UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





FORM
      10-Q





(Mark
      one)




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


For
      the
      quarterly period ended May 31, 2008




or


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




For
      the
      transition period from _______ to _______




Commission
      File No. 1-4978





SOLITRON
      DEVICES, INC.


(Exact
      Name of Registrant as Specified in Its Charter)


Delaware
              
              22-1684144(State
                  or Other Jurisdiction of
              
              (I.R.S.
                  EmployerIncorporation
                  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 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 companyx




The
      number of shares of the registrant’s common stock, $0.01 par value, outstanding
      as of June 25, 2008 was 2,262,904.







SOLITRON
      DEVICES, INC.





INDEX








Page
                No.PART
              1 - FINANCIAL INFORMATIONItem
            1.
            Financial
                Statements (unaudited)Condensed
                Balance Sheets
            
            3May
                31, 2008 and February 29, 2008Condensed
                Statements of Income
            
            4Three
                Months Ended May 31, 2008 and 2007Condensed
                Statements of Cash Flows
            
            5Three
                Months Ended May 31, 2008 and 2007Notes
                to Condensed Financial Statements
            
            6-12Item
            2.
            Management’s
                Discussion and Analysis of Financial Condition andResults
                of Operations
            
            13-15Item
            3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            
            15-16Item
            4.
            Controls
                and Procedures
            
            16-17PART
                II – OTHER INFORMATIONItem
            6.
            Exhibits
            
            17Signatures
            
            
            18




2




PART
      I
– FINANCIAL INFORMATION





ITEM
      1.   FINANCIAL
      STATEMENTS





SOLITRON
      DEVICES, INC.


CONDENSED
      BALANCE SHEETS


(Unaudited,
      in thousands)





May 31,2008
            
            
            Feb 29,2008**ASSETS**CURRENT
                ASSETS :Cash
            
            $
            465
            
            $
            75Investment
                in treasury bills
            
            
            4,420
            
            
            4,410Accounts
                receivable, less allowance for doubtful accounts of $7
            
            
            837
            
            
            1,026Inventories,
                net
            
            
            2,844
            
            
            2,985Prepaid
                expenses and other current assets
            
            
            149
            
            
            104TOTAL
                CURRENT ASSETS
            
            
            8,715
            
            
            8,600PROPERTY,
                PLANT AND EQUIPMENT, net
            
            
            571
            
            
            562OTHER
                ASSETS
            
            
            240
            
            
            245TOTAL
                ASSETS
            
            $
            9,526
            
            $
            9,407**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**CURRENT
                LIABILITIES:Accounts
                payable – Post-petition
            
            $
            447
            
            $
            529Accounts
                payable – Pre-petition, current portion
            
            
            1,106
            
            
            1,114Customer
                Deposit
            
            
            304
            
            
            387Accrued
                expenses and other current liabilities
            
            
            574
            
            
            554TOTAL
                CURRENT LIABILITIES
            
            
            2,431
            
            
            2,584LONG
                TERM LIABILITIES, net of current portion
            
            
            345
            
            
            345TOTAL
                LIABILITIES
            
            
            2,776
            
            
            2,929COMMITMENTS
                & CONTINGENCIES**STOCKHOLDERS’
                EQUITY**Preferred
                stock, $.01 par value, authorized 500,000 shares, none issued
            
            
            -0-
            
            
            -0-Common
                    stock, $.01 par value, authorized 10,000,000 shares, 2,262,904
                    shares
                    issued and outstanding, net of 173,287 shares of treasury
                    stock
            
            
            23
            
            
            23Additional
                paid-in capital
            
            
            2,733
            
            
            2,733Retained
                earnings
            
            
            3,994
            
            
            3,722TOTAL
                STOCKHOLDERS’ EQUITY
            
            
            6,750
            
            
            6,478TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            9,526
            
            $
            9,407





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





3




SOLITRON
      DEVICES, INC.


CONDENSED
      STATEMENTS OF INCOME


THREE
      MONTHS ENDED MAY 31,


(Unaudited,
      in thousands except for share and per share amounts)




2008
            
            2007NET
                SALES
            
            $
            2,169
            
            $
            1,743Cost
                of Sales
            
            
            1,623
            
            
            1,370Gross
                Profit
            
            
            546
            
            
            373Selling,
                General and Administrative Expenses
            
            
            284
            
            
            270Operating
                Income/(Loss)
            
            
            262
            
            
            103OTHER
                INCOMEOther
                Income, Net
            
            
            -
            
            
            4Interest
                Income
            
            
            10
            
            
            44Interest
                Expense
            
            
            -
            
            
            -Other
                Income, Net
            
            
            10
            
            
            48Net
                Income/(Loss)
            
            $
            272
            
            $
            151INCOME/(LOSS)
                PER SHARE: Basic
            
            $
            .12
            
            $
            .07:
                Diluted
            
            $
            .11
            
            $
            .06WEIGHTED
                AVERAGESHARES
                OUTSTANDING: Basic
            
            
            2,262,972
            
            
            2,288,279:
                Diluted
            
            
            2,479,039
            
            
            2,462,577




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





4




SOLITRON
      DEVICES, INC.


CONDENSED
      STATEMENTS OF CASH FLOWS


THREE
      MONTHS ENDED MAY 31,


(Unaudited,
      in thousands)




2008
            
            2007CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                (Loss)/Income
            
            $
            272
            
            $
            151Adjustments
                    to reconcile net income to net cash provided by operating
                    activities:Depreciation
                and amortization
            
            
            49
            
            
            46Changes
                in operating assets and liabilities:(Increase)
                Decrease in:Investment
                in treasury bills
            
            
            (10
            )
            
            (327
            )Accounts
                receivable
            
            
            189
            
            
            (4
            )Inventories
            
            
            141
            
            
            (1
            )Prepaid
                expenses and other current assets
            
            
            (45
            )
            
            (19
            )Other
                assets
            
            
            5
            
            
            (5
            )Increase
                (Decrease) in:Accounts
                payable – Post-petition
            
            
            (82
            )
            
            113Accounts
                payable – Pre-petition
            
            
            (8
            )
            
            (7
            )Customer
                deposit
            
            
            (83
            )
            
            -Accrued
                expenses and other current liabilities
            
            
            20
            
            
            6Other
                long-term liabilities
            
            
            -
            
            
            -NET
                CASH PROVIDED BY OPERATING ACTIVITIES
            
            
            448
            
            
            (47
            )CASH
                FLOW FROM INVESTING ACTIVITIES:Purchases
                of property, plant and equipment
            
            
            (58
            )
            
            (30
            )NET
                CASH (USED IN) INVESTING ACTIVITIES
            
            
            (58
            )
            
            (30
            )CASH
                FLOW FROM FINANCING ACTIVITIES:Exercise
                of stock options
            
            
            -
            
            
            -NET
                CASH FROM FINANCING ACTIVITIES
            
            
            -
            
            
            -NET
                INCREASE/(DECREASE) IN CASH
            
            
            390
            
            
            (77
            )CASH
                AT THE BEGINNING OF PERIOD
            
            
            75
            
            
            163CASH
                AT THE END OF PERIOD
            
            $
            465
            
            $
            86





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





5




SOLITRON
      DEVICES, INC.


NOTES
      TO CONDENSED FINANCIAL STATEMENTS


(Unaudited)





1.
            GENERAL
                AND SIGNIFICANT ACCOUNTING POLICIES:





GENERAL :





The
      financial information included herein is unaudited; however, such information
      reflects all adjustments (consisting primarily of normal recurring adjustments),
      which are, in the opinion of management, necessary for a fair statement of
      the
      results for the interim period.




The
      accompanying unaudited interim condensed financial statements have been prepared
      pursuant to the rules and regulations of the Securities and Exchange Commission
      for reporting on Form 10-Q. Pursuant to such rules and regulations, certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with accounting principles generally accepted in the
      United States have been condensed or omitted.




The
      information contained in this Quarterly Report on Form 10-Q should be read
      in
      conjunction with the Notes to Consolidated Financial Statements appearing in
      the
      Solitron Devices, Inc. Annual Report on Form 10-K for the year ended February
      29, 2008.




The
      results of operations for the three-month period ended May 31, 2008 are not
      necessarily indicative of the results to be expected for the entire year ending
      February 28, 2009.




SIGNIFICANT
      ACCOUNTING POLICIES :




Cash


Cash
      includes demand deposits and money market accounts. The Company has $465,000
      in
      cash deposits which is $365,000 over the $100,000 limit for FDIC
      insurance.





Investment
      in Treasury Bills


During
      the first quarter of this fiscal year company management decided to reclassify
      its investment in treasury bills from cash and cash equivalents and report
      it
      separately as “Investment in Treasury Bills”. Investment in Treasury Bills
      includes treasury bills with maturities of one year or less and is stated at
      market value. The corresponding amount of cash and cash equivalents shown on
      the
      prior period balance sheet and statement of cash flows has been reclassified
      to
      reflect this change in accounting principle (see footnote 11).





Accounts
      Receivable


The
      Company extends unsecured credit to its customers in the ordinary course of
      business but mitigates the associated credit risk by performing credit checks
      and actively pursuing past due accounts. An allowance for doubtful accounts
      has
      been established. The allowance amount was $7,000 as of May 31,
      2008.





Shipping
      and Handling


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





Inventories


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




The
      Company’s inventory valuation policy is as follows:


Raw
                    material /Work in process:
                All
                    material purchased, processed and/or used in the last two fiscal
                    years is
                    valued at the lower of its acquisition cost or market. All material
                    not
                    purchased/used in the last two fiscal years is fully reserved
                    for.
  6
  SOLITRON
            DEVICES, INC.
 NOTES
            TO CONDENSED FINANCIAL STATEMENTS
 (Unaudited)
  Finished
                    goods:
                All
                    finished goods with firm orders for later delivery are valued
                    (material
                    and overhead) at the lower or 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.






Stock
      Based Compensation


In
      December 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      148, “Accounting for Stock-Based Compensation-Transition and Disclosure, and
      amendment of FASB Statement No. 123”. This statement amends SFAS No. 123, to
      provide alternative methods of transition for a voluntary change to the fair
      value based method of accounting for stock-based employee compensation. This
      statement also amends the disclosure requirements of SFAS No. 123 to require
      prominent disclosures in both annual and interim financial statements about
      the
      method of accounting for stock-based employee compensation and the effect of
      the
      method used on reported results. The Company has prepared its interim financial
      statements for the quarters ended May 31, 2008 and May 31, 2007 in accordance
      with SFAS No. 148.





During
      the quarters ended May 31, 2008 and May 31, 2007, the Company did not issue
      any
      stock-based compensation to its employees or directors.




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.





3.  ENVIRONMENTAL
      LIABILITIES:





The
      Company entered into an Ability to Pay Multi-Site Settlement Agreement with
      the
      United States Environmental Protection Agency (“USEPA”), effective February 24,
      2006 (“Settlement Agreement”), to resolve the Company’s alleged liability to
      USEPA at the following sites: Solitron Microwave Superfund Site, Port Salerno,
      Florida (“Port Salerno Site”); Petroleum Products Corporation Superfund Site,
      Pembroke Park, Florida; Casmalia Resources Superfund Site, Santa Barbara,
      California “(Casmalia Site”); Solitron Devices Site, Riviera Beach, Florida (the
“Riviera Beach Site”); and City Industries Superfund Site, Orlando, Florida
      (collectively, the “Sites”). The Settlement Agreement required the Company to
      pay to USEPA the sum of $74,000 by February 24, 2008; the Company paid the
      entire sum of $74,000 to USEPA on February 27, 2006. In addition, the Company
      is
      required to pay to USEPA the sum of $10,000 or 5% of Solitron’s net after-tax
      income over the first $500,000, if any, whichever is greater, for each year
      from
      2008-2012. For payment to USEPA to be above $10,000 for any of these five years,
      the Company’s net income must exceed $700,000 for such year, which has happened
      in fiscal year 2001, fiscal year 2006, and fiscal year 2008. The Company accrued
      $50,000 for its remaining obligations under the Settlement
      Agreement.





7




SOLITRON
      DEVICES, INC.


NOTES
      TO CONDENSED FINANCIAL STATEMENTS


(Unaudited)





In
      consideration of the payments made by the Company under the Settlement
      Agreement, USEPA agreed not to sue or take any administrative action against
      the
      Company with regard to any of the Sites. The Company has also been notified
      by a
      group of alleged responsible parties formed at the Casmalia Site (“Casmalia PRP
      Group”) that, based on their
      review and lack of objection to the Settlement Agreement, the Casmalia PRP
      Group
      does not anticipate pursuing Solitron for cost recovery at the Casmalia
      site.





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





Prior
      to
      the sale of the Port Salerno Site and Riviera Beach Site, USEPA took over from
      FDEP as the lead regulatory agency for the remediation of the Sites. At the
      closing of the sale of each Site, the net proceeds of sale were distributed
      to
      USEPA and/or FDEP or other parties, as directed by the agencies. In addition,
      upon the sale of the Riviera Beach Site, the Riviera Beach Escrow Account was
      transferred to USEPA, as directed by the agencies. The current balance in the
      Port Salerno Escrow Account is approximately $58,000. At present, work at the
      Port Salerno Site is being performed by USEPA. Work at the Riviera Beach Site
      is
      being performed by Honeywell, Inc. (“Honeywell”), pursuant to an Administrative
      Order on Consent entered into between Honeywell and USEPA. The Company has
      been
      notified by FDEP that the successful performance of remediation work in
      accordance with the Consent Final Judgment standards by USEPA at the Port
      Salerno Site and by Honeywell at the Riviera Beach Site will be construed by
      FDEP as discharging the Company’s remediation obligations under the Consent
      Final Judgment.





There
      remains a possibility that FDEP will determine at some time in the future that
      the final remedy approved by USEPA and implemented at either, or both of, the
      Port Salerno Site and Riviera Beach Site does not meet the State cleanup
      requirements imposed by the Consent Final Judgment. If such a final
      determination is made by FDEP, there is a possibility that FDEP will require
      the
      Company to implement additional remedial action at either, or both of, the
      Port
      Salerno Site and Riviera Beach Site.





By
      letter
      dated November 16, 2006, FDEP notified the Company that FDEP has unreimbursed
      expenses associated with the Port Salerno Site and Riviera Beach Site of
      $214,800. FDEP further notified the Company that FDEP required the Company
      to
      resume payments under Consent Final Judgment to ensure that there are adequate
      funds to cover FDEP’s unreimbursed expenses and the Company’s residual liability
      under the Consent Final Judgment. During a follow up telephone conversation
      with
      the Company’s attorney, FDEP advised the Company that FDEP will prepare a
      justification for the asserted unreimbursed expenses. Upon receipt of the cost
      reimbursement package, the Company is required to transfer $55,000.00 from
      the
      Port Salerno Escrow Account to FDEP as partial payment for FDEP’s unreimbursed
      expenses that are otherwise recoverable under the Consent Final Judgment. FDEP
      further stated, during the telephone conversation, that FDEP will work with
      the
      Company to establish a reduced payment schedule for the Company to resume under
      the Consent Final Judgment based on an appropriate showing by the Company of
      financial hardship. The Company is currently awaiting receipt of FDEP’s cost
      reimbursement package. Upon receipt of that documentation, the Company will
      be
      required to provide a recommendation to FDEP for resumption of payments to
      FDEP
      under the Consent Final Judgment based on the Company’s present ability to
      pay.





8




SOLITRON
      DEVICES, INC.


NOTES
      TO CONDENSED FINANCIAL STATEMENTS


(Unaudited)





On
      August
      7, 2002, the Company received a Request for Information from the State of New
      York Department of Environmental Conservation (“NYDEC”), seeking information on
      whether the Company had disposed of certain wastes at the Clarkstown Landfill
      Site located in the Town of Clarkstown, Rockland County, New York (The
      Clarkstown Landfill Site”). By letter dated August 29, 2002, the Company
      responded to the Request for Information and advised NYDEC that the Company’s
      former Tappan, New York facility had closed in the mid-1980’s, prior to the
      initiation of the Company’s bankruptcy proceedings described below. The Company
      contends that, to the extent that NYDEC has a claim against the Company as
      a
      result of the Company’s alleged disposal of wastes at the Clarkstown Landfill
      Site prior to the closing of the Company’s former Tappan facility in the
      mid-1980’s, the claim was discharged in bankruptcy as a result of the Bankruptcy
      Court’s August 1993 Order. At NYDEC’s request, the Company entered into a
      revised Tolling Agreement with NYDEC on October 8, 2007, which provides for
      the
      tolling of applicable statutes of limitation through the earlier of October
      28,
      2008, or the date the State institutes a suit against the Company for any claims
      associated with the Clarkstown Landfill Site. It is not known at this time
      whether NYDEC will pursue a claim against the Company in connection with the
      Clarkstown Landfill Site. As of the date of this filing, no such claim has
      been
      made.





4.  EARNINGS
      PER SHARE :





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





For the three months endedMay 31,2008
            
            2007Weighted
                average common shares outstanding
            
            
            2,262,972
            
            
            2,288,279Dilutive
                effect of employee stock options
            
            
            216,067
            
            
            174,298Weighted
                average common shares outstanding, assuming dilution
            
            
            2,479,039
            
            
            2,462,577




Weighted
      average common shares outstanding, assuming dilution, include the incremental
      shares that would be issued upon the assumed exercise of stock options. For
      the
      three month periods ended May 31, 2008 and May 31, 2007, 13,800 of the Company's
      stock options were excluded from the calculation of diluted earning per share
      because the exercise prices of the stock options were greater than or equal
      to
      the average price of the common shares, and therefore their inclusion would
      have
      been anti-dilutive.





5.  INVENTORIES:





As
      of May
      31, 2008, inventories consist of the following:





Gross
            
            Reserve
            
            NetRaw
                Materials
            
            $
            1,581,000
            
            $
            (321,000
            )
            $
            1,260,000Work-In-Process
            
            
            1,989,000
            
            
            (509,000
            )
            
            1,480,000Finished
                Goods
            
            
            563,000
            
            
            (459,000
            )
            
            104,000Totals
            
            $
            4,133,000
            
            $
            (1,289,000
            )
            $
            2,844,000




9




SOLITRON
      DEVICES, INC.


NOTES
      TO CONDENSED FINANCIAL STATEMENTS


(Unaudited)





6.  INCOME
      TAXES :





At
      May
      31, 2008, the Company has net operating loss carryforwards of approximately
      $12,598,000 that expire through 2022. Such net operating losses are available
      to
      offset future taxable income, if any. As the utilization of such net operating
      losses for tax purposes is not assured, the deferred tax asset has been mostly
      reserved through the recording of a 90% valuation allowance. Should a cumulative
      change in the ownership of more than 50% occur within a three-year period,
      there
      could be an annual limitation on the use of the net operating loss
      carryforward.





Total
      net
      deferred taxes are comprised of the following at May 31, 2008:





Deferred
                tax assets:Loss
                carryforwards
            
            $
            4,542,000Allowance
                for doubtful accounts
            
            
            3,000Inventory
                allowance
            
            
            3,565,000Accrued
                bonuses
            
            
            77,000Section
                263A capitalized costs
            
            
            1,111,000Total
                deferred tax assets
            
            
            9,298,000Valuation
                allowance
            
            
            (8,833000
            )Net
                deferred tax assets
            
            
            465,000Deferred
                tax liabilities:Depreciation
            
            
            278,000Total
                deferred tax liabilities
            
            
            278,000Total
                net deferred taxes
            
            $
            187,000




The
      change in the valuation allowance on deferred tax assets is due principally
      to
      the utilization of the net operating loss for the quarter ending May 31,
      2008.





A
      reconciliation of the provision for income taxes to the amount calculated using
      the statutory federal rate (34%) for quarter ending May 31, 2008, is as
      follows:





2008
            
            2007Income
                    Tax Provision at U.S. Statutory Rate
            
            $
            272,000
            
            $
            147,000State
                Taxes, Net of Federal Benefit
            
            
            29,000
            
            
            16,000Alternative
                Minimum Taxes
            
            
            -
            
            
            -Utilization
                of Net Operating Loss Carryforward
            
            
            (301,000
            )
            
            (163,000
            )Income
                Tax Provision
            
            $
            -
            
            $
            -





The
      Company paid $8,000 in federal and state alternative minimum taxes for fiscal
      year 2007 and has accrued $11,000 in federal and state alternative minimum
      taxes
      for fiscal year 2008.





7.  OTHER
      INCOME :





The
      $10,000 of other income reflected in the condensed statements of income for
      the
      quarter ended May 31, 2008 consists entirely of interest income on investment
      in
      treasury bills net of changes in market value. For the fiscal quarter ended
      May
      31, 2007, the Company earned $48,000 of other income consisting of $44,000
      interest income on investment in treasury bills net of changes in market value
      plus $4,000 of other income related to receivables adjustments.





10




SOLITRON
      DEVICES, INC.


NOTES
      TO CONDENSED FINANCIAL STATEMENTS


(Unaudited)





8.  ACCRUED
      EXPENSES :





As
      of May
      31, 2008 accrued expenses and other liabilities consisted of the
      following:


Payroll
                and related employee benefits
              
              $
              519,000Other
                liabilities
              
              
              55,000$
              574,000




9.  EXPORT
      SALES AND MAJOR CUSTOMERS :





Revenues
      from domestic and export sales to unaffiliated customers for the three months
      ended May 31, 2008 are as follows:


Power
              
              
              
              Field Effect
              
              PowerGeographic
                  Region
              
              Transistors
              
              Hybrids
              
              Transistors
              
              MOSFETS
              
              TotalsEurope
                  and Australia
              
              $
              38,000
              
              $
              129,000
              
              $
              10,000
              
              $
              0
              
              $
              177,000Canada
                  and Latin America
              
              
              12,000
              
              
              0
              
              
              0
              
              
              5,000
              
              
              17,000Far
                  East and Middle East
              
              
              42,000
              
              
              0
              
              
              0
              
              
              0
              
              
              42,000United
                  States
              
              
              261,000
              
              
              1,234,000
              
              
              127,000
              
              
              311,000
              
              
              1,933,000Totals
              
              $
              353,000
              
              $
              1,363,000
              
              $
              137,000
              
              $
              316,000
              
              $
              2,169,000




Revenues
      from domestic and export sales to unaffiliated customers for the three months
      ended May 31, 2007 are as follows:


Power
              
              
              
              Field Effect
              
              PowerGeographic
                  Region
              
              Transistors
              
              Hybrids
              
              Transistors
              
              MOSFETS
              
              TotalsEurope
                  and Australia
              
              $
              17,000
              
              $
              217,000
              
              $
              34,000
              
              $
              0
              
              $
              268,000Canada
                  and Latin America
              
              
              8,000
              
              
              0
              
              
              0
              
              
              18,000
              
              
              26,000Far
                  East and Middle East
              
              
              22,000
              
              
              0
              
              
              0
              
              
              0
              
              
              22,000United
                  States
              
              
              215,000
              
              
              922,000
              
              
              128,000
              
              
              162,000
              
              
              1,427,000Totals
              
              $
              262,000
              
              $
              1,139,000
              
              $
              162,000
              
              $
              180,000
              
              $
              1,743,000





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.





Sales
      to
      the Company's top two customers, Raytheon Company and the U.S. Government,
      accounted for 52% of net sales for the quarter ended May 31, 2008 as compared
      with 54% of the Company's net sales for the quarter ended May 31, 2007. Sales
      to
      Raytheon Company accounted for approximately 39% of net sales for the quarter
      ended May 31, 2008 and 41% for the quarter ended May 31, 2007. Sales to the
      U.S.
      Government accounted for 13% of sales during both quarters ended May 31, 2008
      and May 31, 2007.





10.
      Major
      Suppliers





Purchases
      from the Company’s two top suppliers, Platronics Seals and Egide USA Inc.,
      accounted for 23% of total purchases of production materials for the quarter
      ended May 31, 2008. For the quarter ended May 31, 2007, purchases from the
      Company’s two top suppliers, Platronics Seals and Coining Inc., accounted for
      14% of the Company's total purchases of production materials.





11


SOLITRON
        DEVICES, INC.
 NOTES
        TO CONDENSED FINANCIAL STATEMENTS
 (Unaudited)
 
 11.
        Change in accounting principle
 
 During
        the first quarter of this fiscal year company management decided to remove
        its
        investment in treasury bills from cash and cash equivalents and report it
        separately as “Investment in Treasury Bills”. Investment in Treasury Bills
        includes treasury bills with maturities of one year or less and is stated
        at
        market value. The
        Company has reclassified its February 28, 2008 balance sheet to reflect this
        change in accounting principle. The reclassification is as
        follows:


Before
                  change:Cash
                  and cash equivalents
              
              $
              4,485,000After
                  change:Cash
              
              $
              75,000Investment
                  in treasury bills
              
              
              4,410,000




Income
        from treasury bill investments will include both accrued interest income
        and
        differences between accrued surrender value and market
        value.




12





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





Overview:




Solitron
      Devices, Inc., a Delaware corporation (the “Company” or “Solitron”), designs,
      develops, manufactures and markets solid-state semiconductor components and
      related devices primarily for the military and aerospace markets. The Company
      manufactures a large variety of bipolar and metal oxide semiconductor (“MOS”)
      power transistors, power and control hybrids, junction and power MOS field
      effect transistors and other related products. Most of the Company’s products
      are custom made pursuant to contracts with customers whose end products are
      sold
      to the U.S. Government. Other products, such as Joint Army/Navy transistors,
      diodes and Standard Military Drawings voltage regulators, are sold as standard
      or catalog items.




The
      following discussion and analysis of factors which have affected the Company's
      financial position and operating results during the periods included in the
      accompanying condensed financial statements should be read in conjunction with
      the Financial Statements and the related Notes to Financial Statements and
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations included in the Company’s Annual Report on Form 10-K for the year
      ended February 29, 2008 and the Condensed Financial Statements and the related
      Notes to Condensed Financial Statements included in Item 1 of this Quarterly
      Report on Form 10-Q.




Significant
      Accounting Policies:




The
      discussion and analysis of our financial condition and results of operations
      are
      based upon the condensed financial statements included elsewhere in this
      Quarterly Report on Form 10-Q which are prepared in accordance with accounting
      principles generally accepted in the United States. Preparing financial
      statements requires management to make estimates and assumptions that affect
      the
      reported amounts of assets, liabilities, revenue, and expenses. These estimates
      and assumptions are affected by management’s application of accounting policies.
      Our critical accounting policies include inventories, valuation of plant,
      equipment, revenue recognition and accounting for income taxes. A discussion
      of
      all of these critical accounting policies can be found in Note 1 of the “Notes
      To Financial Statements” in Item 8 of our Annual Report on Form 10-K for
      the fiscal year ended February 29, 2008.




Trends
      and Uncertainties :




During
      the three months ended May 31, 2008 the Company’s book-to-bill ratio was
      approximately .56 as compared to approximately 1.31 for the three months ended
      May 31, 2007, reflecting a decrease in the volume of orders booked. The Company
      does not believe that the quarter-to-quarter 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. The Company
      continues to identify means intended to reduce its variable manufacturing costs
      to offset the potential impact of low volume of orders to be shipped. However,
      should order intake fall drastically below the level experienced in the last
      twenty four months, the Company might be required to implement further cost
      cutting or other downsizing measures to continue its 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.




The
      Company’s inventory valuation policy is as follows:





Raw
                material /Work in process:
            All
                material purchased, processed and/or used in the last two fiscal
                years is
                valued at the lower of its acquisition cost or market. All material
                not
                purchased/used in the last two fiscal years is fully reserved
                for.




13




Finished
                goods:
            All
                finished goods with firm orders for later delivery are valued (material
                and overhead) at the lower or 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, 2008 Compared to Three Months Ended
      May
      31, 2007 :





Net
      sales
      for the three months ended May
      31,
      2008 increased 24% to $2,169,000 as compared to $1,743,000 for the three months
      ended May 31, 2007. This increase was primarily attributable to a higher level
      of orders that were shipped in accordance with customer
      requirements.




Cost
      of
      sales for the three months ended May 31, 2008 increased to $1,623,000 from
      $1,370,000 for the comparable period in 2007. Expressed as a percentage of
      sales, cost of sales decreased to 75% from 79% for the same period in 2007.
      This
      change was due primarily to decreases in direct and indirect labor wages and
      manufacturing overhead expenses.





Gross
      profit for the three months ended May 31, 2008 increased to $546,000 from
      $373,000 for the three months ended May 31, 2007. Accordingly, gross margins
      on
      the Company’s sales increased to 25% for the three months ended May 31, 2008 in
      comparison to 21% for the three months ended May 31, 2007. This change was
      due
      mainly to higher sales and decreases in direct and indirect labor wages and
      manufacturing overhead expenses as discussed above.





For
      the
      three months ended May 31, 2008, the Company shipped 129,577 units as compared
      to 199,346 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.





The
      Company’s backlog of open orders decreased 16%, from $5,826,000 to $4,886,000,
      for the three months ended May 31, 2008, as compared to an increase of 12%
      for
      the three months ended May 31, 2007. Changes in backlog reflect changes in
      the
      intake of orders and in the delivery requirements of customers.





The
      Company has experienced an decrease of 46% in the level of bookings during
      the
      quarter ended May 31, 2008 as compared to a 22% increase in bookings for the
      same period in 2007 principally as a result of a shift in defense spending
      priorities, resulting in a decrease in the monetary value of, and timing
      differences in the placement of contracts by the Department of Defense and
      its
      prime contractors.





Selling,
      general, and administrative expenses increased to $284,000 for the three months
      ended May
      31,
      2008 from
      $270,000 for the comparable period in 2007. During the three months ended May
      31,
      2008 ,
      selling, general, and administrative expenses as a percentage of net sales
      fell
      to 13% as compared with 15% for the three months ended May
      31,
      2007 .
      The
      percentage decrease was due primarily to decreases in legal fees and insurance
      premiums.





Operating
      income for the three months ended May 31, 2008 increased to $262,000 as compared
      to $103,000 for the three months ended May 31, 2007. This increase is due mainly
      to higher sales and decreases in cost of sales as discussed above.




The
      Company recorded net other income of $10,000 for the three months ended May
      31,
      2008 as
      compared to $48,000 for the three months ended May
      31,
      2007 .
      Included in net other income was interest
      income on investment in treasury bills net of changes in market
      value of
      $10,000 for the three months ended May
      31,
      2008 as
      compared to $44,000 for the three months ended May
      31,
      2007. The decrease in interest income is due primarily to lower rates of return
      on invested funds.




14





Net
      income for the three months May 31, 2008 increased to $272,000 as compared
      to
      $151,000 for the same period in 2007. This increase is due primarily to higher
      sales and decreases in cost of sales and selling, general and administrative
      expenses as discussed above .




Liquidity
      and Capital Resources:




The
      Company’s sole source of cash is revenue generated by ongoing operations. The
      Company’s liquidity might be adversely affected by decreased cash receipts due
      to anticipated lower level of sales volume over the next twelve to twenty-four
      months due to customers’ delivery requirements. The Company’s liquidity is not
      expected to improve until the Company’s revenues increase to a level
      consistently above its breakeven point.





Furthermore,
      the Company’s liquidity continues to be adversely affected by the Company’s 1993
      bankruptcy petition obligations and the Company’s inability to obtain additional
      working capital through the sale of debt or equity securities. For a more
      complete discussion of the Company’s bankruptcy obligations, see “Business –
Bankruptcy Proceedings” in the Company’s Annual Report on Form 10-K filed for
      the period ended February 29, 2008.





The
      Company is required to make quarterly payments to holders of unsecured claims
      until they receive 35 percent (35%) of their pre-petition claims. However,
      due
      to negotiations between the parties, the unsecured creditors agreed to a
      deferment of this payment and the Company agreed to make payments until its
      obligations are fulfilled. The unsecured creditors do not object to the reduced
      level of quarterly payments. As of May 31, 2008, the Company has paid
      approximately $742,000 to its unsecured creditors. The Company’s remaining
      obligation is approximately $1,106,000 to holders of allowed unsecured claims
      to
      be paid in quarterly installments.





The
      Company reported net income of $272,000 and operating income of $262,000 for
      the
      three months ended May 31, 2008.





At
      May
      31, 2008, February 29, 2008 and May 31, 2007, the Company had cash of
      approximately $465,000, $75,000 and $86,000, respectively. Decreases in accounts
      receivable and inventories contributed $330,000 to the last three months’ cash
      flow generated by ongoing operations.





At
      May
      31, 2008, February 29, 2008 and May 31, 2007, the Company had investments in
      treasury bills of approximately $4,420,000, $4,410,000 and $3,703,000,
      respectively.





At
      May
      31, 2008, the Company had working capital of $6,284,000 as compared with a
      working capital at May 31, 2007 of $5,341,000. At February 29, 2008, the Company
      had a working capital of $6,016,000. The $268,000 increase for the three months
      ended May 31, 2008 was due mainly to a $400,000 increase in cash offset by
      decreases in accounts receivable and inventories.





Off-Balance
      Sheet Arrangements:





The
      Company has not engaged in any off-balance sheet arrangements .





ITEM 3.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURE ABOUT MARKET
                RISK





Not
      applicable





FORWARD-LOOKING
      STATEMENTS





Some
      of
      the statements in this Quarterly Report on Form 10-Q are "forward-looking
      statements," as that term is defined in the Private Securities Litigation Reform
      Act of 1995. These forward-looking statements include statements regarding
      our
      business, financial condition, results of operations, strategies or
      prospects. You can identify forward-looking statements by the fact that these
      statements do not relate strictly to historical or current matters. Rather,
      forward-looking statements relate to anticipated or expected events, activities,
      trends or results. Because forward-looking statements relate to matters that
      have not yet occurred, these statements are inherently subject to risks and
      uncertainties. Many factors could cause our actual activities or results to
      differ materially from the activities and results anticipated in forward-looking
      statements. These factors include those described under the caption "Risk
      Factors" in our Annual Report on Form 10-K for the year ended February 29,
      2008,
      including those identified below. We do not undertake any obligation to update
      forward-looking statements.




15




Some
      of
      the factors that may impact our business, financial condition, results of
      operations, strategies or prospects include:





·
            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 and parts on a timely
                basis and
                at a cost-effective price.


·
            We
                are dependent on government contracts, which are subject to termination,
                price renegotiations and regulatory compliance, which can increase
                the
                cost of doing business and negatively impact our
                revenues.


·
            Changes
                in government policy or economic conditions could negatively impact
                our
                results.


·
            Our
                inventories may become obsolete and other assets may be subject to
                risks.


·
            Environmental
                regulations could require us to incur significant
                costs.


·
            Our
                business is highly competitive, and increased competition could reduce
                gross profit margins and the value of an investment in our
                Company.


·
            Downturns
                in the business cycle could reduce the revenues and profitability
                of our
                business.


·
            Our
                operating results may decrease due to the decline of profitability
                in the
                semiconductor industry.


·
            Uncertainty
                of current economic conditions, domestically and globally, could
                continue
                to affect demand for our products and negatively impact our
                business.


·
            Cost
                reduction efforts may be unsuccessful or insufficient to improve
                our
                profitability and may adversely impact
                productivity.


·
            We
                may not achieve the intended effects of our new business strategy,
                which
                could adversely impact our business, financial condition and results
                of
                operations.


·
            Our
                inability to introduce new products could result in decreased revenues
                and
                loss of market share to competitors; new technologies could also
                reduce
                the demand for our products.


·
            Loss
                of, or reduction of business from, substantial clients could hurt
                our
                business by reducing our revenues, profitability and cash
                flow.


·
            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.


·
            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.


·
            Natural
                disasters, like hurricanes, or occurrences of other natural disasters
                whether in the United States or internationally may affect the
                availability of raw materials which may adversely affect our
                profitability.


·
            Failure
                to protect our proprietary technologies or maintain the right to
                use
                certain technologies may negatively affect our ability to
                compete.


·
            The
                price of our common stock has fluctuated widely in the past and may
                fluctuate widely in the future.





ITEM 4.
            CONTROLS
                AND PROCEDURES




Our
      Evaluation of Disclosure Controls and Procedures





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





16





Changes
      in Internal Control over Financial Reporting





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





PART
      II– OTHER INFORMATION




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.




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:
              June 26, 2008




/s/ Shevach SarafShevach
                SarafChairman,
                President,Chief
                Executive Officer,Treasurer
                andChief
                Financial Officer




18


EXHIBIT
        INDEX
 
 EXHIBIT NUMBER
              
              DESCRIPTION31
              
              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.
  19