10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2015

or

☐    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. 001-04978

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  ¨

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  ¨

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    ☒

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

The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of June 30, 2015 was 2,298,004.

SOLITRON DEVICES, INC.

TABLE OF CONTENTS

PART 1 – FINANCIAL INFORMATION

			Page No.
Item	1.	Financial Statements
		Condensed Balance Sheets	1
		May 31, 2015 (unaudited) and February 28, 2015
		Condensed Statements of Income (unaudited)	2
		Three Months Ended May 31, 2015 and 2014
		Condensed Statements of Cash Flows (unaudited)	3
		Three Months Ended May 31, 2015 and 2014
		Notes to Condensed Financial Statements	4-10
Item	2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11-15
Item	4.	Controls and Procedures	16
PART II – OTHER INFORMATION
Item	1.	Legal Proceedings	17
Item	6.	Exhibits	17
Signatures			18

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SOLITRON DEVICES, INC.

CONDENSED BALANCE SHEETS

AS OF MAY 31, 2015 AND FEBRUARY 28, 2015

(unaudited)

	May 31,			Feb 28,
	2015			2015
ASSETS	(in thousands, except for shares)
CURRENT ASSETS
Cash and cash equivalents	$	929		$	820
Treasury bills and certificates of deposit		7,212			6,971
Accounts receivable, less allowance for doubtful accounts of $2		907			1,018
Inventories, net (Note 4)		3,848			4,197
Prepaid expenses and other current assets		210			123
TOTAL CURRENT ASSETS		13,106			13,129
PROPERTY, PLANT AND EQUIPMENT, net		490			458
OTHER ASSETS		8			8
TOTAL ASSETS	$	13,604		$	13,595
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable – Post-petition	$	225		$	425
Customer deposits		25			20
Accrued expenses and other liabilities (Note 7)		1,344			632
TOTAL CURRENT LIABILITIES		1,594			1,077
TOTAL LIABILITIES		1,594			1,077
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, 2,187,132 and 2,185,832 shares issued and outstanding, net of 273,230 shares of treasury stock as of May 31, 2015 and February 28, 2015 respectively		23			23
Additional paid-in capital		2,751			2,749
Accumulated other comprehensive income		15			15
Retained earnings		9,496			10,006
Less treasury stock		(275	)		(275	)
TOTAL STOCKHOLDERS' EQUITY		12,010			12,518
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	13,604		$	13,595

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

1

SOLITRON DEVICES, INC.

CONDENSED STATEMENTS OF INCOME

THREE MONTHS ENDED MAY 31, 2015 AND MAY 31, 2014

(Unaudited)

	2015		2014
	(in thousands, except for share and per share amounts)
Net sales	$	2,383	$	2,305
Cost of sales		1,880		1,814
Gross profit		503		491
Selling, general and administrative expenses		466		336
Operating income		37		155
Other income (expenses):
Interest income		5		4
Other, net (Note 6)		-		8
Income before provision for income taxes		42		167
Provision for income taxes		7		4
Net income	$	35	$	163
Other comprehensive income:
Unrealized (loss)/gain on investments		2		(1	)
Total comprehensive income	$	37	$	162
Income per share from operating income-Basic	$	0.02	$	0.07
Income per share from operating income-Diluted	$	0.01	$	0.07
Net income per share-Basic	$	0.02	$	0.07
Net income per share-Diluted	$	0.02	$	0.07
Weighted average shares outstanding-Basic		2,187,132		2,178,008
Weighted average shares outstanding-Diluted		2,411,137		2,402,138

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

2

SOLITRON DEVICES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MAY 31, 2015 AND MAY 31, 2014

(Unaudited)

	2015			2014
	(in thousands)
Net income	$	35		$	163
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		51			56
Decrease (increase) in operating assets:
Accounts receivable		111			142
Inventories, net		349			(1	)
Prepaid expenses and other current assets		(87	)		(55	)
Other assets		-			1
Increase (decrease) in operating liabilities:
Accounts payable – Post-petition		(200	)		90
Accounts payable – Pre-petition		-			(8	)
Customer deposits		4			(88	)
Accrued expenses and other liabilities		168			25
Total adjustments		396			162
NET CASH PROVIDED BY OPERATING ACTIVITIES		431			325
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of treasury bills and certificates of deposit		1,754			1,598
Purchases of treasury bills and certificates of deposit		(1,995	)		(1,743	)
Purchases of property, plant and equipment		(83	)		(19	)
NET CASH (USED IN) INVESTING ACTIVITIES		(324	)		(164	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash from exercise of employee stock options		2			6
NET CASH PROVIDED BY FINANCING ACTIVITIES		2			6
Net increase in cash and cash equivalents		109			167
Cash and cash equivalents – beginning of the period		820			625
Cash and cash equivalents - end of the period	$	929		$	792

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

3

SOLITRON DEVICES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

1. ORGANIZATION AND 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 unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

The unaudited condensed financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three months ended May 31, 2015 are not necessarily indicative of the results to be expected for the year ending February 29, 2016.

The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended February 28, 2015.

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 and certificates of deposit include treasury bills with maturities of one year or less, and is stated at market value.

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.  Investments in available-for-sale securities are reported at fair value with unrecognized gains or losses, net of tax, as a component of accumulated other comprehensive income and is included as a separate component of stockholders’ equity. The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when the declines are determined to be other-than-temporary.

The following table summarizes the total face value of treasury bills and certificates of deposit.

Total Face Value as of 5/31/15 (in thousands)
Treasury bills	$	999
Certificates of deposit		6,225
	$	7,224

4

SOLITRON DEVICES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

As of May 31, 2015, 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	$	6,225	$	6,215
Maturing within two years		999		997
	$	7,224	$	7,212

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures”, defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC 820 also sets forth a valuation hierarchy of the inputs (assumptions that market participants would use in pricing an asset or liability) used to measure fair value.  This hierarchy prioritizes the inputs into the following three levels:

Level 1:	Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
Level 2:	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:	Inputs that are generally unobservable.  These inputs may be used with internally developed methodologies that results in management’s best estimate of fair value.

The Company’s brokered Treasury bills and certificates of deposits are subject to Level 1 fair value measurement.

The carrying amounts of the Company’s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses and other liabilities approximate their fair value due to the relatively short period to maturity for these instruments. The fair value of long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities, and the carrying amount of the long-term debt approximates fair 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 May 31, 2015 and February 28, 2015.

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.

5

SOLITRON DEVICES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

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.
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.

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 condensed 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.

Recent Accounting Pronouncements

No recent accounting pronouncements affecting the Company were issued by the Financial Accounting Standards Board or other standards-setting bodies.

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 and its subsidiaries 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.

6

SOLITRON DEVICES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

3. 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 May 31,
	2015		2014
Weighted average common shares outstanding		2,187,132		2,178,008
Dilutive effect of employee stock options		224,005		224,130
Weighted average common shares outstanding, assuming dilution		2,411,137		2,402,138

Weighted average common shares outstanding, assuming dilution, include the incremental shares that would be issued upon the assumed exercise of stock options.

4. INVENTORIES

As of May 31, 2015, inventories consist of the following:

	Gross		Reserve			Net
Raw Materials	$	1,634,000	$	(407,000	)	$	1,227,000
Work-In-Process		4,055,000		(1,635,000	)		2,420,000
Finished Goods		927,000		(726,000	)		201,000
Totals	$	6,616,000	$	(2,768,000	)	$	3,848,000

As of February 28, 2015, inventories consist of the following:

	Gross		Reserve			Net
Raw Materials	$	2,124,000	$	(404,000	)	$	1,720,000
Work-In-Process		3,744,000		(1,624,000	)		2,120,000
Finished Goods		1,077,000		(720,000	)		357,000
Totals	$	6,945,000	$	(2,748,000	)	$	4,197,000

7

SOLITRON DEVICES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

5. INCOME TAXES

At May 31, 2015, the Company has net operating loss carryforwards of approximately $11,701,000 that expire through February 2029. 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.

Total net deferred taxes are comprised of the following at May 31, 2015 and February 28, 2015:

Deferred Tax Asset (Liability):		5/31/15			2/28/15
Current
Allowance for doubtful accounts	$	1,000		$	1,000
Inventory allowance		1,059,000			1,044,000
Section 263A capitalized costs		85,000			85,000
Total current deferred tax assets		1,145,000			1,130,000
Valuation allowance		(1,145,000	)		(1,130,000	)
	$	0		$	0
Long-term
Loss carryforwards	$	3,959,000		$	3,959,000
Depreciation		(43,000	)		(31,000	)
Total long-term deferred tax assets		3,916,000			3,928,000
Valuation allowance		(3,916,000	)		(3,928,000	)
	$	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 period ended May 31, 2015 and the year ended February 28, 2015. A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate for the quarter ended May 31, 2015 and for the year ended February 28, 2015 is as follows:

	5/31/15		2/28/15
U.S. federal statutory rate	34.0	%	34.0	%
Change in valuation allowance	(34.0	)	(34.0	)
Alternative minimum taxes	2.0		2.0
Effective income tax rate	2.0	%	2.0	%

6. OTHER INCOME

The Company did not earn other income for the quarter ended May 31, 2015 as compared to $8,000 of other income for the quarter ended May 31, 2014. The $8,000 of other income reflected in the unaudited condensed statements of income for the quarter ended May 31, 2014 consists of income from relief of obligation related to the Company’s 1992 bankruptcy proceedings.

7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of May 31, 2015 and February 28, 2015, accrued expenses and other liabilities consisted of the following:

		5/31/15		2/28/15
Payroll and related employee benefits	$	661,000	$	575,000
Dividends		547,000		0
Income taxes		17,000		15,000
Property taxes		18,000		7,000
Other liabilities		101,000		35,000
	$	1,344,000	$	632,000

8

SOLITRON DEVICES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

8. EXPORT SALES AND MAJOR CUSTOMERS

Revenues from domestic and export sales to unaffiliated customers for the three months ended May 31, 2015 are as follows:

	Power				Field Effect		Power
Geographic Region	Transistors		Hybrids		Transistors		MOSFETS		Totals
Europe and Australia	$	0	$	0	$	6,000	$	0	$	6,000
Canada and Latin America		9,000		0		0		0		9,000
Far East and Middle East		0		0		14,000		86,000		100,000
United States		464,000		1,149,000		79,000		576,000		2,268,000
Totals	$	473,000	$	1,149,000	$	99,000	$	662,000	$	2,383,000

Revenues from domestic and export sales to unaffiliated customers for the three months ended May 31, 2014 are as follows:

	Power				Field Effect		Power
Geographic Region	Transistors		Hybrids		Transistors		MOSFETS		Totals
Europe and Australia	$	0	$	329,000	$	4,000	$	0	$	333,000
Canada and Latin America		23,000		0		0		0		23,000
Far East and Middle East		0		0		74,000		0		74,000
United States		406,000		944,000		39,000		486,000		1,875,000
Totals	$	429,000	$	1,273,000	$	117,000	$	486,000	$	2,305,000

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 May 31, 2015, sales to the Company’s top two customers consisted of the following:

Customer	% of Sales
Raytheon Company		58	%
United States Government		18	%
		76	%

For the quarter ended May 31, 2014, sales to the Company’s top two customers consisted of the following:

Customer	% of Sales
Raytheon Company		30	%
United States Government		25	%
		55	%

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SOLITRON DEVICES, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

9. MAJOR SUPPLIERS

For the quarter ended May 31, 2015, purchases from the Company’s top two vendors consisted of the following:

Vendor	% of Purchases
Egide, USA		24	%
Stellar Industries		17	%
		41	%

For the quarter ended May 31, 2014, purchases from the Company’s top two vendors consisted of the following:

Vendor	% of Purchases
Egide, USA		27	%
Wuxi Streamtek Ltd		13	%
		40	%

10. COMMITMENTS AND CONTINGENCIES

Future minimum lease payments for the Company’s manufacturing facility are as follows:

Fiscal Year Ending February 28/29	Amount
2016		415,000
2017		427,000
2018		440,000
2019		454,000
2020		467,000
Thereafter		892,000
	$	3,095,000

11. DIVIDEND

On May 29, 2015, the Board of Directors of the Company approved a cash dividend of $0.25 per share of common stock. The dividend will be paid on or about July 22, 2015 to stockholders of record as of the close of business on June 29, 2015. On May 31, 2015, there were 2,187,132 shares of common stock outstanding; as a result the Company recorded a $547,000 liability for dividends payable, which is reflected on the May 31, 2015 balance sheet.

12. STOCK REPURCHASE PROGRAM

On May 29, 2015, the Board of Directors of the Company 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. 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 market conditions, stock price, corporate and regulatory requirements and other factors.

10

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 unaudited 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 28, 2015 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.

Significant Accounting Policies:

The discussion and analysis of our financial condition and results of operations are based upon the unaudited 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, revenue recognition, earnings per common share, shipping and handling, and inventories. A discussion of these critical accounting policies are included 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 28, 2015.

Trends and Uncertainties:

During the three months ended May 31, 2015, the Company’s book-to-bill ratio was approximately .67 as compared to approximately .95 for the three months ended May 31, 2014, reflecting adecrease 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. 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. Subsequent to the three months ended May 31, 2015, the Company has been advised by certain of its key customers that they are currently experiencing delays in receiving contract awards from the U.S. government and delays in foreign military sales, and they anticipate these delays may continue into the first quarter of calendar year 2016. The Company expects these delays may impact the Company’s level of bookings over the corresponding period. 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 continue to 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.

11

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.
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 May 31, 2015 Compared to Three Months Ended May 31, 2014:

Net sales for the three months ended May 31, 2015 increased 3% to $2,383,000 as compared to $2,305,000 for the three months ended May 31, 2014. This increase was primarily attributable to a higher level of orders of products with a higher price point that were shipped in accordance with customer requirements.

Cost of sales for the three months ended May 31, 2015 increased 4% to $1,880,000 as compared to $1,814,000 for the three months ended May 31, 2014, mostly due to higher raw material costs. Expressed as a percentage of sales, cost of sales remained at 79% from the same period in 2014.

Gross profit for the three months ended May 31, 2015 increased slightly to $503,000 from $491,000 for the three months ended May 31, 2014, mostly due to the higher price point on sales although these were slightly offset by an increase in raw material costs. Accordingly, gross margins on the Company’s sales remained at 21% for the three months ended May 31, 2015 and May 31, 2014.

For the three months ended May 31, 2015, the Company shipped 19,804 units as compared to 23,582 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 May 31, 2015, the Company’s backlog of open orders decreased 11% to $6,393,000 as compared to the backlog of $7,176,000 as of February 28, 2015. The Company’s backlog as of May 31, 2015 is 26% lower than the backlog as of May 31, 2014. Changes in backlog reflect changes in the intake of orders and in the delivery requirements of customers.

The Company has experienced a decrease of 28% to $1,588,000 in the level of bookings during the three months ended May 31, 2015 as compared to the three months ended May 31, 2014. The decrease in bookings for the three months ended May 31, 2015 is principally a result of a decrease in the placement of orders by key customers, resulting in timing differences in the award of, contracts by the Department of Defense and its prime contractors.

Selling, general, and administrative expenses increased 39% to $466,000for the three months ended May 31, 2015 from $336,000 for the three months ended May 31, 2014. The increase reflects mostly higher legal fees due to the proxy contest facing the company at its 2015 annual stockholders’ meeting and also higher sales commissions. During the three months ended May 31, 2015, selling, general, and administrative expenses as a percentage of net sales increased to 20% as compared with 15% for the three months ended May 31, 2014.

Operating income for the three months ended May 31, 2015 decreased 76% to $37,000as compared to $155,000 for the three months ended May 31, 2014. This decrease is due primarily to higher cost of sales and higher selling, general, and administrative expenses as described above.

Interest income for the three months ended May 31, 2015 increased to $5,000 as compared to $4,000 for the three months ended May 31, 2014. This increase is due primarily to a higher rate of return on funds invested in certificates of deposit and treasury bills.

12

The Company had no other income for the quarter ended May 31, 2015 as compared to $8,000 of other income for the quarter ended May 31, 2014. The $8,000 of other income for the quarter ended May 31, 2014 consists of income from relief of obligation related to the Company’s 1992 bankruptcy proceedings.

Total comprehensive income for the three months ended May 31, 2015 decreased 77% to $37,000as compared to $162,000 for the three months ended May 31, 2014. This decrease is due primarily to higher cost of sales, an increase in selling, general and administrative expenses, and a decrease in other income as outlined above.

Liquidity and Capital Resources:

Operating Activities:

Net cash provided by operating activities was $431,000 for the three months ended May 31, 2015 principally reflecting net income of $35,000, depreciation of $51,000 and $349,000 of lower inventories.

Net cash provided by operating activities was $325,000 for the three months ended May 31, 2014 principally reflecting net income of $163,000, depreciation of $56,000 and a decrease in accounts receivable of $142,000.

Investing Activities:

Net cash used in investing activities was $324,000 for the three months ended May 31, 2015 principally reflecting $1,754,000 in sales of treasury bills and certificates of deposit, $1,995,000 in purchases of treasury bills and certificates of deposit, and $83,000 in purchases of property, plant and equipment.

Net cash used in investing activities was $164,000 for the three months ended May 31, 2014 principally reflecting $1,598,000 in sales of treasury bills and certificates of deposit, $1,743,000 in purchases of treasury bills and certificates of deposit, and $19,000 in purchases of property, plant and equipment.

Financing Activities:

Net cash provided by financing activities was $2,000 for the three months ended May 31, 2015 principally reflecting $2,000 from stock options exercised by the Company’s employees.

Net cash provided by financing activities was $6,000 for the three months ended May 31, 2014 principally reflecting $6,000 from stock options exercised by the Company’s employees.

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 $280,000 during the balance of the current fiscal year and will be funded from operations.

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 over the next twelve months and cash from operations. However, due to the level of current backlog, projected new order intake, 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 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.

13

At May 31, 2015, February 28, 2015 and May 31, 2014, the Company had cash on hand of approximately $929,000, $820,000 and $792,000, respectively. The cash increase for the three months ended May 31, 2015 was primarily due to a reduction of $349,000 in inventories due to lower production yields which was partially offset by an increase in treasury bills and certificates of deposit of $241,000.

At May 31, 2015, February 28, 2015 and May 31, 2014, the Company had investments in treasury bills and certificates of deposit of approximately $7,212,000, $6,971,000 and $6,406,000, respectively.

At May 31, 2015, the Company had working capital of $11,512,000 as compared with a working capital at February 28, 2015 of $12,052,000. The $540,000 decrease for the three months ended May 31, 2015 was primarily due to increases in accrued expenses.

Capital Allocation:

Cash Dividend:

On May 29, 2015, the Company announced that its Board of Directors declared a cash dividend of $0.25 per share of common stock which will be paid on or about July 22, 2015 to stockholders of record as of the close of business on June 29, 2015.

Stock Repurchase Program:

On May 29, 2015, the Company also announced that its Board of Directors authorized a stock repurchase program under which the Company may repurchase up to $500,000 of its outstanding common stock from time to time through February 29, 2016 on the open market or in privately negotiated transactions as 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 a variety of factors including price, corporate and regulatory requirements and other conditions.

The Company did not repurchase any shares under the stock repurchase program during the three months ended May 31, 2015.

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 28, 2015, 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:

● 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 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.

14

● 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 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.

● A shortage of three-inch silicon wafers could result in lost revenues due to an inability to build our products.

● 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.

● Our business could be negatively affected by the proxy contest at our 2015 annual meeting of stockholders and other activist stockholder activities.

● 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 newly authorized 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.

15

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 not effective as of May 31, 2015 due to the material weakness described in the Company’s Annual report on Form 10-K for the year ended February 28, 2015 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 quarter ended May 31, 2015.

Changes in Internal Control over Financial Reporting.

Other than the changes referenced in the Company’s Annual report on Form 10-K for the year ended February 28, 2015 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 first quarter ended May 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

16

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We may from time to time become a party to various legal proceedings arising in the ordinary course of business. As of May 31, 2015, we had no known material current, pending, or threatened litigation.

ITEM 6. EXHIBITS

Exhibits

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

17

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: July 15, 2015
	/s/ Shevach Saraf
	Shevach Saraf
	Chairman, President,
	Chief Executive Officer,
	Treasurer and
	Chief Financial Officer
	(Principal Executive and Financial Officer)

18

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.**

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

19

EX-31

Exhibit 31

CERTIFICATION

I, Shevach Saraf, Chairman, President, Chief Executive Officer, Treasurer and Chief Financial Officer of Solitron Devices, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Solitron Devices, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within this entity, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 15, 2015

/s/ Shevach Saraf

Shevach Saraf

Chairman, President,

Chief Executive Officer,

Treasurer and

Chief Financial Officer

(Principal Executive and Financial Officer)

EX-32

Exhibit 32

Certification Required by 18 U.S.C. Section 1350

(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report of Solitron Devices, Inc. (the “Company”) on Form 10-Q for the period ended May 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Shevach Saraf, as Chairman, President, Chief Executive Officer, Treasurer and Chief Financial Officer of Solitron Devices, Inc., certify, pursuant to 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002), that to my knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 15, 2015

/s/ Shevach Saraf

Shevach Saraf

Chairman, President,

Chief Executive Officer,

Treasurer and Chief Financial Officer

(Principal Executive and Financial Officer)

XML

Export Sales and Major Customers (Details Textual) - Customers	3 Months Ended
	May. 31, 2015	May. 31, 2014
Export Sales and Major Customers (Textual)
Number of major customers	2	2

XML

Income Taxes (Details 1)	3 Months Ended	12 Months Ended
	May. 31, 2015	Feb. 28, 2015
Reconciliation of the U.S. federal statutory tax rate to the company's effective tax rate
U.S. federal statutory rate	34.00%	34.00%
Change in valuation allowance	(34.00%)	(34.00%)
Alternative minimum taxes	2.00%	2.00%
Effective income tax rate	2.00%	2.00%

XML

Major Suppliers (Tables)

3 Months Ended

May. 31, 2015

Major Suppliers [Abstract]

Summary of percentage of purchase from major vendors

Vendor	% of Purchases
Egide, USA		24	%
Stellar Industries		17	%
		41	%

Vendor	% of Purchases
Egide, USA		27	%
Wuxi Streamtek Ltd		13	%
		40	%

XML

Commitments and Contingencies (Details)	May. 31, 2015 USD ($)
Summary of future minimum lease payments for the Company's manufacturing facility
2016	$ 415,000
2017	427,000
2018	440,000
2019	454,000
2020	467,000
Thereafter	892,000
Total	$ 3,095,000

XML

Export Sales and Major Customers (Details) - USD ($)	3 Months Ended
	May. 31, 2015	May. 31, 2014
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	$ 2,383,000	$ 2,305,000
Power Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	473,000	429,000
Hybrids [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	1,149,000	1,273,000
Field Effect Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	99,000	117,000
Power MOSFETS [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	662,000	486,000
Europe and Australia [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	6,000	333,000
Europe and Australia [Member] | Power Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	0	0
Europe and Australia [Member] | Hybrids [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	0	329,000
Europe and Australia [Member] | Field Effect Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	6,000	4,000
Europe and Australia [Member] | Power MOSFETS [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	0	0
Canada and Latin America [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	9,000	23,000
Canada and Latin America [Member] | Power Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	9,000	23,000
Canada and Latin America [Member] | Hybrids [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	0	0
Canada and Latin America [Member] | Field Effect Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	0	0
Canada and Latin America [Member] | Power MOSFETS [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	0	0
Far East and Middle East [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	100,000	74,000
Far East and Middle East [Member] | Power Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	0	0
Far East and Middle East [Member] | Hybrids [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	0	0
Far East and Middle East [Member] | Field Effect Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	14,000	74,000
Far East and Middle East [Member] | Power MOSFETS [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	86,000	0
United States [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	2,268,000	1,875,000
United States [Member] | Power Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	464,000	406,000
United States [Member] | Hybrids [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	1,149,000	944,000
United States [Member] | Field Effect Transistors [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	79,000	39,000
United States [Member] | Power MOSFETS [Member]
Revenues from domestic and export sales to unaffiliated customers
Revenues, Total	$ 576,000	$ 486,000

XML

Inventories

3 Months Ended

May. 31, 2015

Inventories [Abstract]

INVENTORIES

4. INVENTORIES

As of May 31, 2015, inventories consist of the following:

	Gross		Reserve			Net
Raw Materials	$	1,634,000	$	(407,000	)	$	1,227,000
Work-In-Process		4,055,000		(1,635,000	)		2,420,000
Finished Goods		927,000		(726,000	)		201,000
Totals	$	6,616,000	$	(2,768,000	)	$	3,848,000

As of February 28, 2015, inventories consist of the following:

	Gross		Reserve			Net
Raw Materials	$	2,124,000	$	(404,000	)	$	1,720,000
Work-In-Process		3,744,000		(1,624,000	)		2,120,000
Finished Goods		1,077,000		(720,000	)		357,000
Totals	$	6,945,000	$	(2,748,000	)	$	4,197,000

XML

Dividend (Details) - USD ($)	1 Months Ended
	May. 29, 2015	May. 31, 2015	Feb. 28, 2015
Dividend [Abstract]
Cash dividends per share (in dollars per share)	$ 0.25
Common stock, shares outstanding		2,187,132	2,185,832
Dividends payable		$ 547,000	$ 0

XML

Organization and Summary of Significant Accounting Policies (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	Feb. 28, 2015
Summary of Significant Accounting Policies (Textual)
Description of inventory valuation policy for 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.
Accounts receivable allowance amount	$ 2	$ 2
Certificates of Deposit [Member]
Summary of Significant Accounting Policies (Textual)
Maturity term	One year or less

XML

Organization and Summary of Significant Accounting Policies (Details 1) $ in Thousands	May. 31, 2015 USD ($)
Schedule of contractual maturities of the Company's available-for-sale non-equity investments
Maturing within one year, face value	$ 6,225
Maturing within two years, face value	999
Total, face value	7,224
Maturing within one year, fair value	6,215
Maturing within two years, fair value	997
Total, fair value	$ 7,212

XML

Stock Repurchase Program (Details) - May. 29, 2015 - USD ($)	Total
Stock Repurchase Program (Textual)
Stock repurchase program, authorized amount	$ 500,000
Stock repurchase program, expiration date	Feb. 29, 2016

XML

Earnings Per Share (Details) - shares	3 Months Ended
	May. 31, 2015	May. 31, 2014
Summary of basic and diluted earnings per common share
Weighted average common shares outstanding	2,187,132	2,178,008
Dilutive effect of employee stock options	224,005	224,130
Weighted average common shares outstanding, assuming dilution	2,411,137	2,402,138

XML

Inventories (Details) - USD ($)	May. 31, 2015	Feb. 28, 2015
Schedule of Inventories
Inventory, Raw Materials, Gross	$ 1,634,000	$ 2,124,000
Inventory, Work-In-Process, Gross	4,055,000	3,744,000
Inventory, Finished Goods, Gross	927,000	1,077,000
Inventory, Gross, Total	6,616,000	6,945,000
Inventory Raw Material Reserve	(407,000)	(404,000)
Inventory Work-In-Process Reserve	(1,635,000)	(1,624,000)
Inventory Finished Goods Reserve	(726,000)	(720,000)
Inventories, Reserve, Total	(2,768,000)	(2,748,000)
Inventory, Raw material, Net	1,227,000	1,720,000
Inventory, Work in Process, Net	2,420,000	2,120,000
Inventory, Finished Goods, Net	201,000	357,000
Inventories, Net, Total	$ 3,848,000	$ 4,197,000

XML

Earnings Per Share

3 Months Ended

May. 31, 2015

Earnings Per Share [Abstract]

EARNINGS PER SHARE

3. 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 May 31,
	2015		2014
Weighted average common shares outstanding		2,187,132		2,178,008
Dilutive effect of employee stock options		224,005		224,130
Weighted average common shares outstanding, assuming dilution		2,411,137		2,402,138

Weighted average common shares outstanding, assuming dilution, include the incremental shares that would be issued upon the assumed exercise of stock options.

XML

Income Taxes (Details) - USD ($)	May. 31, 2015	Feb. 28, 2015
Current
Allowance for doubtful accounts	$ 1,000	$ 1,000
Inventory allowance	1,059,000	1,044,000
Section 263A capitalized costs	85,000	85,000
Total current deferred tax assets	1,145,000	1,130,000
Valuation allowance	(1,145,000)	(1,130,000)
Total net deferred taxes	0	0
Long-term
Loss carryforwards	3,959,000	3,959,000
Depreciation	(43,000)	(31,000)
Total long-term deferred tax assets	3,916,000	3,928,000
Valuation allowance	(3,916,000)	(3,928,000)
Total net deferred tax assets	$ 0	$ 0

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Major Suppliers (Details) - Supplier Concentration Risk [Member]	3 Months Ended
	May. 31, 2015	May. 31, 2014
Summary of percentage of purchase from major vendors (Textual)
Percentage of purchases from major vendors	41.00%	40.00%
Egide, USA [Member]
Summary of percentage of purchase from major vendors (Textual)
Percentage of purchases from major vendors	24.00%	27.00%
Stellar Industries [Member]
Summary of percentage of purchase from major vendors (Textual)
Percentage of purchases from major vendors	17.00%
Wuxi Streamtek Ltd [Member]
Summary of percentage of purchase from major vendors (Textual)
Percentage of purchases from major vendors		13.00%

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Condensed Balance Sheets (Unaudited) - USD ($) $ in Thousands	May. 31, 2015	Feb. 28, 2015
CURRENT ASSETS
Cash and cash equivalents	$ 929	$ 820
Treasury bills and certificates of deposit	7,212	6,971
Accounts receivable, less allowance for doubtful accounts of $2	907	1,018
Inventories, net (Note 4)	3,848	4,197
Prepaid expenses and other current assets	210	123
TOTAL CURRENT ASSETS	13,106	13,129
PROPERTY, PLANT AND EQUIPMENT, net	490	458
OTHER ASSETS	8	8
TOTAL ASSETS	13,604	13,595
CURRENT LIABILITIES
Accounts payable - Post-petition	225	425
Customer deposits	25	20
Accrued expenses and other liabilities (Note 7)	1,344	632
TOTAL CURRENT LIABILITIES	1,594	1,077
TOTAL LIABILITIES	$ 1,594	$ 1,077
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, 2,187,132 and 2,185,832 shares issued and outstanding, net of 273,230 shares of treasury stock as of May 31, 2015 and February 28, 2015 respectively	$ 23	$ 23
Additional paid-in capital	2,751	2,749
Accumulated other comprehensive income	15	15
Retained earnings	9,496	10,006
Less treasury stock	(275)	(275)
TOTAL STOCKHOLDERS' EQUITY	12,010	12,518
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 13,604	$ 13,595

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Organization and Summary of Significant Accounting Policies

3 Months Ended

May. 31, 2015

Organization and Summary of Significant Accounting Policies [Abstract]

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. ORGANIZATION AND 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 unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

The unaudited condensed financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three months ended May 31, 2015 are not necessarily indicative of the results to be expected for the year ending February 29, 2016.

The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended February 28, 2015.

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 and certificates of deposit include treasury bills with maturities of one year or less, and is stated at market value.

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.  Investments in available-for-sale securities are reported at fair value with unrecognized gains or losses, net of tax, as a component of accumulated other comprehensive income and is included as a separate component of stockholders’ equity. The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when the declines are determined to be other-than-temporary.

The following table summarizes the total face value of treasury bills and certificates of deposit.

Total Face Value as of 5/31/15 (in thousands)
Treasury bills	$	999
Certificates of deposit		6,225
	$	7,224

As of May 31, 2015, 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	$	6,225	$	6,215
Maturing within two years		999		997
	$	7,224	$	7,212

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures”, defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC 820 also sets forth a valuation hierarchy of the inputs (assumptions that market participants would use in pricing an asset or liability) used to measure fair value.  This hierarchy prioritizes the inputs into the following three levels:

Level 1:	Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
Level 2:	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:	Inputs that are generally unobservable.  These inputs may be used with internally developed methodologies that results in management’s best estimate of fair value.

The Company’s brokered Treasury bills and certificates of deposits are subject to Level 1 fair value measurement.

The carrying amounts of the Company’s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses and other liabilities approximate their fair value due to the relatively short period to maturity for these instruments. The fair value of long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities, and the carrying amount of the long-term debt approximates fair 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 May 31, 2015 and February 28, 2015.

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.
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.

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 condensed 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.

Recent Accounting Pronouncements

No recent accounting pronouncements affecting the Company were issued by the Financial Accounting Standards Board or other standards-setting bodies.

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Other Income (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Other Income (Textual)
Other income		$ 8

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Income Taxes (Tables)

3 Months Ended

May. 31, 2015

Income Taxes [Abstract]

Summary of deferred tax asset (Liability)

Deferred Tax Asset (Liability):		5/31/15			2/28/15
Current
Allowance for doubtful accounts	$	1,000		$	1,000
Inventory allowance		1,059,000			1,044,000
Section 263A capitalized costs		85,000			85,000
Total current deferred tax assets		1,145,000			1,130,000
Valuation allowance		(1,145,000	)		(1,130,000	)
	$	0		$	0
Long-term
Loss carryforwards	$	3,959,000		$	3,959,000
Depreciation		(43,000	)		(31,000	)
Total long-term deferred tax assets		3,916,000			3,928,000
Valuation allowance		(3,916,000	)		(3,928,000	)
	$	0		$	0

Reconciliation of the U.S.federal statutory tax rate to the company's effective tax rate

	5/31/15		2/28/15
U.S. federal statutory rate	34.0	%	34.0	%
Change in valuation allowance	(34.0	)	(34.0	)
Alternative minimum taxes	2.0		2.0
Effective income tax rate	2.0	%	2.0	%

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Accrued Expenses and Other Current Liabilities (Details) - USD ($)	May. 31, 2015	Feb. 28, 2015
Summary of accrued expenses and other liabilities
Payroll and related employee benefits	$ 661,000	$ 575,000
Dividends	547,000	0
Income taxes	17,000	15,000
Property taxes	18,000	7,000
Other liabilities	101,000	35,000
Accrued expenses, Total	$ 1,344,000	$ 632,000

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Export Sales and Major Customers (Tables)

3 Months Ended

May. 31, 2015

Export Sales and Major Customers [Abstract]

Summary of Revenues from domestic and export sales to unaffiliated customers

	Power				Field Effect		Power
Geographic Region	Transistors		Hybrids		Transistors		MOSFETS		Totals
Europe and Australia	$	0	$	0	$	6,000	$	0	$	6,000
Canada and Latin America		9,000		0		0		0		9,000
Far East and Middle East		0		0		14,000		86,000		100,000
United States		464,000		1,149,000		79,000		576,000		2,268,000
Totals	$	473,000	$	1,149,000	$	99,000	$	662,000	$	2,383,000

	Power				Field Effect		Power
Geographic Region	Transistors		Hybrids		Transistors		MOSFETS		Totals
Europe and Australia	$	0	$	329,000	$	4,000	$	0	$	333,000
Canada and Latin America		23,000		0		0		0		23,000
Far East and Middle East		0		0		74,000		0		74,000
United States		406,000		944,000		39,000		486,000		1,875,000
Totals	$	429,000	$	1,273,000	$	117,000	$	486,000	$	2,305,000

Summary of percentage of sales from major customer

Customer	% of Sales
Raytheon Company		58	%
United States Government		18	%
		76	%

Customer	% of Sales
Raytheon Company		30	%
United States Government		25	%
		55	%

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Environmental Regulation

3 Months Ended

May. 31, 2015

Environmental Regulation [Abstract]

ENVIRONMENTAL REGULATION

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 and its subsidiaries 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.

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Condensed Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	May. 31, 2015	Feb. 28, 2015
Balance Sheets [Abstract]
Allowance for doubtful accounts	$ 2	$ 2
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	2,187,132	2,185,832
Common stock, shares outstanding	2,187,132	2,185,832
Treasury stock, shares	273,230	273,230

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Stock Repurchase Program

3 Months Ended

May. 31, 2015

Stock Repurchase Program [Abstract]

STOCK REPURCHASE PROGRAM

12. STOCK REPURCHASE PROGRAM

On May 29, 2015, the Board of Directors of the Company 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. 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 market conditions, stock price, corporate and regulatory requirements and other factors.

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Document and Entity Information - shares	3 Months Ended
	May. 31, 2015	Jun. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	SOLITRON DEVICES INC
Entity Central Index Key	0000091668
Amendment Flag	false
Current Fiscal Year End Date	--02-28
Document Type	10-Q
Document Period End Date	May 31, 2015
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,298,004

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Organization and Summary of Significant Accounting Policies (Policies)

3 Months Ended

May. 31, 2015

Organization and Summary of Significant Accounting Policies [Abstract]

Nature of Operations and Activities

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

Basis of Presentation

The unaudited condensed financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

The unaudited condensed financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three months ended May 31, 2015 are not necessarily indicative of the results to be expected for the year ending February 29, 2016.

The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended February 28, 2015.

Cash and Cash Equivalents

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 and Certificates of Deposit

Investment in treasury bills and certificates of deposit include treasury bills with maturities of one year or less, and is stated at market value.

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.  Investments in available-for-sale securities are reported at fair value with unrecognized gains or losses, net of tax, as a component of accumulated other comprehensive income and is included as a separate component of stockholders’ equity. The Company monitors its investments for impairment periodically and records appropriate reductions in carrying values when the declines are determined to be other-than-temporary.

The following table summarizes the total face value of treasury bills and certificates of deposit.

Total Face Value as of 5/31/15 (in thousands)
Treasury bills	$	999
Certificates of deposit		6,225
	$	7,224

As of May 31, 2015, 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	$	6,225	$	6,215
Maturing within two years		999		997
	$	7,224	$	7,212

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures”, defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC 820 also sets forth a valuation hierarchy of the inputs (assumptions that market participants would use in pricing an asset or liability) used to measure fair value.  This hierarchy prioritizes the inputs into the following three levels:

Level 1:	Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
Level 2:	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:	Inputs that are generally unobservable.  These inputs may be used with internally developed methodologies that results in management’s best estimate of fair value.

The Company’s brokered Treasury bills and certificates of deposits are subject to Level 1 fair value measurement.

The carrying amounts of the Company’s short-term financial instruments, including accounts receivable, accounts payable, accrued expenses and other liabilities approximate their fair value due to the relatively short period to maturity for these instruments. The fair value of long-term debt is based on current rates at which the Company could borrow funds with similar remaining maturities, and the carrying amount of the long-term debt approximates fair value.

Accounts Receivable

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 May 31, 2015 and February 28, 2015.

Shipping and Handling

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

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.
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.

Revenue Recognition

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

Financial Statement Estimates

The preparation of condensed 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.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

No recent accounting pronouncements affecting the Company were issued by the Financial Accounting Standards Board or other standards-setting bodies.

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Condensed Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Income Statement [Abstract]
Net sales	$ 2,383	$ 2,305
Cost of sales	1,880	1,814
Gross profit	503	491
Selling, general and administrative expenses	466	336
Operating income	37	155
Other income (expenses):
Interest income	$ 5	4
Other, net (Note 6)		8
Income before provision for income taxes	$ 42	167
Provision for income taxes	7	4
Net income	35	163
Other comprehensive income:
Unrealized (loss)/gain on investments	2	(1)
Total comprehensive income	$ 37	$ 162
Income per share from operating income-Basic	$ 0.02	$ 0.07
Income per share from operating income-Diluted	0.01	0.07
Net income per share-Basic	0.02	0.07
Net income per share-Diluted	$ 0.02	$ 0.07
Weighted average shares outstanding-Basic	2,187,132	2,178,008
Weighted average shares outstanding-Diluted	2,411,137	2,402,138

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Accrued Expenses and Other Current Liabilities

3 Months Ended

May. 31, 2015

Accrued Expenses and Other Liabilities [Abstract]

ACCRUED EXPENSES AND OTHER LIABILITIES

7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

As of May 31, 2015 and February 28, 2015, accrued expenses and other liabilities consisted of the following:

		5/31/15		2/28/15
Payroll and related employee benefits	$	661,000	$	575,000
Dividends		547,000		0
Income taxes		17,000		15,000
Property taxes		18,000		7,000
Other liabilities		101,000		35,000
	$	1,344,000	$	632,000

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Other Income

3 Months Ended

May. 31, 2015

Other Income [Abstract]

OTHER INCOME

6. OTHER INCOME

The Company did not earn other income for the quarter ended May 31, 2015 as compared to $8,000 of other income for the quarter ended May 31, 2014. The $8,000 of other income reflected in the unaudited condensed statements of income for the quarter ended May 31, 2014 consists of income from relief of obligation related to the Company’s 1992 bankruptcy proceedings.

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Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

May. 31, 2015

Accrued Expenses and Other Liabilities [Abstract]

Summary of accrued expenses and other liabilities

		5/31/15		2/28/15
Payroll and related employee benefits	$	661,000	$	575,000
Dividends		547,000		0
Income taxes		17,000		15,000
Property taxes		18,000		7,000
Other liabilities		101,000		35,000
	$	1,344,000	$	632,000

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Organization and Summary of Significant Accounting Policies (Tables)

3 Months Ended

May. 31, 2015

Organization and Summary of Significant Accounting Policies [Abstract]

Summary of available-for-sale investments

Total Face Value as of 5/31/15 (in thousands)
Treasury bills	$	999
Certificates of deposit		6,225
	$	7,224

Contractual maturities of available-for-sale non-equity investments

	Face value		Fair Value
	(In thousands)		(In thousands)
Maturing within one year	$	6,225	$	6,215
Maturing within two years		999		997
	$	7,224	$	7,212

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Commitments and Contingencies

3 Months Ended

May. 31, 2015

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

10. COMMITMENTS AND CONTINGENCIES

Future minimum lease payments for the Company’s manufacturing facility are as follows:

Fiscal Year Ending February 28/29	Amount
2016		415,000
2017		427,000
2018		440,000
2019		454,000
2020		467,000
Thereafter		892,000
	$	3,095,000

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Export Sales and Major Customers

3 Months Ended

May. 31, 2015

Export Sales and Major Customers [Abstract]

EXPORT SALES AND MAJOR CUSTOMERS

8. EXPORT SALES AND MAJOR CUSTOMERS

Revenues from domestic and export sales to unaffiliated customers for the three months ended May 31, 2015 are as follows:

	Power				Field Effect		Power
Geographic Region	Transistors		Hybrids		Transistors		MOSFETS		Totals
Europe and Australia	$	0	$	0	$	6,000	$	0	$	6,000
Canada and Latin America		9,000		0		0		0		9,000
Far East and Middle East		0		0		14,000		86,000		100,000
United States		464,000		1,149,000		79,000		576,000		2,268,000
Totals	$	473,000	$	1,149,000	$	99,000	$	662,000	$	2,383,000

Revenues from domestic and export sales to unaffiliated customers for the three months ended May 31, 2014 are as follows:

	Power				Field Effect		Power
Geographic Region	Transistors		Hybrids		Transistors		MOSFETS		Totals
Europe and Australia	$	0	$	329,000	$	4,000	$	0	$	333,000
Canada and Latin America		23,000		0		0		0		23,000
Far East and Middle East		0		0		74,000		0		74,000
United States		406,000		944,000		39,000		486,000		1,875,000
Totals	$	429,000	$	1,273,000	$	117,000	$	486,000	$	2,305,000

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 May 31, 2015, sales to the Company’s top two customers consisted of the following:

Customer	% of Sales
Raytheon Company		58	%
United States Government		18	%
		76	%

For the quarter ended May 31, 2014, sales to the Company’s top two customers consisted of the following:

Customer	% of Sales
Raytheon Company		30	%
United States Government		25	%
		55	%

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Major Suppliers

3 Months Ended

May. 31, 2015

Major Suppliers [Abstract]

MAJOR SUPPLIERS

9. MAJOR SUPPLIERS

For the quarter ended May 31, 2015, purchases from the Company’s top two vendors consisted of the following:

Vendor	% of Purchases
Egide, USA		24	%
Stellar Industries		17	%
		41	%

For the quarter ended May 31, 2014, purchases from the Company’s top two vendors consisted of the following:

Vendor	% of Purchases
Egide, USA		27	%
Wuxi Streamtek Ltd		13	%
		40	%

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Dividend

3 Months Ended

May. 31, 2015

Dividend [Abstract]

DIVIDEND

11. DIVIDEND

On May 29, 2015, the Board of Directors of the Company approved a cash dividend of $0.25 per share of common stock. The dividend will be paid on or about July 22, 2015 to stockholders of record as of the close of business on June 29, 2015. On May 31, 2015, there were 2,187,132 shares of common stock outstanding; as a result the Company recorded a $547,000 liability for dividends payable, which is reflected on the May 31, 2015 balance sheet.

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Income Taxes (Details Textual) - May. 31, 2015 - USD ($)	Total
Income Taxes (Textual)
Operating loss carryforwards, net	$ 11,701,000
Operating loss carryforwards, Expiration date	Feb. 28, 2029
Valuation allowance recorded on deferred tax assets, Percentage	100.00%
Operating Loss Carryforwards, Limitations on Use	Should a cumulative change in the ownership of more than 50% occur within a three-year period, there could be an annual limitation on loss carryforwards.
Cumulative change in ownership percentage	50.00%
Period for cumulative change in ownership	3 years

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Inventories (Tables)

3 Months Ended

May. 31, 2015

Inventories [Abstract]

Schedule of inventories

	Gross		Reserve			Net
Raw Materials	$	1,634,000	$	(407,000	)	$	1,227,000
Work-In-Process		4,055,000		(1,635,000	)		2,420,000
Finished Goods		927,000		(726,000	)		201,000
Totals	$	6,616,000	$	(2,768,000	)	$	3,848,000

	Gross		Reserve			Net
Raw Materials	$	2,124,000	$	(404,000	)	$	1,720,000
Work-In-Process		3,744,000		(1,624,000	)		2,120,000
Finished Goods		1,077,000		(720,000	)		357,000
Totals	$	6,945,000	$	(2,748,000	)	$	4,197,000

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Commitments and Contingencies (Tables)

3 Months Ended

May. 31, 2015

Commitments and Contingencies [Abstract]

Summary of future minimum lease payments for the Company's manufacturing facility

Fiscal Year Ending February 28/29	Amount
2016		415,000
2017		427,000
2018		440,000
2019		454,000
2020		467,000
Thereafter		892,000
	$	3,095,000

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Major Suppliers (Details Textual) - Vendors	3 Months Ended
	May. 31, 2015	May. 31, 2014
Major Suppliers (Textual)
Number of major vendors	2	2

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Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 35	$ 163
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	51	56
Decrease (increase) in operating assets:
Accounts receivable	111	142
Inventories, net	349	(1)
Prepaid expenses and other current assets	$ (87)	(55)
Other assets		1
Increase (decrease) in operating liabilities:
Accounts payable - Post-petition	$ (200)	90
Accounts payable - Pre-petition		(8)
Customer deposits	$ 4	(88)
Accrued expenses and other liabilities	168	25
Total adjustments	396	162
NET CASH PROVIDED BY OPERATING ACTIVITIES	431	325
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales of treasury bills and certificates of deposit	1,754	1,598
Purchases of treasury bills and certificates of deposit	(1,995)	(1,743)
Purchases of property, plant and equipment	(83)	(19)
NET CASH (USED IN) INVESTING ACTIVITIES	(324)	(164)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash from exercise of employee stock options	2	6
NET CASH PROVIDED BY FINANCING ACTIVITIES	2	6
Net increase in cash and cash equivalents	109	167
Cash and cash equivalents - beginning of the period	820	625
Cash and cash equivalents - end of the period	$ 929	$ 792

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Income Taxes

3 Months Ended

May. 31, 2015

Income Taxes [Abstract]

INCOME TAXES

5. INCOME TAXES

At May 31, 2015, the Company has net operating loss carryforwards of approximately $11,701,000 that expire through February 2029. 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.

Total net deferred taxes are comprised of the following at May 31, 2015 and February 28, 2015:

Deferred Tax Asset (Liability):		5/31/15			2/28/15
Current
Allowance for doubtful accounts	$	1,000		$	1,000
Inventory allowance		1,059,000			1,044,000
Section 263A capitalized costs		85,000			85,000
Total current deferred tax assets		1,145,000			1,130,000
Valuation allowance		(1,145,000	)		(1,130,000	)
	$	0		$	0
Long-term
Loss carryforwards	$	3,959,000		$	3,959,000
Depreciation		(43,000	)		(31,000	)
Total long-term deferred tax assets		3,916,000			3,928,000
Valuation allowance		(3,916,000	)		(3,928,000	)
	$	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 period ended May 31, 2015 and the year ended February 28, 2015. A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate for the quarter ended May 31, 2015 and for the year ended February 28, 2015 is as follows:

	5/31/15		2/28/15
U.S. federal statutory rate	34.0	%	34.0	%
Change in valuation allowance	(34.0	)	(34.0	)
Alternative minimum taxes	2.0		2.0
Effective income tax rate	2.0	%	2.0	%

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Organization and Summary of Significant Accounting Policies (Details) $ in Thousands	May. 31, 2015 USD ($)
Short-term investments:
Face Value	$ 7,224
Treasury bills [Member]
Short-term investments:
Face Value	999
Certificates of Deposit [Member]
Short-term investments:
Face Value	$ 6,225

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Export Sales and Major Customers (Details 1) - Sales [Member]	3 Months Ended
	May. 31, 2015	May. 31, 2014
Summary of percentage sales to major customer
Percentage of purchases from major vendors	76.00%	55.00%
Raytheon Company [Member]
Summary of percentage sales to major customer
Percentage of purchases from major vendors	58.00%	30.00%
United States Government [Member]
Summary of percentage sales to major customer
Percentage of purchases from major vendors	18.00%	25.00%

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Earnings Per Share (Tables)

3 Months Ended

May. 31, 2015

Earnings Per Share [Abstract]

Summary of basic and diluted earnings per common share

	For the three months ended May 31,
	2015		2014
Weighted average common shares outstanding		2,187,132		2,178,008
Dilutive effect of employee stock options		224,005		224,130
Weighted average common shares outstanding, assuming dilution		2,411,137		2,402,138