(Mark one)
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August 31, 2020
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Delaware | 22-1684144 | |
Incorporation or Organization) | Identification No.) |
3301 Electronics Way, West Palm Beach, Florida | 33407 | |
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Page No. | |||
PART 1 - FINANCIAL INFORMATION | |||
Item | 1. | Financial Statements | 1 |
Condensed Balance Sheets November 30, 2016 (unaudited) and February 29, 2016 | 1 | ||
Condensed Statements of Operations (unaudited) Three and Nine Months Ended November 30, 2016 and 2015 | 2 | ||
Condensed Statements of Cash Flows (unaudited) Nine Months Ended November 30, 2016 and 2015 | 3 | ||
Notes to Condensed Financial Statements | 4-10 | ||
Item | 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11-16 |
Item | 4. | Controls and Procedures | 17 |
PART II – OTHER INFORMATION | |||
Item | 1. | Legal Proceedings | 18 |
Item | 6. | Exhibits | 18 |
Signatures | 19 |
Page No. | |||
Financial Statements | |||
Balance Sheets | 3 | ||
August 31, 2020 (unaudited) and February 29, 2020 | |||
Statements of Operations (unaudited) | 4 | ||
Three and Six Months Ended August 31, 2020 and 2019 | |||
Statements of Stockholders’ Equity (unaudited) Three and Six Months Ended August 31, 2020 and 2019 | 5 | ||
Statements of Cash Flows (unaudited) | 6 | ||
Six Months Ended August 31, 2020 and 2019 | |||
Notes to Financial Statements (unaudited) | 7 | ||
Management’s Discussion and Analysis of Financial Condition and | |||
Results of Operations | 17 | ||
Quantitative and Qualitative Disclosures About Market Risk | 21 | ||
Controls and Procedures | 21 | ||
Legal Proceedings | 22 | ||
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Risk Factors | 22 | ||
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Unregistered Sales of Equity Securities and Use of Proceeds | 22 | ||
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Exhibits | 22 | ||
23 | |||
CONDENSED BALANCE SHEETS
AS OF NOVEMBER 30, 2016 AND FEBRUARY 29, 2016
(unaudited) | ||||||||
November 30, | February 29, | |||||||
2016 | 2016 | |||||||
ASSETS | (in thousands, except for share and per share amounts) | |||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 1,130 | $ | 634 | ||||
Treasury bills and certificates of deposit | 1,993 | 6,740 | ||||||
Accounts receivable, less allowance for doubtful accounts of $2 | 1,384 | 528 | ||||||
Inventories, net (Note 4) | 3,683 | 3,671 | ||||||
Prepaid expenses and other current assets | 164 | 184 | ||||||
TOTAL CURRENT ASSETS | 8,354 | 11,757 | ||||||
PROPERTY, PLANT AND EQUIPMENT, net | 502 | 436 | ||||||
OTHER ASSETS | 8 | 8 | ||||||
TOTAL ASSETS | $ | 8,864 | $ | 12,201 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 494 | $ | 164 | ||||
Customer deposits | 12 | 28 | ||||||
Accrued expenses and other current liabilities (Note 6) | 472 | 497 | ||||||
TOTAL CURRENT LIABILITIES | 978 | 689 | ||||||
TOTAL LIABILITIES | 978 | 689 | ||||||
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, 1,901,950 and 2,232,977 shares issued and outstanding, net of 669,284 and 338,257 shares of treasury stock as of November 30, 2016 and February 29, 2016 respectively | 24 | 24 | ||||||
Additional paid-in capital | 1,834 | 2,759 | ||||||
Accumulated other comprehensive income | 1 | 17 | ||||||
Retained earnings | 7,793 | 9,266 | ||||||
Less treasury stock | (1,766 | ) | (554 | ) | ||||
TOTAL STOCKHOLDERS’ EQUITY | 7,886 | 11,512 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 8,864 | $ | 12,201 |
SOLITRON DEVICES, INC. | ||
BALANCE SHEETS | ||
AS OF AUGUST 31, 2020 AND FEBRUARY 29, 2020 | ||
(In thousands except for share and per share amounts) | ||
August 31, 2020 | February 29, 2020 | |
(unaudited) | ||
ASSETS | ||
CURRENT ASSETS | ||
Cash and cash equivalents | $2,819 | $1,332 |
Securities | 193 | 164 |
Accounts receivable | 1,782 | 1,379 |
Inventories, net | 3,168 | 2,870 |
Prepaid expenses and other current assets | 249 | 118 |
TOTAL CURRENT ASSETS | 8,211 | 5,863 |
Property, plant and equipment, net | 353 | 405 |
Operating lease - right-of-use asset | 535 | 723 |
Other assets | 44 | 45 |
TOTAL ASSETS | $9,143 | $7,036 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
CURRENT LIABILITIES | ||
Accounts payable | $325 | $269 |
Customer deposits | 29 | 53 |
Operating lease liability | 437 | 417 |
Accrued expenses and other current liabilities | 894 | 437 |
TOTAL CURRENT LIABILITIES | 1,685 | 1,176 |
Notes payable (PPP Loan) | 807 | - |
Operating lease liability | 153 | 377 |
Capital lease liability | 17 | - |
TOTAL LIABILITIES | 2,662 | 1,553 |
STOCKHOLDERS’ EQUITY | ||
Preferred stock, $.01 par value, authorized 500,000 shares, none issued | - | - |
Common stock, $.01 par value, authorized 10,000,000 shares, | ||
2,060,456 shares outstanding, net of 510,807 treasury shares | ||
at August 31, 2020; 2,062,949 shares outstanding, net of | ||
508,314 treasury shares at February 29, 2020, respectively | 21 | 21 |
Additional paid-in capital | 1,834 | 1,834 |
Retained earnings | 6,113 | 5,109 |
Less treasury stock | (1,487) | (1,481) |
TOTAL STOCKHOLDERS’ EQUITY | 6,481 | 5,483 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $9,143 | $7,036 |
SOLITRON DEVICES, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 2016 AND NOVEMBER 30, 2015
(Unaudited, in thousands except for share and per share amounts)
Three months | Nine Months | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net Sales | $ | 2,145 | $ | 1,919 | $ | 5,833 | $ | 6,514 | ||||||||
Cost of Sales | 1,671 | 1,549 | 4,847 | 5,076 | ||||||||||||
Gross Profit | 474 | 370 | 986 | 1,438 | ||||||||||||
Selling, General and Administrative Expenses | 323 | 351 | 2,508 | 1,573 | ||||||||||||
Operating Income/(Loss) | 151 | 19 | (1,522 | ) | (135 | ) | ||||||||||
Other income | ||||||||||||||||
Other income | 3 | - | 3 | - | ||||||||||||
Interest Income | 9 | 6 | 29 | 18 | ||||||||||||
Total other income | 12 | 6 | 32 | 18 | ||||||||||||
Income/(Loss) before provision for income taxes | 163 | 25 | (1,490 | ) | (117 | ) | ||||||||||
Provision for income taxes | - | (5 | ) | - | (5 | ) | ||||||||||
Net Income/(Loss) | $ | 163 | $ | 20 | $ | (1,490 | ) | $ | (122 | ) | ||||||
Other comprehensive income: | ||||||||||||||||
Unrealized (loss)/gain on investments | 1 | - | 1 | - | ||||||||||||
Total comprehensive (loss)/income | $ | 164 | $ | 20 | $ | (1,489 | ) | $ | (122 | ) | ||||||
Income/(Loss) Per Share from operating income-Basic | $ | .08 | $ | .01 | $ | (.73 | ) | $ | (.06 | ) | ||||||
Income/Loss) Per Share from operating income-Diluted | $ | .08 | $ | .01 | $ | (.73 | ) | $ | (.06 | ) | ||||||
Net Income/(Loss) Per Share-Basic | $ | .09 | $ | .01 | $ | (.72 | ) | $ | (.05 | ) | ||||||
Net Income/(Loss) Per Share-Diluted | $ | .09 | $ | .01 | $ | (.72 | ) | $ | (.05 | ) | ||||||
Weighted average shares outstanding-Basic | 1,901,950 | 2,290,779 | 2,075,288 | 2,249,759 | ||||||||||||
Weighted average shares outstanding-Diluted | 1,901,950 | 2,451,791 | 2,075,288 | 2,249,759 |
SOLITRON DEVICES, INC. | ||||
STATEMENTS OF OPERATIONS | ||||
FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2020 AND AUGUST 31, 2019 | ||||
(Unaudited, in thousands except for share and per share amounts) | ||||
For the three months ended | For the three months ended | For the six months ended | For the six months ended | |
August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | |
Net sales | $3,103 | $2,420 | $5,601 | $4,977 |
Cost of sales | 1,978 | 1,958 | 3,620 | 4,324 |
Gross profit | 1,125 | 462 | 1,981 | 653 |
Selling, general and administrative expenses | 526 | 779 | 1,012 | 1,223 |
Operating income (loss) | 599 | (317) | 969 | (570) |
Other income (loss) | ||||
Interest income | - | 1 | - | 1 |
Dividend income | 1 | - | 7 | 1 |
Realized gain (loss) on investments | 11 | (4) | 26 | (20) |
Unrealized gain (loss) on investments | 24 | - | 2 | 19 |
Total other income (loss) | 36 | (3) | 35 | 1 |
Net income (loss) | $635 | $(320) | $1,004 | $(569) |
Net income (loss) per common share - basic and diluted | $0.31 | $(0.16) | $0.49 | $(0.29) |
Weighted average common shares outstanding - basic and diluted | 2,060,457 | 2,013,959 | 2,061,703 | 1,957,959 |
SOLITRON DEVICES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED NOVEMBER 30, 2016 AND NOVEMBER 30, 2015
(Unaudited)
2016 | 2015 | |||||||
(in thousands) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net (loss) | $ | (1,490 | ) | $ | (122 | ) | ||
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 145 | 162 | ||||||
Decrease (increase) in operating assets: | ||||||||
Accounts receivable | (856 | ) | 516 | |||||
Inventories, net | (12 | ) | 404 | |||||
Prepaid expenses and other current assets | 20 | (10 | ) | |||||
Other assets | - | - | ||||||
Increase (decrease) in operating liabilities: | ||||||||
Accounts payable | 330 | (235 | ) | |||||
Customer deposits | (16 | ) | (5 | ) | ||||
Accrued expenses and other liabilities | (25 | ) | (228 | ) | ||||
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES | (1,904 | ) | 482 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Sales of Treasury Bills and Certificates of Deposit | 4,748 | 5,478 | ||||||
Purchases of Treasury Bills and Certificates of Deposit | - | (4,992 | ) | |||||
Purchases of property, plant and equipment | (211 | ) | (150 | ) | ||||
NET CASH PROVIDED BY INVESTING ACTIVITIES | 4,537 | 336 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Cash from exercise of employee stock options | - | 11 | ||||||
Repurchase of Common Stock and Options | (2,137 | ) | (279 | ) | ||||
Payment of Dividends | - | (575 | ) | |||||
NET CASH USED IN FINANCING ACTIVITIES | (2,137 | ) | (843 | ) | ||||
Net increase/(decrease) in cash and cash equivalents | 496 | (25 | ) | |||||
Cash and cash equivalents – beginning of the period | 634 | 820 | ||||||
Cash and cash equivalents - end of the period | $ | 1,130 | $ | 795 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the year for income taxes | $ | 0 | $ | 9 |
SOLITRON DEVICES, INC. | |||||||
STATEMENTS OF STOCKHOLDERS’ EQUITY | |||||||
FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2020 AND AUGUST 31, 2019 | |||||||
(Unaudited, In thousands, except for number of shares) | |||||||
Common Stock | Additional | ||||||
Number | Treasury | Paid-in | Treasury Stock | Retained | |||
of Shares | Shares | Amount | Capital | Amount | Earnings | Total | |
Balance, February 28, 2019 | 2,571,263 | (669,304) | $19 | $1,834 | $(1,761) | $5,806 | $5,898 |
Adjustment for Adoption of ASC 842 | - | - | - | - | - | (91) | (91) |
Net loss | - | - | - | - | - | (249) | (249) |
Balance, May 31, 2019 | 2,571,263 | (669,304) | $19 | $1,834 | $(1,761) | $5,466 | $5,558 |
Stock based Compensation | - | 161,000 | 2 | - | 280 | - | 282 |
Net loss | - | - | - | - | - | (320) | (320) |
Balance, August 31, 2019 | 2,571,263 | (508,304) | $21 | $1,834 | $(1,481) | $5,146 | $5,520 |
Balance, February 29, 2020 | 2,571,263 | (508,314) | $21 | $1,834 | $(1,481) | $5,109 | $5,483 |
Net income | - | - | - | - | - | 369 | 369 |
Balance, May 31, 2020 | 2,571,263 | (508,314) | $21 | $1,834 | $(1,481) | $5,478 | $5,852 |
Purchase of Common Stock | - | (2,493) | - | - | (6) | - | (6) |
Net income | - | - | - | - | - | 635 | 635 |
Balance, August 31, 2020 | 2,571,263 | (510,807) | $21 | $1,834 | $(1,487) | $6,113 | $6,481 |
SOLITRON DEVICES, INC. | ||
STATEMENTS OF CASH FLOWS | ||
FOR THE SIX MONTHS ENDED AUGUST 31, 2020 AND AUGUST 31, 2019 | ||
(Unaudited, in thousands) | ||
For the six months ended | For the six months ended | |
August 31, 2020 | August 31, 2019 | |
Net income (loss) | $1,004 | $(569) |
Adjustments to reconcile net income (loss) | ||
to net cash provided by operating activities: | ||
Depreciation and amortization | 119 | 108 |
Operating lease expense | 188 | 185 |
Net realized and unrealized losses (gains) on investments | (28) | 1 |
Stock based compensation | - | 282 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (403) | 152 |
Inventories | (298) | 909 |
Prepaid expenses and other current assets | (131) | (35) |
Other assets | 1 | |
Payments on operating lease liabilities | (204) | (186) |
Accounts payable | 54 | (303) |
Customer deposits | (24) | 33 |
Accrued expenses and other current and non-current liabilities | 448 | (103) |
Net cash provided by operating activities | 726 | 474 |
Investing activities | ||
Proceeds from sale of securities | 272 | 45 |
Purchases of securities | (272) | (32) |
Purchases of property and equipment | (40) | (68) |
Net cash (used in) investing activities | (40) | (55) |
Financing activities | ||
Proceeds from SBA Paycheck Protection Program loan | 807 | - |
Purchase of treasury stock | (6) | - |
Net cash provided by financing activities | 801 | - |
Net increase in cash and cash equivalents | 1,487 | 419 |
Cash and cash equivalents - beginning of the year | 1,332 | 394 |
Cash and cash equivalents - end of period | $2,819 | $813 |
Non-cash transactions | ||
Capitalization of ROU asset and liability | 26 | 1,081 |
Adjustment for Adoption of ASC 842 | - | (91) |
Nature of Operations and Activities
2021.
2020.
Securities
All of the Company’s investments are classified as available-for-sale. As they are available for current operations, they are classified as current on the balance sheets.bonds. Investments in available-for-sale securities are reported at fair value with changes in unrecognized gains or losses net ofincluded in other income on the income statement.
August 31, 2020 | Gross | Gross | ||
Marketable Securities: | Cost | Unrealized Gains | Unrealized Losses | Fair Value |
Common Stocks | 200 | 15 | (22) | 193 |
February 29, 2020 | Gross | Gross | ||
Marketable Securities: | Cost | Unrealized Gains | Unrealized Losses | Fair Value |
Common Stocks | 155 | 16 | (7) | 164 |
As of November 30, 2016, the Company’s available for sale non-equity investments were comprised of certificates of deposits.
As of November 30, 2016, contractual maturities of the Company’s available-for-sale non-equity investments were as follows:
Face Value | Fair Value | |||||||
(In thousands) | (In thousands) | |||||||
Maturing within one year | $ | 1,992 | $ | 1,993 |
was $0.
SOLITRON DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
2020.
The Company maintains a three inch wafer fab which procures raw wafers and produces finished wafers based on management’s estimates of projected future demand. Finished wafers are considered work-in-process since they are usable for many years, and in some circumstances can be used on more than one finished product depending on customer parameters.
Raw material /Work in process: All material acquired or processed | |
Revenue Recognition
Revenue is recognizedvalued at the lower of its acquisition cost or net realizable value, except for wafers which function under a three- year policy. All material not used after two fiscal years is fully reserved for except wafers which are reserved for after three years. Finished wafers produced m our wafer fab are stored in the wafer bank and are considered work-in-process. Raw material in excess of five years’ usage that cannot be restocked, and slow-moving work in process are reserved for.
SOLITRON DEVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
current. Revenues from domestic and export sales to unaffiliated customers for the three months ended August 31, 2020 and August 31, 2019, respectively are as follows: purchases of production materials, and all other suppliers were individually less than 10% of purchases. For the For the Company's total purchases of production materials, with all other suppliers individually less than 10% of purchases. For the 2020. Results of Operations-Three Months Ended August 31, 2019. August 31, 2019. August 31, 2019. and the decrease in selling, general, and administrative expense. August 31, 2019. August 31, 2019. August 31, 2019. August 31, 2019. $19,000 for the six months ended August 31, 2019. equivalents, if necessary. SBA Paycheck Protection Program loan. income from operations. sole discretion. August 31, 2020.2.ENVIRONMENTAL REGULATIONWhileBeginning Balance Accrued Allowances Credits Issued Ending Balance believesany products that it hasare returned within one year after 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 impactdate of semiconductor manufacturing operations.shipment. The Company does not reserve for potential warranty costs based on historical experience and the nature of its cost tracking system. Raw Materials Work-In-Process Finished Goods Totals conductCompany’s products), net of its manufacturing operations, has handledreserves, totaled $1,244,000 as of August 31, 2020 and does handle materials that are considered hazardous, toxic or volatile under federal, state and local laws and, therefore, is subject$1,239,000 as of February 29, 2020. Wafer production was temporarily curtailed during fiscal 2020 due to regulations related to their use, storage, discharge and disposal. No assurance can be made thatimplementation of an improvement plan, which was completed in the riskfirst quarter of accidental releasefiscal 2021. As 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 restAugust 31, 2020, 100% of the semiconductor industry,wafer bank inventory consisted of wafers manufactured between calendar year 2016 and 2021. We do not expect all of our wafer inventory to be consumed within twelve months; however, since it is subjectnot possible 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 and its subsidiariesknow which wafers will or 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.EARNINGS PER SHAREThe shares used, in the computation of the Company’s basic and diluted earnings per common share werewe classify all our inventory as follows: For the three months ended November 30, For the nine months ended November 30, 2016 2015 2016 2015 Weighted average common shares outstanding 1,901,950 2,290,779 2,075,288 2,249,759 Dilutive effect of employee stock options 0 161,012 0 0 Weighted average common shares outstanding, assuming dilution 1,901,950 2,451,791 2,075,288 2,249,759 Weighted average common shares outstanding, assuming dilution, include the incremental shares that would be issued upon the assumed exercise of stock options.4.INVENTORIESNovember 30, 2016, inventories consisted of the following: Gross Reserve Net Raw Materials $ 2,051,000 $ (687,000 ) $ 1,364,000 Work-In-Process 3,945,000 (1,742,000 ) 2,203,000 Finished Goods 939,000 (823,000 ) 116,000 Totals $ 6,935,000 $ (3,252,000 ) $ 3,683,000 6SOLITRON DEVICES, INC.NOTES TO CONDENSED FINANCIAL STATEMENTSAs of February 29, 2016, inventories consisted of the following: Gross Reserve Net Raw Materials $ 1,854,000 $ (489,000 ) $ 1,365,000 Work-In-Process 3,915,000 (1,775,000 ) 2,140,000 Finished Goods 980,000 (814,500 ) 165,500 Totals $ 6,749,000 $ (3,078,500 ) $ 3,670,500 5.INCOME TAXESAt November 30, 2016, the Company has net operating loss carryforwards of approximately $10,016,000 that expire through February 2028. 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 fully 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 carryforwards.Net operating losses after 1996 are subject to a twenty-year loss carryforward. Of the Company’s $10,016,000 of net operating loss carryforwards as of November 30, 2016, approximately $1,254,000 expire in 2021, $1,248,000 expire in 2022, and $7,514,000 expire in 2028.6.ACCRUED EXPENSES AND OTHER CURRENT LIABILITIESAs of November 30, 2016August 31, 2020, and February 29, 2016,2020, accrued expenses and other current liabilities consistedconsist of the following: November 30,
2016 February 29,
2016 Payroll and related employee benefits $ 372,000 $ 447,000 Property taxes 43,000 10,000 Other liabilities 57,000 40,000 Totals $ 472,000 $ 497,000 7.EXPORT SALES AND MAJOR CUSTOMERSRevenues from domestic and export sales to unaffiliated customers for the three months ended November 30, 2016 are as follows: Power Field Effect Power Geographic Region Transistors Hybrids Transistors MOSFETS Totals Europe and Australia $ 2,000 $ 0 $ 3,000 $ 24,000 $ 29,000 Canada and Latin America 4,000 0 0 0 4,000 Far East and Middle East 0 0 11,000 0 11,000 United States 350,000 1,358,000 82,000 311,000 2,101,000 Totals $ 356,000 $ 1,358,000 $ 96,000 $ 335,000 $ 2,145,000 7SOLITRON DEVICES, INC.NOTES TO CONDENSED FINANCIAL STATEMENTSRevenues from domestic and export sales to unaffiliated customers for the three months ended November 30, 2015 are as follows: Power Field Effect Power Geographic Region Transistors Hybrids Transistors MOSFETS Totals Europe and Australia $ 0 $ 0 $ 3,000 $ 0 $ 3,000 Canada and Latin America 9,000 0 1,000 40,000 50,000 Far East and Middle East 15,000 5,000 7,000 99,000 126,000 United States 259,000 698,000 138,000 645,000 1,740,000 Totals $ 283,000 $ 703,000 $ 149,000 $ 784,000 $ 1,919,000 Revenues from domestic and export sales to unaffiliated customers for the nine months ended November 30, 2016 are as follows: Power Field Effect Power Geographic Region Transistors Hybrids Transistors MOSFETS Totals Europe and Australia $ 13,000 $ 0 $ 8,000 $ 24,000 $ 45,000 Canada and Latin America 13,000 0 0 0 13,000 Far East and Middle East 83,000 0 16,000 83,000 182,000 United States 799,000 3,941,000 251,000 602,000 5,593,000 Totals $ 908,000 3,941,000 $ 275,000 $ 709,000 $ 5,833,000 Revenues from domestic and export sales to unaffiliated customers for the nine months ended November 30, 2015 are as follows: Power Field Effect Power Geographic Region Transistors Hybrids Transistors MOSFETS Totals Europe and Australia $ 0 $ 0 $ 12,000 $ 0 $ 12,000 Canada and Latin America 18,000 0 25,000 40,000 83,000 Far East and Middle East 19,000 5,000 36,000 245,000 305,000 United States 965,000 3,023,000 422,000 1,704,000 6,114,000 Totals $ 1,002,000 $ 3,028,000 $ 495,000 $ 1,989,000 $ 6,514,000 Payroll and related employee benefits Legal fees Property taxes Return Allowance Bonus Accrual Other liabilities Totals Geographic Region Europe and Australia Canada and Latin America Far East and Middle East United States Totals Geographic Region Europe and Australia Canada and Latin America Far East and Middle East United States Totals quarterthree months ended November 30, 2016,August 31, 2020 and August 31, 2019, approximately 72% and 74%, respectively, of the Company’s sales have been attributable to contracts with customers whose products are sold to the United States government. The remaining 28% and 26%, respectively of sales are for non-military, scientific and industrial applications, or to distributors where we do not have end user information.consisted offor the following:Customer% of SalesRaytheon Company74%United States Government12%86%For the quarterthree months ended November 30, 2015, sales toAugust 31, 2020 and August 31, 2019, respectively are as follows:Customer Raytheon Avnet / USI Electronics Totals consisted offor the following:Customer% of SalesRaytheon Company54%United States Government10%64%
six months ended August 31, 2020 and August 31, 2019, respectively are as follows:8SOLITRON DEVICES, INC.NOTES TO CONDENSED FINANCIAL STATEMENTSCustomer Raytheon Avnet / USI Electronics Totals ninethree months ended November 30, 2016, sales to the Company’s top two customers consistedAugust 31, 2020, Stellar Industries accounted for 14% of the following:Customer% of SalesRaytheon Company68%United States Government11%79%ninethree months ended November 30, 2015, sales to the Company’s top two customers consistedAugust 31, 2019, no supplier accounted for 10% or more of the following:Customer% of SalesRaytheon Company51%United States Government12%63%8.purchases of production materials. MAJOR SUPPLIERSquartersix months ended November 30, 2016,August 31, 2020, purchases from the Company’s top two vendors consisted supplier, Egide USA, accounted for 24%of the following:Vendor% of PurchasesEgide, USA17%Air Products and Services12%29%quartersix months ended November 30, 2015,August 31, 2019, purchases from the Company’s top two vendors consistedsupplier, Egide USA, accounted for 23% of the following:VendorBalance Sheet Classification% of PurchasesEgide, USAAssets28%SintermetalglassOperating lease right-of-use assets, March 1, 2020Amortization for the six months ended August 31, 2020 Total operating lease right-of-use asset, August 31, 2020 17Liabilities %Current Operating lease liability, short-term 45%For the nine months ended November 30, 2016, purchases from the Company’s top two vendors consisted of the following:Vendor% of PurchasesEgide, USANon-current21%Air Products10% Operating lease liability, long-term 31%For the nine months ended November 30, 2015, purchases from the Company’s top two vendors consisted of the following:Vendor% of PurchasesWuxi Streamtek LTDTotal lease liabilities18%Sintermetalglass17%35%9$590,000 SOLITRON DEVICES, INC.NOTES TO CONDENSED FINANCIAL STATEMENTS9.COMMITMENTS AND CONTINGENCIESFiscal Year Ending February 28/29 Amount 2017 $ 107,000 2018 440,000 2019 454,000 2020 467,000 2021 481,000 Thereafter 411,000 $ 2,360,000 Fiscal Year Ending February 28/29 2021 2022 Total Future Undiscounted Cash Flows Less Imputed Interest to be recognized in lease expense Operating Lease Liabilities, as reported 10.Balance Sheet ClassificationPAYMENT OF DIVIDENDFebruary 29, 2020Assets Operating lease right-of-use assets, March 1, 2019 Amortization for the fiscal year ended February 29, 2020 Total operating lease right-of-use asset, February 29, 2020 Liabilities Current Operating lease liability, short-term Non-current Operating lease liability, long-term Total lease liabilities Fiscal Year Ending February 28/29 2021 2022 Total Future Undiscounted Cash Flows Less Imputed Interest to be recognized in lease expense Operating Lease Liabilities, as reported of the Company did not declare a cash dividend during the three and nine months ended November 30, 2016. In July 2015, the Company paid a dividend of $0.25 per share to all stockholders of record at the close of business on June 29, 2015. The aggregate dividend payment was approximately $575,000.11.STOCK REPURCHASE PROGRAMOn May 29, 2015, the Board of Directors of the Companyhas authorized a stock repurchase program under which the Company may repurchase up to $500,000 of the Company’s common stock through February 29, 2016. On July 28, 2015, the Company announced that the Board of Directors had expanded the stock repurchase program to cover repurchases of up to $1,000,000$1.0 million of its outstanding common stock from time to time through February 29, 2016. On November 20, 2015,stock. Purchases under the Company purchased for $279,616 a total of 65,027 shares of the Company’s common stock pursuant to the repurchase program. On January 15, 2016, the Board of Directors of the Company amended the repurchase program under which the Company may repurchase up to $1,000,000 of its outstanding common stock without an expiration date to the repurchase program. Under the repurchase program, repurchases may be made by the Company from time to time onthrough the open market or in privately negotiated transactions dependingas determined by the Company’s management, and in accordance with the requirements of the Securities and Exchange Commission. The timing and actual number of shares repurchased will depend on market conditions, stocka variety of factors including price, corporate and regulatory requirements and other factors. conditions.did not repurchase any outstanding common stockrepurchased 2,493 shares under the stock repurchase program during the three months ended August 31, 2020, at a total cost of $5,734, or $2.30 per share.three and nine months ended November 30, 2016. See Note 12 for shares and options repurchased from the former Chief Executive Officer that were not pursuant to the stock repurchase program.12.RETIREMENT OF FORMER CHIEF EXECUTIVE OFFICEROn July 22, 2016, Shevach Saraf retired as Chairman, Chief Executive Officer, President, Chief Financial Officer, Treasurer and a member of the Board of Directors of the Company. The Separation Payment and Additional Consideration (as defined below) pursuant to the Separation Agreement entitled to Mr. Saraf included the following payments and benefits related to the repurchase of shares.●a payment of one million two hundred ninety-four thousand three hundred fifteen dollars and ffty-seven cents ($1,294,315.57) representing the aggregate purchase price for the Company’s purchase of Mr. Saraf’s ownership of 331,027 shares of the Company’s common stock (the “Purchase Price”), of which $82,757 represented an excess paid over fair value on the Separation Date;●a payment of nine hundred ninety-five thousand one hundred fourteen dollars and thirty-eight cents ($995,114.38) representing the aggregate payment by the Company to Mr. Saraf for the exercisable stock options held by Mr. Saraf for 290,073 shares of the Company’s common stock pursuant to his stock option agreements (the “Option Payment”), of which $69,753 represented an excess paid over fair value on the Separation Date using Black-Sholes calculations with a Risk Free Interest Rate of .55%, a Volatility of 29.2% and a Life of one year consistent with the contract expiration of these options.
2021 calendar year.10Item 2.Management’s Discussion and Analysis of FINANCIAL CONDITION AND RESULTS of operations20162020 and the Unaudited Condensed Financial Statements and the related Notes to Unaudited Condensed Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.Treasury bills and Certificates of Deposit,securities, revenue recognition, earnings per common share, shipping and handling, and inventories. A discussion of these critical accounting policies are included in Note 12 of the “Notes To Financial Statements” in Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 29, 2016.Trends and Uncertainties:During the three months ended November 30, 2016, the Company’s book-to-bill ratio was approximately 1.08 as compared to approximately 0.34 for the three months ended November 30, 2015, reflecting an increase in the volume of orders booked. In recent years, the Company has experienced seasonality in its bookings, with the fiscal fourth quarter experiencing the highest level of bookings. The Company expects bookings in the fourth quarter of fiscal 2017 to exceed bookings in the fourth quarter of fiscal 2016, which were $4.4 million.During the quarter, the Company was advised by one of its key customers that it was in the process of seeking out additional or alternative sources for some of the Company’s products with that customer. The Company is addressing the concerns of the customer, and subsequent to quarter end received a purchase order for the impacted products for fiscal year 2018, but it is uncertain if the Company will be successful in addressing the customer’s concerns over the long term.Since the management change on July 22, 2016, the Company has been seeking out additional revenue sources, which may involve new products and/or products the Company has not manufactured in recent years. During the quarter, the Company received purchase orders in excess of $1.7 million from a new customer for products the company has not manufactured in recent years. The Company may incur difficulty manufacturing those products, which could result in decreased margins. Most of the products require testing over an extended duration which could result in a temporary increase in work in process and finished goods inventory until the testing is completed prior to shipment. The Company is restructuring operations to support processes for these and other potential new products.November 30, 2016August 31, 2020 Compared to Three Months Ended November 30, 2015August 31, 2019:November 30, 2016August 31, 2020 increased 12%28% to $2,145,000$3,103,000 as compared to $1,919,000$2,420,000 for the three months ended November 30, 2015. This increase was primarily attributableAugust 31, 2019.an increase in$1,683,000 versus $3,827,000 during the valuethree months ended August 31, 2019. Backlog as of orders that were shipped in accordance with customer requirements.
August 31, 2020 decreased 21% to $5,428,000 as compared to a backlog of $6,839,000 as of August 31, 2019.11November 30, 2016August 31, 2020 increased to $1,671,000$1,978,000 from $1,549,000$1,958,000 for the three months ended November 30, 2015,August 31, 2019, due to higher rawincreased materials associated with increased sales and an increase in inventory reserves,cost partially offset by lowerdecreased labor costs.costs and improved productivity. Expressed as a percentage of net sales, cost of sales decreased to 78%64% for the three months ended November 30, 2016August 31, 2020 from 81% for the three months ended November 30, 2015.November 30, 2016August 31, 2020 increased to $474,000$1,125,000 from $370,000$462,000 for the three months ended November 30, 2015,August 31, 2019, due primarily to higherincreased net sales. Accordingly, gross margins on the Company’s net sales increased to 22%36% for the three months ended November 30, 2016 in comparisonAugust 31, 2020 as compared to 19% for the three months ended November 30, 2015.November 30, 2016, the CompanyAugust 31, 2020, we shipped 15,37523,343 units as compared to 23,82320,955 units shipped during the same period of the prior year. It should be noted that since the Company manufactureswe manufacture a wide variety of products with an average sales price ranging from less than one dollara few dollars to several hundred dollars, such periodic variations in the Company’sour volume of units shipped should not be regarded as a reliable indicator of the Company’sour performance.For the three months ended November 30, 2016, the Company’s backlog of open orders increased 40% to $4,650,000 as compared to the backlog of $3,324,000 as of November 30, 2015. Changes in backlog reflect changes in the intake of orders and in the delivery requirements of customers.The Company experienced an increase of 255% to $2,310,000 in the level of bookings during the three months ended November 30, 2016 as compared to $651,000 for the same period in the prior year. The increase in bookings for the three months ended November 30, 2016 is principally 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.$323,000$526,000 for the three months ended November 30, 2016August 31, 2020 from $351,000$779,000 for the same period in the prior year. The decrease reflects a credit relatedwas due to the reversal of an over accrual from the prior quarter for $80,000 and a decrease indecreased stock compensation expense, legal fees of $76,000 in the prior year,and travel expense, partially offset by an increase in selling wages, commissions, and travel expenses of $58,000 related to the Director of Sales position being vacant in the prior year period, and $39,000 in annual meeting expenses that were expensed in the November quarter versus the August quarter in the prior year due to the annual meeting occurring later in the calendar year.bonus accrual. During the three months ended November 30, 2016,August 31, 2020, selling, general and administrative expenses as a percentage of net sales decreased to 15%17% as compared to 18%32% for the three months ended November 30, 2015.November 30, 2016August 31, 2020 increased 695% to $151,000$599,000 as compared to an operating incomeloss of $19,000($317,000) for the three months ended November 30, 2015.August 31, 2019. This increase is due primarily to higherincreased net sales as described above.NovemberAugust 31, 2020 and August 30, 2016 increased to $9,000 as compared to $6,0002019, was consistent at $1,000. Realized gains on investments for the three months ended November 30, 2015. The interest income is primarily driven by the rateAugust 31, 2020 increased to $11,000 as compared to a loss of return on funds invested in certificates of deposit and treasury bills.Other income($4,000) for the three months ended November 30, 2016 increased to $3,000August 31, 2019. Unrealized gains on investments for the three months ended August 31, 2020 were $24,000 as compared to $0 for the three months ended November 30, 2015.November 30, 2016August 31, 2020 increased 715% to $163,000$635,000 as compared to a net incomeloss of $20,000($320,000) for the three months ended November 30, 2015.August 31, 2019. This increase is due primarily to an increase inincreased net sales, decreased cost of sales as a percentage of revenue as described above, and lower selling, general and administrative expenses as described above.Operations-NineOperations-Six Months Ended November 30, 2016August 31, 2020 Compared to NineSix Months Ended November 30, 2015August 31, 2019:ninesix months ended November 30, 2016 decreased 10%August 31, 2020 increased 13% to $5,833,000$5,601,000 as compared to $6,514,000$4,977,000 for the ninesix months ended November 30, 2015. This was primarily attributableAugust 31, 2019.decrease in the numberbacklog of units sold and the corresponding value$6,839,000 as of the orders that were shipped in accordance with customer requirements during the nine months ended November 30, 2016.
August 31, 2019.12ninesix months ended November 30, 2016August 31, 2020 decreased to $4,847,000$3,620,000 from $5,076,000$4,324,000 for the ninesix months ended November 30, 2015, mostlyAugust 31, 2019, due to decreased inventory obsolescence, raw materials and labor costs, due to the reduction in net sales, and a shift in the mix of products manufactured.improved productivity. Expressed as a percentage of net sales, cost of sales increaseddecreased to 83%65% for the ninesix months ended November 30, 2016August 31, 2020 from 78%87% for the ninesix months ended November 30, 2015.ninesix months ended November 30, 2016 decreasedAugust 31, 2020 increased to $986,000$1,981,000 from $1,438,000$653,000 for the ninesix months ended November 30, 2015,August 31, 2019, due primarily to the reduction inincreased net sales and lower cost of sales. Accordingly, gross margins on the Company’s sales decreasedincreased to 17%35% for the ninesix months ended November 30, 2016 in comparisonAugust 31, 2020 as compared to 22%13% for the ninesix months ended November 30, 2015.ninesix months ended November 30, 2016, the CompanyAugust 31, 2020, we shipped 52,31748,511 units as compared to 64,25035,147 units shipped during the same period of the prior year. It should be noted that since the Company manufactureswe manufacture a wide variety of products with an average sales price ranging from less than one dollara few dollars to several hundred dollars, such periodic variations in the Company’sour volume of units shipped should not be regarded as a reliable indicator of the Company’sour performance.For the nine months ended November 30, 2016, the Company’s backlog of open orders decreased 20% to $4,650,000 as compared to the backlog of open orders of $5,832,000 as of February 29, 2016. The Company’s backlog of $4,650,000 as of November 30, 2016 was 40% higher as compared to the backlog of open orders of $3,324,000 as of November 30, 2015. Changes in backlog resulted from changes in the intake of orders and in the delivery requirements of customers.The Company has experienced an increase of 76% to $4,651,000 in the level of bookings during the nine months ended November 30, 2016 when compared to $2,648,000 during the nine months ended November 30, 2015. The increase occurred principally as a result of increases 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.increaseddecreased to $2,508,000$1,012,000 for the ninesix months ended November 30, 2016August 31, 2020 from $1,573,000$1,223,000 for the same period in the prior year. The increase in costsdecrease was primarily due to costs associated with the separation agreement the Company entered into with its former CEOdecreased bonus accrual/expense and certain proxy reimbursement expenses as reported in the Company’s 8-K filing on July 27, 2016. Costs related to the separation agreement included $627,000 of payments associated with the retirement of the former Chief Executive Officer, $22,000 of associated payroll taxes, $100,000 oflower legal fees, salaries and $170,000 of proxy settlement costs.travel expense. During the ninesix months ended November 30, 2016,August 31, 2020, selling, general and administrative expenses as a percentage of net sales increaseddecreased to 43%18% as compared to 24%25% for the ninesix months ended November 30, 2015.ninesix months ended November 30, 2016 decreased 1,027%August 31, 2020 increased to an operating loss of $1,522,000$969,000 as compared to an operating loss of $135,000($570,000) for the ninesix months ended November 30, 2015.August 31, 2019. This decreaseincrease is due primarily to higherincreased net sales, lower cost of sales and decreased selling general and administrative expenses and the lower net sales as described above.The Company recorded total other of $32,000 for the ninesix months ended November 30, 2016August 31, 2020 increased to $7,000 as compared to total other income of $18,000$2,000 for the ninesix months ended November 30, 2015. Included in other incomeAugust 31, 2019. Realized gains on investments for the ninesix months ended November 30, 2016 was $29,000August 31, 2020 increased to $26,000 as compared to a loss of interest income on investment in treasury bills and certificates of deposit, and $3,000 of other income. Included in total other income($20,000) for the ninesix months ended November 30, 2015 was $18,000August 31, 2019. Unrealized gains on investments for the six months ended August 31, 2020 were $2,000 as compared to a gain of interest income on investment in treasury bills and certificates of deposit, and $0 of other income.ninesix months ended November 30, 2016 decreasedAugust 31, 2020 increased to $1,004,000 as compared to a net loss of $1,490,000 from a net loss of $122,000($569,000) for the same period in 2015.six months ended August 31, 2019. This decreaseincrease is due primarily to lowerincreased net sales volume and an increase in selling, general and administrative expensesdecreased cost of sales as described above.Net cash used in operating activities was $1,904,000 for the nine months ended November 30, 2016 primarily reflecting a net loss of $1,490,000 and an increase in accounts receivable of $856,000 offset by increases in accounts payable of $330,000 and depreciation and amortization of $145,000.$482,000$726,000 for the ninesix months ended November 30, 2015August 31, 2020 primarily reflecting net income of $1,004,000, an increase in accrued expenses and other current and non-current liabilities of $448,000, depreciation and amortization of $119,000, partially offset by increases in accounts receivable of $403,000, inventories of $298,000 and prepaid and other expenses of $131,000.$122,000($569,000) offset by a decrease in inventory of $909,000, stock compensation expense of $282,000 and a decrease in accounts receivable of $516,000 and inventory of $404,000 and by depreciation and amortization of $162,000$152,000, partially offset by a decrease in accountaccounts payable of $235,000$303,000 and by accrued expenses and other current and non-current liabilities of $228,000.
$103,000.13provided byused in investing activities was $4,537,000($40,000) for the ninesix months ended November 30, 2016August 31, 2020 principally reflecting $4,748,000$272,000 in salesproceeds from the sale of treasury bills and certificates of deposit, $0securities, offset by $272,000 in purchases of treasury billssecurities and certificates of deposit, and $211,000$40,000 in purchases of property, plant and equipment.investing activities was $336,000 for the nine months ended November 30, 2015 principally reflecting $5,478,000 in sales of treasury bills and certificates of deposit, $4,992,000 in purchases of treasury bills and certificates of deposit, and $150,000 in purchases of property, plant and equipment.Financing Activities:Net cash used in financing activities was $2,137,000$801,000 for the ninesix months ended November 30, 2016August 31, 2020 principally reflecting payments for the repurchase of common stock and options associated with the retirementproceeds of the former Chief Executive Officer.NetSBA Paycheck Protection Program loan.inor provided by financing activities was $843,000 forduring the ninesix months ended November 30, 2015 primarily reflecting a $575,000 dividend paid to stockholders and $279,000 paid to a stockholder in connection with a privately negotiated stock repurchase offset by $11,000 from stock option exercises by the Company’s employees.Subject to the following discussion, the Company expects itsAugust 31, 2019.come frombe cash generated from operations cash on hand and cash invested in money market funds, Treasury bills and certificates of deposit. The Company anticipatescash equivalents, if necessary. We anticipate that itsour capital expenditures required to sustain operations will be approximately $250,000$300,000 during the next twelve months and will be funded from operations and/or available cash.Based upon management’s best information as to current national defense priorities, future defense programs, the shift to Commercial Off-The-Shelf (COTS) by the defense industry, and the continued competition in the defense and aerospace market, the Company believes that it will have sufficient cash on hand and cash from operations to satisfy its operating needs over the next twelve months.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 over the next twelve months. 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 further 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, joint ventures with others or acquisitions in order to maximize marketing potential and utilization of existing resources and provide further opportunities for growth.November 30, 2016 andAugust 31, 2020, February 29, 2016, the Company2020, and August 31, 2019, we had cash on handand cash equivalents of approximately $1,130,000$2,819,000, $1,332,000, and $634,000,$813,000, respectively. The cash increase for the ninesix months ended November 30, 2016August 31, 2020 was primarily due to income from operations and the sale of treasury bills and certificates of deposit.November 30, 2016 andAugust 31, 2020, February 29, 2016, the Company2020, and August 31, 2019, we had investments in treasury bills and certificates of depositsecurities of approximately $1,993,000$193,000, $164,000, and $6,740,000,$65,000, respectively.November 30, 2016, the CompanyAugust 31, 2020, February 29, 2020, and August 31, 2019, we had working capital of $7,376,000 as compared with a working capital at February 29, 2016 of $11,068,000.$6,526,000, $4,687,000, and $4,699,000, respectively. The working capital decreaseincrease for the ninesix months ended November 30, 2016August 31, 2020 was due primarily due to cash used in operations and financing activities.program.Cash Dividend:The Board of Directors of the Company did not declare a cash dividend during the threeprogram subject to market conditions, corporate liquidity requirements and nine months ended November 30, 2016. In July 2015, the Company paid a dividend of $0.25 per share to all stockholders of record at the close of business on June 29, 2015. The aggregate dividend payment was approximately $575,000.14Stock Repurchase Program:On May 29, 2015, the Company announced that its Board of Directors authorized a stock repurchase program under which the Companypriorities and other factors as may repurchase up to $500,000 of its outstanding common stock from time to time through February 29, 2016. On July 28, 2015, the Company announced that the Board of Directors had expanded the stock repurchase program to cover repurchases of up to $1,000,000 of its outstanding common stock from time to time through February 29, 2016. On November 20, 2015, the Company purchased for $279,616 a total of 65,027 shares ofbe considered in the Company’s common stock pursuant to the repurchase program. On January 15, 2016, the Board of Directors of the Company amended the repurchase program under which the Company may repurchase up to $1,000,000 of its outstanding common stock without an expiration date to the repurchase program. Under the repurchase program, repurchases may be made by the Company from time to time on the open market or in privately negotiated transactions depending on markets conditions, stock price, corporate and regulatory requirements, and other factors.The Company did not repurchase any shares under the stock repurchase program during the nine months ended November 30, 2016. See Note 12 of the Form 10-Q for the quarter ended August 31, 2016 for shares and options repurchased from the former Chief Executive Officer that were not pursuant to the stock repurchase program.Forward Looking Statements:"forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995.“forward-looking statements”. 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, 2016,2020, including those identified below. We do not undertake any obligation to update forward-looking statements, except as required by law.●Loss of, or reduction of business from, substantial clients could hurt our business by reducing our revenues, profitability and cash flow.●Our complex manufacturing processes may lower yields and reduce our revenues.●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.●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 of 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 business strategy, which could adversely impact our business, financial condition and results of operations.●A shortage of three-inch silicon wafers could result in lost revenues due to an inability to build our products.15●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.●Failure to protect our proprietary technologies or maintain the right to use certain technologies may negatively affect our ability to compete.●We cannot promise that we will have sufficient capital resources to make necessary investments in manufacturing technology and equipment.●We may make substantial investments in plant and equipment that may become impaired.●While we attempt to monitor the credit worthiness of our customers, we may be at risk due to the adverse financial condition of one or more customers.●Our international operations expose us to material risks, including risks under U.S. export laws.●Security breaches and other disruptions could compromise the integrity of our information and expose us to liability, which would cause our business and reputation to suffer.●The price of our common stock has fluctuated widely in the past and may fluctuate widely in the future.●We cannot guarantee that we will declare future cash dividend payments at historic rates or at all, nor repurchase any shares of our common stock pursuant to our stock repurchase program.●Compliance with regulations regarding the use of "conflict minerals" could limit the supply and increase the cost of certain metals used in manufacturing our products.●Our failure to remediate the material weakness in our internal control over financial reporting or our identification of any other material weaknesses in the future may adversely affect the accuracy and timing of our financial reporting.16ITEM 4.CONTROLS AND PROCEDURESNovember 30, 2016August 31, 2020 due to the material weakness described in the Company’s Annual Report on Form 10-K for the year ended February 29, 20162020 under “Management’s Report on Internal Control over Financial Reporting”. However, giving full consideration to the material weakness and the remediation plan, the Company’s management has concluded that the Company’s financial statements included in this Quarterly Report fairly present, in all material respects, the Company’s financial condition and results of operations as of and for the three months ended November 30, 2016.20162020 under “Management’s Report on Internal Control over Financial Reporting”, there were no changes in the Company’s internal control over financial reporting during the third quarter ended November 30, 2016August 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.17November 30, 2016,August 31, 2020, we had no known material current, pending, or threatened litigation.Period June 1, 2020 – June 30, 2020 July 1, 2020 – July 31, 2020 August 1, 2020 – August 31, 2020 Total ITEM 6.10.1EXHIBITSPromissory Note, dated July 21, 2020, by and between Solitron Devices Inc. and Bank of America (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 27, 2020.ExhibitsCertification of Chief Executive Officer and Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.** Certification of Chief Executive Officer and Interim 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 herewith18SIGNATURESSIGNATURESSOLITRON DEVICES, INC.Date: January 17, 2017/s/ Tim EriksenTim EriksenChief Executive Officer, andInterim Chief Financial Officer 19 EXHIBIT INDEXEXHIBIT NUMBERDESCRIPTION By: DESCRIPTION 31 Certification of Chief Executive Officer and Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.** 32 Certification of Chief Executive Officer and Interim 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 herewith20