314 )     193  
                 
Cash and cash equivalents – beginning of the period
    985       539  
                 
Cash and cash equivalents - end of the period
  $ 671     $ 732  

The accompanying notes are an integral part of the financial statements.
 
 
5

 

SOLITRON DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Activities
Solitron Devices, Inc., a Delaware corporation (the “Company” or “Solitron”), designs, develops, manufactures, and markets solid-state semiconductor components and related devices primarily for the military and aerospace markets.  The Company was incorporated under the laws of the State of New York in 1959 and reincorporated under the laws of the State of Delaware in August 1987.

Basis of Presentation
The financial statements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

Cash and Cash Equivalents
Cash and cash equivalents include demand deposits and money market accounts.

Investment in Treasury Bills and Certificates of Deposit
Investment in Treasury Bills/CDs includes treasury bills with maturities of one year or less, and Certificates of Deposit with maturities from one to three years, and is stated at market value.

Accounts Receivable
Accounts receivable consists of unsecured credit extended to the Company’s customers in the ordinary course of business.  The Company reserves for any amounts deemed to be uncollectible based on past collection experiences and an analysis of outstanding balances, using an allowance account.  The allowance amount was $2,000 as of November 30, 2012 and $95,000 as of February 29, 2012.

Shipping and Handling
Shipping and handling costs billed to customers are recorded in net sales.  Shipping costs incurred by the Company are recorded in cost of sales.

Inventories
Inventories are stated at the lower of cost or market.  Cost is determined using the “first-in, first-out” (FIFO) method.  The Company buys raw material only to fill customer orders.  Excess raw material is created only when a vendor imposes a minimum buy in excess of actual requirements.  Such excess material will usually be utilized to meet the requirements of the customer’s subsequent orders.  If excess material is not utilized after two fiscal years it is fully reserved.  Any inventory item once designated as reserved is carried at zero value in all subsequent valuation activities.
 
The Company’s inventory valuation policy is as follows:
 
Raw material /Work in process:
All material purchased, processed, and/or used in the last two fiscal years is valued at the lower of its acquisition cost or market.  All material not purchased/used in the last two fiscal years is fully reserved for.
   
Finished goods:
All finished goods with firm orders for later delivery are valued (material and overhead) at the lower of cost or market.  All finished goods with no orders are fully reserved.
   
Direct labor costs:
Direct labor costs are allocated to finished goods and work in process inventory  based on engineering estimates of the amount of man-hours required from the  different direct labor departments to bring each device to its particular level of  completion.
 
 
6

 
 
SOLITRON DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
 
Revenue Recognition
Revenue is recognized in accordance with SEC Staff Accounting Bulletin No. 104, Revenue Recognition.  This pronouncement requires that four basic criteria be met before revenue can be recognized: 1) there is evidence that an arrangement exists; 2) delivery   has occurred; 3) the fee is fixed or determinable; and 4) collectability  is reasonably assured. We recognize revenue upon determination that all criteria for revenue recognition have been met.  The criteria are usually met at the time of product shipment. Shipping terms are generally FCA (Free Carrier) shipping point.

Financial Statement  Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates, and the differences could be material.  Such estimates include depreciable life, valuation allowance, and allowance for inventory obsolescence.

2.   ENVIRONMENTAL REGULATION:

While the Company believes that it has the environmental permits necessary to conduct its business and that its operations conform to present environmental regulations, increased public attention has been focused on the environmental impact of semiconductor manufacturing operations.  The Company, in the conduct of its manufacturing operations, has handled and does handle materials that are considered hazardous, toxic or volatile under federal, state and local laws and, therefore, is subject to regulations related to their use, storage, discharge and disposal.  No assurance can be made that the risk of accidental release of such materials can be completely eliminated.  In the event of a violation of environmental laws, the Company could be held liable for damages and the costs of remediation. In addition, the Company, along with the rest of the semiconductor industry, is subject to variable interpretations and governmental priorities concerning environmental laws and regulations.  Environmental statutes have been interpreted to provide for joint and several liability and strict liability regardless of actual fault.  There can be no assurance that the Company will not be required to incur costs to comply with, or that the operations, business or financial condition of the Company will not be materially adversely affected by current or future environmental laws or regulations.

3.   ENVIRONMENTAL LIABILITIES:

The Company entered into an Ability to Pay Multi-Site Settlement Agreement with the United States Environmental Protection Agency (“USEPA”), effective February 24, 2006 (“Settlement Agreement”), which resolved the Company’s alleged liability to USEPA for four sites in Florida (including the Solitron Microwave Superfund Site, Port Salerno, Florida (“Port Salerno Site”) and the Solitron Devices Site, Riviera Beach, Florida (the “Riviera Beach Site”) discussed further below and one site in California.  Pursuant to the Settlement Agreement, the Company paid the sum of $74,000 to USEPA on February 27, 2006.  In addition, the Company is required to pay to USEPA the sum of $10,000 or 5% of Solitron’s net after-tax income over the first $500,000, if any, whichever is greater, for each year from fiscal years 2009-2013.  As of June 12, 2012, the Company paid $12,812 in full satisfaction of its obligations for fiscal year 2012.  The Company has accrued $10,000 for its remaining minimum obligations under the Settlement Agreement for fiscal year 2013 which is reflected in “Accrued expenses” on the Company’s Balance Sheets at November 30, 2012.

On October 21, 1993, a Consent Final Judgment was entered into between the Company and the Florida Department of Environmental Protection (“FDEP”) in the Circuit Court of the Nineteenth Judicial Circuit of Florida in and for Martin County, Florida, in Case No. 91-1232 CA (the “Consent Final Judgment”).  The Consent Final Judgment required the Company to remediate the Port Salerno and Riviera Beach Sites, make monthly payments to escrow accounts for each Site until the sale of the Sites to fund the remediation work, take all reasonable steps to sell the two Sites and, upon the sale of the Sites, apply the net proceeds from the sales to fund the remediation work.  Both Sites have been sold pursuant to purchase agreements approved by FDEP.
 
 
7

 

SOLITRON DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

Prior to the sale of the Port Salerno and Riviera Beach Sites, USEPA took over from FDEP as the lead regulatory agency for the remediation of the Sites.   At the closing of the sale of each site, the net proceeds of sale were distributed to USEPA and/or FDEP or other parties, as directed by the agencies.  In addition, upon the sale of the Riviera Beach Site, the Riviera Beach Escrow Account was transferred to USEPA, as directed by the agencies.  The current balance in the Port Salerno Escrow Account is approximately $58,000.  USEPA completed remedy construction at the Port Salerno Site in 2004 and is performing annual groundwater sampling.  A 5-Year review performed by USEPA in 2009 concluded that remedial actions taken at the property remain protective.  Work at the Riviera Beach Site is being performed by Honeywell, Inc. (“Honeywell”), pursuant to an Administrative Order of  Consent entered  into between  Honeywell and USEPA.  Design and  construction  of the remedy is  reported by
USEPA to be complete and the treatment system has been in operation since March 2009.  The Company has been notified by FDEP that the performance of remediation work by USEPA at the Port Salerno Site and by Honeywell at the Riviera Beach Site will be construed by FDEP as discharging the Company’s remediation obligations under the Consent Final Judgment.

In 2006, FDEP notified the Company that FDEP has unreimbursed expenses associated with the Port Salerno and Riviera Beach Sites of $214,800 and initially directed the Company to resume payments under the Consent Final Judgment to ensure that there are adequate funds to cover FDEP’s unreimbursed expenses and the Company’s residual liability under the Consent Final Judgment.  Later, FDEP advised the Company that FDEP would prepare a justification for the asserted unreimbursed expenses, following receipt of which the Company is required to transfer $58,000 from the Port Salerno Escrow Account to FDEP as partial payment for FDEP’s unreimbursed expenses.  FDEP further stated that FDEP would work with the Company to establish a reduced payment schedule for the Company to resume payments under the Consent Final Judgment based on the Company’s financial ability to pay.  In November 2012 the Company renewed its request for documentation supporting FDEP’s claim for unreimbursed expenses and submitted a settlement offer.  To date, FDEP has not formally responded to the settlement offer.

On August 7, 2002, the Company received a Request for Information from the State of New York Department of Environmental Conservation (“NYDEC”), seeking information on whether the Company had disposed of certain wastes at the Clarkstown Landfill Site located in the Town of Clarkstown, Rockland County, New York (The Clarkstown Landfill Site”).  By letter dated August 29, 2002, the Company responded to the Request for Information and advised NYDEC that the Company’s former Tappan, New York facility had closed in the mid-1980’s, prior to the initiation of the Company’s bankruptcy proceedings.  The Company contends that, to the extent that NYDEC has a claim against the Company as a result of the Company’s alleged disposal of wastes at the Clarkstown Landfill Site prior to the closing of the Company’s former Tappan facility in the mid-1980’s, the claim was discharged in bankruptcy as a result of the Bankruptcy Court’s August 1993 Order.  By letter dated March 17, 2010, the Clarkstown Landfill Joint Defense Group (“JDG”) offered to pursue a settlement of NYDEC’s claim against the Company in return for the Company’s agreement to pay the sum of $125,000, representing the Company’s alleged share of JDG’s overall settlement with NYDEC.  The Company rejected the settlement offer on March 29, 2010, based on its continuing contention that any claim of NYDEC against the Company was discharged in bankruptcy as a result of the Bankruptcy Court’s August 1993 Order. The JDG/NYDEC Consent Decree, settling NYDEC’s claims against individual members of  JDG, was entered by the Court on March 21, 2011. To date, neither NYDEC nor JDG have pursued any claim against the Company with respect to the Clarkstown Landfill Site.

4.           EARNINGS PER SHARE:

The shares used in the computation of the Company’s basic and diluted earnings per common share were as follows:

   
For the three months ended
November 30,
   
For the Nine months ended
November 30,
 
   
2012
   
2011
   
2012
   
2011
 
Weighted average common shares outstanding
    2,177,832       2,267,775       2,232,256       2,267,489  
Dilutive effect of employee stock options
    217,621       221,679       214,558       221,673  
Weighted average common shares outstanding, assuming dilution
    2,395,453       2,489,454       2,446,814       2,489,162  
 
 
8

 
 
SOLITRON DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

Weighted average common shares outstanding, assuming dilution, include the incremental shares that would be issued upon the assumed exercise of stock options.  For the three month periods ended November 30, 2012 and November 30, 2011, 13,500 shares underlying  the Company's stock options were excluded from the calculation of diluted earning per share because the exercise prices of the stock options were greater than or equal to the average price of the common shares, and therefore their inclusion would have been anti-dilutive.

5.   INVENTORIES:

As of November 30, 2012, inventories consist of the following:

   
Gross
   
Reserve
   
Net
 
Raw Materials
  $ 2,393,000     $ (450,000 )   $ 1,943,000  
Work-In-Process
    3,075,000       (1,142,000 )     1,933,000  
Finished Goods
    608,000       (544,000 )     64,000  
     Totals
  $ 6,076,000     $ (2,136,000 )   $ 3,940,000  

As of February 29, 2012, inventories consist of the following:

   
Gross
   
Reserve
   
Net
 
Raw Materials
  $ 1,525,000     $ (407,000 )   $ 1,118,000  
Work-In-Process
    2,883,000       (1,065,000 )     1,818,000  
Finished Goods
    625,000       (579,000 )     46,000  
     Totals
  $ 5,033,000     $ (2,051,000 )   $ 2,982,000  

Net raw material inventory increased $825,000 for the nine months ended November 30, 2012 primarily due to raw materials received to meet an increase in customer orders (see Results of Operations-Nine Months ended November 30, 2012 Compared to Nine Months Ended November 30, 2011).

6.           INCOME TAXES:

At November 30, 2012, the Company has net operating loss carryforwards of approximately $15,161,000 that expire through 2023.  Such net operating losses are available to offset future taxable income, if any.  As the utilization of such net operating losses for tax purposes is not assured, the deferred tax asset has been mostly reserved through the recording of a 100% valuation allowance.  Should a cumulative change in the ownership of more than 50% occur within a three-year period, there could be an annual limitation on the use of the net operating loss carryforward.

Total net deferred taxes were comprised of the following as of November 30 and February 29, 2012:
 
Deferred tax assets:
 
11/30/12
   
2/29/12
 
Loss carryforwards
  $ 5,761,000     $ 5,572,000  
Allowance for doubtful accounts
    1,000       35,000  
Inventory allowance
    920,000       690,000  
Depreciation
    (178,000 )     68,000  
Section 263A capitalized costs
    663,000       494,000  
Total deferred tax assets
    7,167,000       6,859,000  
Valuation allowance
    (7,167,000 )     (6,859,000 )
                 
Total net deferred taxes
  $ 0     $ 0  

The change in the valuation allowance on deferred tax assets is due principally to the utilization of the net operating loss for the quarter ended November 30, 2012 and for the year ended February 29, 2012.
 
 
9

 
 
SOLITRON DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate for the quarter ended November 30, 2012 and for the year ended February 29, 2012 is as follows:

   
11/30/12
   
2/29/12
 
U.S. federal statutory rate
    34.0 %     34.0 %
Change in valuation allowance
    (34.0 )     (34.0 )
Alternative minimum taxes
    2.5       2.2  
Effective income tax rate
     2.5 %      2.2 %

On June 11, 2012, the Company made an estimated tax payment of $4,000 toward its fiscal year 2013 federal income tax obligation.
 
7.           OTHER INCOME:

The $230,000 of other income reflected in the condensed statements of income for the quarter ended November 30, 2012 consists of $215,000 of income from cancellation of debt plus $11,000 of interest income on investment in treasury bills net of changes in market value plus $4,000 of income from federal tax adjustments.  The $8,000 of other income reflected in the condensed statements of income for the quarter ended November 30, 2011 consists entirely of gain on disposal of assets.

8.           INCOME FROM CANCELLATION OF DEBT:

On October 29, 2012, the Company, its affiliates, agents and representatives entered into a Settlement Agreement and Release (the "Agreement and Release") with the Police and Fire Retirement System of City of Detroit, its affiliates, agents and representatives (collectively, "PFRS").  In connection with the Company's bankruptcy, in 1993, the Company was ordered to pay PFRS a total of $1,056,226.85 over time in connection with an unsecured claim against the Company.  As of the date of the Agreement and Release, the Company has paid PFRS an aggregate of $359,653.27.  On October 31, 2012, pursuant to the Agreement and Release, the Company paid PFRS a lump sum payment of $475,000.00 as full and final satisfaction of PFRS' unsecured claim against the Company.  The Agreement and Release also provides for mutual releases among the parties.

9.           ACCRUED EXPENSES:

As of November 30, 2012 and February 29, 2012, accrued expenses and other liabilities consisted of the following:

   
11/30/12
   
2/29/12
 
Payroll and related employee benefits
  $ 383,000     $ 510,000  
Income taxes
    7,000       17,000  
Property taxes
    -       7,000  
Environmental liabilities
    10,000       13,000  
Other liabilities
    18,000       5,000  
    $ 418,000     $ 552,000  

 
10

 
 
SOLITRON DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

10.           EXPORT SALES AND MAJOR CUSTOMERS:

Revenues from domestic and export sales to unaffiliated customers for the three months ended November 30, 2012 are as follows:
 
 
   
Power
   
Field Effect
   
Power
             
Geographic Region
 
Transistors
   
Hybrids
   
Transistors
   
MOSFETS
   
Totals
 
Europe and Australia
  $ 0     $ 273,000     $ 10,000     $ 0     $ 283,000  
Canada and Latin America
    22,000       0       0       0       22,000  
Far East and Middle East
    3,000       0       7,000       75,000       85,000  
United States
    321,000       587,000       72,000       596,000       1,576,000  
Totals
  $ 346,000     $ 860,000     $ 89,000     $ 671,000     $ 1,966,000  

Revenues from domestic and export sales to unaffiliated customers for the three months ended November 30, 2011 are as follows:
 
   
Power
   
Field Effect
   
Power
             
Geographic Region
 
Transistors
   
Hybrids
   
Transistors
   
MOSFETS
   
Totals
 
Europe and Australia
  $ 0     $ 0     $ 27,000     $ 0     $ 27,000  
Canada and Latin America
    14,000       0       2,000       0       16,000  
Far East and Middle East
    0       0       3,000       54,000       57,000  
United States
    338,000       963,000       79,000       632,000       2,012,000  
Totals
  $ 352,000       963,000     $ 111,000     $ 686,000     $ 2,112,000  
 
Revenues from domestic and export sales are attributed to global geographic region according to the location of the customer’s primary manufacturing or operating facilities.

For the quarter ended November 30, 2012, sales to the Company’s top two customers consisted of the following:

Customer
 
% of Sales
 
Raytheon Company
    53 %
BAE Systems Australia
    14 %
      67 %


For the quarter ended November 30, 2011, sales to the Company’s top two customers consisted of the following:

Customer
 
% of Sales
 
Raytheon Company
    45 %
United States Government
    16 %
      61 %
 
 
11

 

SOLITRON DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
 
11.         MAJOR SUPPLIERS:

For the quarter ended November 30, 2012, purchases from the Company’s top two vendors consisted of the following:

Vendor
 
% of Purchases
 
WUXI Streamtek Ltd.
    18 %
Egide, USA
    18 %
      36 %
 
For the quarter ended November 30, 2011, purchases from the Company’s top two vendors consisted of the following:

Vendor
 
% of Purchases
 
Air Products, Inc.
    7 %
Stellar Industries, Inc.
    7 %
      14 %
 
 
12

 
 
Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview:
 
Solitron Devices, Inc., a Delaware corporation (the “Company” or “Solitron”), designs, develops, manufactures and markets solid-state semiconductor components and related devices primarily for the military and aerospace markets.  The Company manufactures a large variety of bipolar and metal oxide semiconductor (“MOS”) power transistors, power and control hybrids, junction and power MOS field effect transistors and other related products.  Most of the Company’s products are custom made pursuant to contracts with customers whose end products are sold to the United States government.  Other products, such as Joint Army/Navy transistors, diodes and Standard Military Drawings voltage regulators, are sold as standard or catalog items.
 
The following discussion and analysis of factors which have affected the Company's financial position and operating results during the periods included in the accompanying condensed financial statements should be read in conjunction with the Financial Statements and the related Notes to Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended February 29, 2012 and the Condensed Financial Statements and the related Notes to Condensed Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.
 
Significant Accounting Policies:
 
The discussion and analysis of our financial condition and results of operations are based upon the condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q which are prepared in accordance with accounting principles generally accepted in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Our critical accounting policies include cash and cash equivalents, investment in Treasury bills and certificates of deposit, accounts receivable, shipping and handling, and inventories. A discussion of all of these critical accounting policies can be found in Note 1 of the “Notes To Financial Statements” in Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 29, 2012.
 
Trends and Uncertainties:
 
During the three months ended November 30, 2012, the Company’s book-to-bill ratio was approximately .39 as compared to approximately .43 for the three months ended November 30, 2011, reflecting a decrease in the volume of orders booked.  The Company does not believe that, in most years, the year-to-year change in the book-to-bill ratio indicates a specific trend in the demand for the Company’s products.  The potential impact that government actions in the next two years will have on future bookings is unclear at this time. Generally, the intake of orders over the last twenty four months has varied greatly as a result of the fluctuations in the general economy, variations in defense spending on programs the Company supports, and the timing of contract awards by the Department of Defense and subsequently by its prime contractors, which is expected to continue over the next twelve to twenty four months. The Company continues to identify means intended to reduce its variable manufacturing costs to offset the potential impact of low volume of orders to be shipped. However, should order intake fall drastically in the coming periods, the Company might be required to implement further cost cutting or other downsizing measures to continue profitable business operations.
 
Inventories

Inventories are stated at the lower of cost or market.  Cost is determined using the “first-in, first-out” (FIFO) method.  The Company buys raw material only to fill customer orders.  Excess raw material is created only when a vendor imposes a minimum buy in excess of actual requirements.  Such excess material will usually be utilized to meet the requirements of the customer’s subsequent orders.  If excess material is not utilized after two fiscal years it is fully reserved.  Any inventory item once designated as reserved is carried at zero value in all subsequent valuation activities.
 
 
13

 

The Company’s inventory valuation policy is as follows:

Raw  material /Work in process:
All material purchased, processed and/or used in the last two fiscal years is valued at the lower of its acquisition cost or market.  All material not purchased/used in the last two fiscal years is fully reserved for.
 
Finished goods:
All finished goods with firm orders for later delivery are valued (material and overhead) at the lower of cost or market.  All finished goods with no orders are fully reserved.

Direct labor costs:
Direct labor costs are allocated to finished goods and work in process inventory based on engineering estimates of the amount of man hours required from the different direct labor departments to bring each device to its particular level of completion.

Results of Operations-Three Months Ended November 30, 2012 Compared to Three Months Ended November 30, 2011:

Net sales for the three months ended November 30, 2012 decreased 7% to $1,966,000 as compared to $2,112,000 for the three months ended November 30, 2011.  This decrease was primarily attributable to a lower level of orders that were shipped in accordance with customer requirements and unanticipated delays in receipt of key raw material components.
 
Cost of sales for the three months ended November 30, 2012 decreased to $1,547,000 from $1,729,000 for the comparable period in 2011, primarily due to lower raw material cost.  Expressed as a percentage of sales, cost of sales decreased to 79% from 82% for the same period in 2011.  This decrease in percentage was due primarily to lower raw material cost of products shipped during the quarter.

Gross profit for the three months ended November 30, 2012 increased to $419,000 from $383,000 for the three months ended November 30, 2011, primarily due to lower raw material cost of products shipped during the quarter.  Accordingly, gross margins on the Company’s sales increased to 21% for the three months ended November 30, 2012 in comparison to 18% for the three months ended November 30, 2011.

For the three months ended November 30, 2012, the Company shipped 43,003 units as compared to 26,934 units shipped during the same period of the prior year.  It should be noted that since the Company manufactures a wide variety of products with an average sales price ranging from less than one dollar to several hundred dollars, such periodic variations in the Company’s volume of units shipped should not be regarded as a reliable indicator of the Company’s performance.

For the three months ended November 30, 2012, the Company’s backlog of open orders decreased 14% to $7,632,000 as compared to the same period of the prior year. For the three months ended November 30, 2011, the Company’s backlog of open orders decreased 20% to $4,780,000 as compared to same period in 2010.  Changes in backlog reflect changes in the intake of orders and in the delivery requirements of customers.

The Company has experienced a decrease of 17% to $761,000 in the level of bookings during the quarter ended November 30, 2012 as compared to the same period in the prior year. For the three months ended November 30, 2011, the Company experienced a 48% decrease to $914,000 in the level of bookings as compared to the same period in the prior year. The decrease in bookings for the three months ended November 30, 2012 is principally a result of a decrease in the placement of orders by key customers, resulting in a decrease in the monetary value of, and timing differences in, the placement of contracts by the Department of Defense and its prime contractors.
 
 
14

 

Selling, general, and administrative expenses decreased to $249,000 for the three months ended November 30, 2012 from $293,000 for the same period in the prior year. The decrease reflects lower sales wages, sales commissions, and administrative wages.  During the three months ended November 30, 2012, selling, general, and administrative expenses as a percentage of net sales decreased to 13% as compared with 14% for the three months ended November 30, 2011.
 
Operating income for the three months ended November 30, 2012 increased to $170,000 as compared to $90,000 for the three months ended November 30, 2011. This increase is due primarily to lower raw material cost of products shipped during the period and lower cost of selling, general and administrative expenses.
 
The Company recorded $230,000 of other income for the quarter ended November 30, 2012 as compared to $8,000 for the quarter ended November 30, 2011. Other income for the three months ended November 30, 2012 consists of $215,000 of income from cancellation of debt (see Note 8) plus $11,000 of interest income on investment in treasury bills net of changes in market value plus $4,000 of income from federal tax adjustments.  Other income for the quarter ended November 30, 2011 consists entirely of gain on disposal of assets.
 
Net income for the three months November 30, 2012 increased to $399,000 as compared to $93,000 for the same period in 2011.  This increase is due primarily to lower raw material cost of product shipped during the period and higher other income as described above.
 
Results of Operations-Nine months Ended November 30, 2012 Compared to Nine months Ended November 30, 2011:

Net sales for the nine months ended November 30, 2012 decreased 6% to $5,999,000 as compared to $6,412,000 for the nine months ended November 30, 2011.  This decrease was primarily attributable to a lower level of orders that were shipped in accordance with customer requirements and unanticipated delays in receipt of key raw material components.

Cost of sales for the nine months ended November 30, 2012 decreased to $4,691,000 from $4,839,000 for the comparable period in 2011 primarily due to a lower level of shipments and a higher cost of materials caused by higher precious metal prices and higher cost of  raw material recently acquired and lower yields on devices produced.  Expressed as a percentage of sales, cost of sales increased to 78% as compared to 75% for the same period in 2011.
 
Gross profit for the nine months ended November 30, 2012 decreased to $1,308,000 from $1,573,000 for the nine months ended November 30, 2011, primarily due to a lower level of shipments and a higher cost of materials as outlined above. Gross margins on the Company’s sales decreased to 22% as compared to 25% for the same period in 2011.
 
For the nine months ended November 30, 2012, the Company shipped 139,666 units as compared to 115,154 units shipped during the same period of the prior year.  It should be noted that since the Company manufactures a wide variety of products with an average sales price ranging from less than one dollar to several hundred dollars, such periodic variations in the Company’s volume of units shipped should not be regarded as a reliable indicator of the Company’s performance.
 
For the nine months ended November 30, 2012, the Company’s backlog of open orders increased 27% to $7,632,000 as compared to the same period of the prior year. For the nine  months ended November 30, 2011, the Company’s backlog of open orders decreased 27% to $4,780,000 as compared to same period in 2010. Changes in backlog resulted from changes in the intake of orders and in the delivery dates required by customers.

The Company has experienced an increase of 64% to $7,645,000 in the level of bookings during the nine months ended November 30, 2012 when compared with the nine months ended November 30, 2011. The increase occurred principally as a result of an increase in the placement of orders by key customers, resulting in an increase in the monetary value of, and timing differences in, the placement of contracts by the Department of Defense and its prime contractors.

Selling, general, and administrative expenses increased to $825,000 for the nine months ended November 30, 2012 from $797,000 for the comparable period in 2011, primarily due to higher legal and professional fees associated with the stock buyback (see the Company’s Form 10-Q dated August 31, 2012) and cancellation of debt mentioned earlier in this report.  During the nine months ended November 30, 2012, selling, general, and administrative expenses as a percentage of net sales increased to 14% as compared to 12% for the nine months ended November 30, 2011.
 
 
15

 

Operating income for the nine months ended November 30, 2012 decreased to $483,000 from $776,000 for the nine months ended November 30, 2011. This decrease is due primarily to lower net sales and higher cost of materials as outlined above.
 
The Company recorded other income of $269,000 for the nine months ended November 30, 2012 as compared to other income of $19,000 for the nine months ended November 30, 2011.  Included in other income for the nine months ended November 30, 2012 was $215,000 of income from cancellation of debt plus $38,000 of interest income on investment in treasury bills and certificates of deposit net of changes in market value plus $12,000 of income from receivables adjustments and $4,000 of income from federal tax adjustments. Included in other income for the nine months ended November 30, 2011, was $11,000 of interest income investment in treasury bills net of changes in market value plus $8,000 gain on disposal of assets.
 
Net income for the nine months ended November 30, 2012 decreased to $745,000 from $783,000 for the same period in 2011.  This decrease is due primarily to lower net sales and higher cost of materials as outlined above, offset by an increase in other income.
 
Liquidity and Capital Resources:
 
Subject to the following discussion, the Company expects its sole source of liquidity over the next twelve months to be cash from operations.  The Company anticipates that its capital expenditures required to sustain operations will be approximately $400,000 during the current fiscal year and will be funded from operations and from its cash reserves.

Based upon (i) management’s best information as to current national defense priorities, future defense programs, as well as management’s expectations as to future defense spending, (ii) the market trends signaling a declining level of bookings, but with an increase in the cost of raw materials and operations that will result in the potential erosion of   profit levels and continued price pressures due to more intense competition, and (iii) the continued competition in the defense and aerospace market, the Company believes that it will have sufficient cash on hand to satisfy its operating needs during the next twelve months and at the current level of payments to its pre-bankruptcy creditors.  However, due to the level of current backlog and projected new order intake (due to the status of the general economy and the shift to Commercial Off –The-Shelf (COTS) by the defense industry), the Company might be required to take cost cutting and productivity enhancing activity to assure its continued profitability.

Over the long-term, based on these factors and at the current level of bookings, costs of raw materials and services, profit margins and sales levels, the Company believes that it will generate sufficient cash from operations to satisfy its operating needs and the level of payments to pre-bankruptcy creditors it has maintained over the last nineteen years.  In the event that bookings in the long-term decline significantly below the level experienced during the previous two fiscal years, the Company may be required to implement cost-cutting or other downsizing measures to continue its business operations.  Such cost-cutting measures could inhibit future growth prospects. In appropriate situations, the Company may seek strategic alliances or joint ventures with others or acquisitions in order to maximize marketing potential and utilization of existing resources to provide further opportunities for growth.

At November 30, 2012, February 29, 2012 and November 30, 2011, the Company had cash of approximately $671,000, $985,000 and $732,000, respectively.  The cash decrease for the nine months ended November 30, 2012 was primarily due to an increase in raw material inventory, the stock buyback (see the Company’s Form 10-Q dated August 31, 2012), and the settlement with Police and Fire Retirement System of City of Detroit.

At November 30, 2012, February 29, 2012 and November 30, 2011, the Company had investments in treasury bills and certificates of deposit of approximately $5,888,000, $6,614,000 and $6,697,000, respectively.

At November 30, 2012, the Company had working capital of $10,195,000 as compared with a working capital at November 30, 2011 of $9,627,000.  At February 29, 2012, the Company had a working capital of $9,635,000.  The $560,000 increase for the nine months ended November 30, 2012 was due mainly to the $745,000 net income for the period.
 
 
16

 

Off-Balance Sheet Arrangements:

The Company has not engaged in any off-balance sheet arrangements.
 
Forward Looking Statements:
 
Some of the statements in this Quarterly Report on Form 10-Q are "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended February 29, 2012, including those identified below. We do not undertake any obligation to update forward-looking statements, except as required by law.
 
Some of the factors that may impact our business, financial condition, results of operations, strategies or prospects include:
 
If we cannot obtain three-inch silicon wafers we could lose revenues due to an inability to build our products and we may be required to make significant, costly upgrades to our manufacturing equipment, pay expensive costs of retooling and lengthy  process updates, as it will require us to upgrade to four inch or larger wafers.
Replacements for our aging equipment could become costly and difficult to obtain.
Our complex manufacturing processes may lower yields and reduce our revenues.
Our business could be materially and adversely affected if we are unable to obtain qualified supplies of raw materials, parts and finished components on a timely basis and at a cost-effective price.
We are dependent on government contracts, which are subject to termination, price renegotiations and regulatory compliance, which can increase the cost of doing business and negatively impact our revenues.
Changes in government policy or economic conditions could negatively impact our results.
Our inventories may become obsolete and other assets may be subject to risks.
Environmental regulations could require us to incur significant costs.
Our business is highly competitive, and increased competition could reduce gross profit margins and the value of an investment in our Company.
Downturns in the business cycle could reduce the revenues and profitability of our business.
Our operating results may decrease due to the decline in profitability in the semiconductor industry.
Uncertainty of current economic conditions, domestically and globally, could continue to affect demand for our products and negatively impact our business.
Cost reduction efforts may be unsuccessful or insufficient to improve our profitability and may adversely impact productivity.
We may not achieve the intended effects of our new business strategy, which could adversely impact our business, financial condition and results of operations.
Our inability to introduce new products could result in decreased revenues and loss of market share to competitors; new technologies could also reduce the demand for our products.
Loss of, or reduction of business from, substantial clients could hurt our business by reducing our revenues, profitability and cash flow.
The nature of our products exposes us to potentially significant product liability risk.
We depend on the recruitment and retention of qualified personnel, and our failure to attract and retain such personnel could seriously harm our business.
Provisions in our charter documents and rights agreement could make it more difficult to acquire our Company and may reduce the market price of our stock.
Natural disasters, like hurricanes, or occurrences of other natural disasters whether in the United States or internationally may affect the markets in which our common stock trades, the markets in which we operate and our profitability. They may also affect the availability of raw materials which may adversely affect our profitability.
Failure to protect our proprietary technologies or maintain the right to use certain technologies may negatively affect our ability to compete.
The price of our common stock has fluctuated widely in the past and may fluctuate widely in the future.
 
 
17

 
 
ITEM 4. 
CONTROLS AND PROCEDURES

Our Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of its management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e), and 15d-15(e)) as of the end of the period covered by this Quarterly Report.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report.

Changes in Internal Control over Financial Reporting

Based on an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, there has been no change in our internal control over financial reporting during our last fiscal quarter identified in connection with that evaluation, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 
18

 

PART II– OTHER INFORMATION
 
Item 5.
OTHER INFORMATION
 
On January 14, 2013, the Company amended the Amended and Restated Employment Agreement of Shevach Saraf, Chairman, President, Chief Executive Officer, Treasurer and Chief Financial Officer of the Company, dated December 1, 2000 (the "Amendment").  The Amendment updates certain provisions of the employment agreement with respect to Section 409A of the Internal Review Code of 1986, as amended, and modifies the amount to be paid to Mr. Saraf in connection with a termination by employer without cause, upon his death or disability, and a termination following a change of control.  In connection with a termination by employer without cause, upon his death or disability, and a termination following a change of control, Mr. Saraf shall be paid a lump sum equal to the larger of (i) Mr. Saraf's base salary and bonus for the remaining term of the employment agreement or (ii) Mr. Saraf's base salary and bonus for three years.  The Amendment increases the number of years from two to three years in (ii) above.  A copy of the Amendment is attached as Exhibit 10.2 to this report and is incorporated herein by this reference
 
ITEM 6.  
EXHIBITS:

Exhibits

10.1
Settlement Agreement and Release, dated October 29, 2012, by and between Solitron Devices, Inc., its affiliates, agents and representatives and the Police and Fire Retirement System of City of Detroit, its affiliates, agents and representatives (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 31, 2012).
 
10.2
Employment Agreement Amendment, dated January 14, 2013, by and between Solitron Devices, Inc. and Shevach Saraf.*+
 
31
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *

32
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

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 Label Linkbase
   
101.PRE***
XBRL Taxonomy Presentation Linkbase
 
*
Filed herewith.
 
**
Furnished herewith.

***
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.
 
+
Management contract or compensatory plan or arrangement.
 
 
19

 

SIGNATURES

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

 
SOLITRON DEVICES, INC.
 
Date: January 14, 2013
   
 
/s/ Shevach Saraf
 
 
Shevach Saraf
 
 
Chairman, President,
 
 
Chief Executive Officer,
Treasurer and
Chief Financial Officer
(Principal Executive and
 Financial Officer)
 

 
20

 
 
EXHIBIT INDEX
 
EXHIBIT NUMBER
 
DESCRIPTION
     
31
 
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
     
32
 
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
     
10.2   Employment Agreement Amendment, dated January 14, 2013, by and between Solitron Devices, Inc. and Shevach Saraf.*+
 
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 Label Linkbase
     
101.PRE***
 
XBRL Taxonomy Presentation Linkbase
 
*
Filed herewith.

**
Furnished herewith.

***
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.
 
+
Management contract or compensatory plan or arrangement.
 
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