UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D. C. 20549





FORM
      10-QSB




(Mark
      One)




xQUARTERLY
      REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For
      the
      quarterly period ended November 30, 2007





oTRANSITION
      REPORT UNDER
      SECTION 13 OR 15(d) OF THE EXCHANGE ACT




For
      the
      transition period from _________ to _________




Commission
      file number 001-04978




Solitron
      Devices, Inc.


(Exact
      name of small business issuer as specified in its charter)








Delaware
            
            22-1684144(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (IRS
                Employer Identification Number)





3301
      Electronics Way, West Palm Beach, Florida 33407


(Address
      of principal executive offices)





(561)
      848-4311


(Issuer’s
      telephone number, including area code)





N/A


(Former
      name, former address and former fiscal year, if changed since last
      report)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days.


Yes
x No o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
o No
x




APPLICABLE
      ONLY TO CORPORATE ISSUERS




State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of December 31, 2007: 2,263,037 shares of common stock.




Transitional
      Small Business Disclosure Format (check one):





Yes
oNo
x







SOLITRON
      DEVICES, INC.





INDEX




PART
      1
      - FINANCIAL INFORMATION





Page
                No.Item
            1.
            Financial
                Statements (unaudited)Condensed
                Consolidated Balance Sheet November 30, 2007
            2Condensed
                Consolidated Statements of Income Three and Nine Months Ended November
                30,
                2007 and 2006
            3Condensed
                Consolidated Statements of Cash Flows Nine Months Ended November
                30, 2007
                and 2006
            4Notes
                to Condensed Consolidated Financial Statements
            5-10Item
            2.
            Management’s
                Discussion and Analysis or Plan of Operation
            11-15Item
            3.
            Controls
                and Procedures
            16PART
                II – OTHER INFORMATIONItem
            6.
            Exhibits
            16Signatures
            
            17


1


PART
      I – FINANCIAL INFORMATION





ITEM
      1.   FINANCIAL
      STATEMENTS





SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED BALANCE SHEET


(Unaudited,
      in thousands)





November 30, 2007**ASSETS**CURRENT
                ASSETSCash
                and cash equivalents
            
            $
            4,390Accounts
                receivable, less allowance for doubtful accounts of $22
            
            
            757Inventories,
                net
            
            
            2,852Prepaid
                expenses and other current assets
            
            
            113TOTAL
                CURRENT ASSETS
            
            
            8,112PROPERTY,
                PLANT AND EQUIPMENT, Net
            
            
            435OTHER
                ASSETS
            
            
            256TOTAL
                ASSETS
            
            $
            8,803**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**CURRENT
                LIABILITIESAccounts
                payable - Post-petition
            
            $
            407Accounts
                payable - Pre-petition, current portion
            
            
            1,121Accrued
                expenses and other current liabilities
            
            
            797TOTAL
                CURRENT LIABILITIES
            
            
            2,325LONG
                TERM LIABILITIES, net of current portion
            
            
            355TOTAL
                LIABILITIES
            
            
            2,680**STOCKHOLDERS’
                EQUITY**Preferred
                stock, $.01 par value, authorized 500,000 shares, none issued
            
            
            -0-Common
                stock, $.01 par value, authorized 10,000,000 shares,
                2,263,037shares
                issued and outstanding, net of 173,287 shares of treasury
                stock
            
            
            23Additional
                paid-in capital
            
            
            2,733Retained
                earnings
            
            
            3,367TOTAL
                STOCKHOLDERS’ EQUITY
            
            
            6,123TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            8,803




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


2


SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF INCOME


THREE
      AND NINE MONTHS ENDED NOVEMBER 30,


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




Three
                Months
            
            Nine
                Months2007
            
            2006
            
            2007
            
            2006NET
                SALES
            
            $
            2,037
            
            $
            2,220
            
            $
            5,627
            
            $
            5,900Cost
                of Sales
            
            
            1,536
            
            
            1,607
            
            
            4,457
            
            
            4,816Gross
                Profit
            
            
            501
            
            
            613
            
            
            1,170
            
            
            1,084Selling,
                General and Administrative Expenses
            
            
            225
            
            
            223
            
            
            730
            
            
            788Operating
                Income
            
            
            276
            
            
            390
            
            
            440
            
            
            296OTHER
                INCOME (EXPENSE)Other
                Income/(Expense), Net
            
            
            -
            
            
            (118
            )
            
            1
            
            
            (118
            )Interest
                Income
            
            
            39
            
            
            33
            
            
            129
            
            
            97Interest
                Expense
            
            
            -
            
            
            -
            
            
            -
            
            
            -Other
                Income (Expense), Net
            
            
            39
            
            
            (85
            )
            
            130
            
            
            (21
            )Net
                Income
            
            $
            315
            
            $
            305
            
            $
            570
            
            $
            275(LOSS)/INCOME
                PER SHARE: Basic
            
            $
            .14
            
            $
            .13
            
            $
            .25
            
            $
            .12:
                Diluted
            
            $
            .13
            
            $
            .13
            
            $
            .23
            
            $
            .11WEIGHTED
                AVERAGESHARES
                OUTSTANDING: Basic
            
            
            2,263,040
            
            
            2,263,049
            
            
            2,263,044
            
            
            2,239,608:
                Diluted
            
            
            2,464,582
            
            
            2,424,472
            
            
            2,449,124
            
            
            2,444,939





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


3


SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


NINE
      MONTHS ENDED NOVEMBER 30,


(Unaudited,
      in thousands)


2007
              
              2006CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  income/(loss)
              
              $
              570
              
              $
              275Adjustments
                  to reconcile net income/(loss) to net cash provided by operating
                  activities:Depreciation
                  and amortization
              
              
              136
              
              
              137Changes
                  in operating assets and liabilities:(Increase)
                  Decrease in:Accounts
                  receivable
              
              
              (115
              )
              
              (63
              )Inventories
              
              
              (170
              )
              
              (186
              )Prepaid
                  expenses and other current assets
              
              
              15
              
              
              (26
              )Other
                  non-current assets
              
              
              (203
              )
              
              8Increase
                  (Decrease) in:Accounts
                  payable - Post-petition
              
              
              167
              
              
              (147
              )Accounts
                  payable - Pre-petition
              
              
              (21
              )
              
              (21
              )Accrued
                  expenses and other current liabilities
              
              
              367
              
              
              (249
              )Other
                  non-current liabilities
              
              
              187
              
              
              105NET
                  CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES
              
              
              933
              
              
              (167
              )CASH
                  FLOW FROM INVESTING ACTIVITIES:Purchases
                  of property, plant and equipment
              
              
              (82
              )
              
              (98
              )NET
                  CASH (USED IN) INVESTING ACTIVITIES
              
              
              (82
              )
              
              (98
              )CASH
                  FLOW FROM FINANCING ACTIVITIES:Exercise
                  of stock options
              
              
              -
              
              
              21NET
                  CASH PROVIDED BY FINANCING ACTIVITIES
              
              
              -
              
              
              21NET
                  INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              851
              
              
              (244
              )CASH
                  AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD
              
              
              3,539
              
              
              3,181CASH
                  AND CASH EQUIVALENTS AT THE END OF PERIOD
              
              $
              4,390
              
              $
              2,937




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


4





SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


NOTES
      TO CONDENSED CONSOLIDATED 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 consolidated financial statements
      have
      been prepared pursuant to the rules and regulations of the Securities and
      Exchange Commission for reporting on Form 10-QSB. 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 Form 10-QSB should be read in conjunction with
      the
      Notes to Consolidated Financial Statements appearing in the Solitron Devices,
      Inc. and Subsidiaries’ (collectively, the “Company”) Annual Report on Form
      10-KSB for the year ended February 28, 2007.




The
      results of operations for the three-month period ended November 30, 2007 are
      not
      necessarily indicative of the results to be expected for the entire year ending
      February 29, 2008.




SIGNIFICANT
      ACCOUNTING PRINCIPLES :




Basis
      for Consolidation




The
      condensed consolidated financial statements include the accounts of the Company.
      All significant inter-company balances and transactions have been eliminated
      in
      consolidation.




Cash
      and Cash Equivalents




Cash
      and
      cash equivalents include demand deposits, money market accounts, and treasury
      bills with maturities of ninety days or less.




Earnings
      Per Common Share




Earnings
      per common share is presented in accordance with SFAS No. 128 “Earnings per
      Share.” Basic earnings per common share is computed using the weighted average
      number of common shares outstanding during the period. Diluted earnings per
      common share incorporate the incremental shares issuable upon the assumed
      exercise of stock options to the extent they are not anti-dilutive using the
      treasury stock method.





Shipping
      and Handling




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


5


SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





Stock
      Based Compensation




In
      December 2004 the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards 123R (“SFAS 123R”) “Share-Based Payments” an
      amendment of SFAS 123. This statement precluded companies from using the
      intrinsic method as allowed by SFAS 123 and was effective for the first interim
      or annual report period beginning after June 15, 2005. The Company adopted
      this
      statement on June 15, 2005.





In
      December 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an
      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 adopted SFAS No. 148 on March
      1,
      2006 and has prepared its interim financial statements for the fiscal quarters
      ended November 30, 2007 and November 30, 2006 in accordance with SFAS No.
      148.





No
      employee stock options were granted during fiscal quarters ended November 30,
      2007 and November 30, 2006.




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 to 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
      only happened twice in the past ten years (in fiscal year 2001 and fiscal year
      2006). The Company accrued $50,000 for its remaining obligations under the
      Settlement Agreement.





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.


6


SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





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 Site and
      Riviera Beach Site, 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 (Riviera
      Beach
      Site on October 12, 1999 and Port Salerno Site on March 17, 2003) 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 $57,920. 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 on 12/13/06. The
      Company has been notified by FDEP that the performance of remediation work
      by
      USEPA at the Port Salerno Site and by Honeywell at the Riviera Beach Site will
      be construed by FDEP as discharging the Company’s remediation obligations under
      the Consent Final Judgment.





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 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 the Consent Final Judgment to ensure that there are
      adequate funds to cover FDEP’s unreimbursed expenses and the Company’s residual
      liability under the Consent Final Judgment. 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. Presently there is approximately $57,920 in
      the Port Salerno Escrow Account. For purposes of establishing a reserve to
      cover
      the Company’s remaining obligations under the Consent Final Judgment, the
      Company assumes that the repayment schedule would cover a period of seven (7)
      years. The details of the liability accrued by the Company are as
      follows:





Amount
                of liability per FDEP
            
            $
            214,800Less
                amount in escrow
            
            
            (57,920
            )Remaining
                amount due
            
            $
            156,880Present
                value of net potential liability discounted topresent
                at 8.25% over 28 quarterly payments (as previously suggested by Consent
                Final Judgment)
            
            $
            118,276


7





SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


NOTES
      TO CONDENSED CONSOLIDATED 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 2, 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.





4.  EARNINGS
      PER SHARE :





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





For
                the three months ended
              November
                30,
            
            For
                the nine months endedNovember 30,2007
            
            2006
            
            2007
            
            2006Weighted
                average common shares outstanding
            
            
            2,263,040
            
            
            2,263,049
            
            
            2,263,044
            
            
            2,239,608Dilutive
                effect of employee stock options
            
            
            201,542
            
            
            161,423
            
            
            186,080
            
            
            205,331Weighted
                average common shares outstanding, assuming dilution
            
            
            2,464,582
            
            
            2,424,472
            
            
            2,449,124
            
            
            2,444,939





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 period ended November 30, 2007, stock options to purchase 13,800
      common shares of the Company 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. For the three-month period ended
      November 30, 2006, stock options to purchase 14,300 common shares of the Company
      were excluded from the calculation of diluted earnings per share.





5.  INVENTORIES:





As
      of
      November 30, net inventories consisted of the following:





2007
            
            2006Raw
                Materials
            
            $
            1,751,000
            
            $
            1,654,000Work-In-Process
            
            
            1,720,000
            
            
            1,641,000Finished
                Goods
            
            
            475,000
            
            
            408,000Gross
                Inventories
            
            
            3,946,000
            
            
            3,703,000Reserve
            
            
            (1,094,000
            )
            
            (947,000
            )Net
                Inventories
            
            $
            2,852,000
            
            $
            2,756,000


8





SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





6.  INCOME
      TAXES :





At
      November 30, 2007, the Company had net operating loss carryforwards of
      approximately $13,195,000 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 fully 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 carryforwards.





A
      reconciliation of the provision for income taxes to the amount calculated using
      the statutory federal rate (34%) for the periods ended November 30, 2007 and
      2006 is provided below:





Income
                Tax Provision at
            
            November
                30,
              2007
            
            November
                30,
              2006U.S.
                Statutory Rate
            
            $
            241,000
            
            $
            -State
                Taxes, Net of Federal Benefit
            
            
            39,000
            
            
            -Alternative
                Minimum Tax
            
            
            8,000
            
            
            -Less:
                Prior Year Overaccrual
            
            
            (8,000
            )
            
            -Utilization
                of Net Operating Loss Carryforward
            
            
            (280,000
            )
            
            -
                .Income
                Tax Provision
            
            $
            -
                _
            
            $
            -
                _





No
      change
      in the valuation allowance on deferred tax assets was recorded for the period
      ended November 30, 2007.





7.  OTHER
      INCOME :





The
      $39,000 of other income reflected in the condensed consolidated statements
      of
      income for the quarter ended November 30, 2007 consists of $39,000 of interest
      income on cash and cash equivalents. For the fiscal quarter ended November
      30,
      2006, the Company earned $33,000 of interest income and recognized other
      expenses in the amount of $118,000 relating to an FDEP claim for its
      unreimbursed expenses associated with the Company’s production sites in
      accordance with the Consent Final Judgment (see Note 3, Environmental
      Liabilities).








8.  ACCRUED
      EXPENSES :





As
      of
      November 30, 2007 accrued expenses and other liabilities consisted of the
      following:





Payroll
                and related employee benefits
            
            $
            355,000Customer
                prepayment
            
            
            434,000Other
                liabilities
            
            
            8,000$
            797,000


9




SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





9.  EXPORT
      SALES AND MAJOR CUSTOMERS :





Revenues
      from domestic and export sales to unaffiliated customers for the three months
      ended November 30, 2007 are as follows:




Power
            
            
            
            Field
                Effect
            
            PowerGeographic
                Region
            
            
            Transistors
            
            
            Hybrids
            
            
            Transistors
            
            
            MOSFETS
            
            
            TotalsEurope
                and Australia
            
            $
            7,000
            
            $
            24,000
            
            $
            1,000
            
            $
            0
            
            $
            32,000Canada
                and Latin America
            
            
            16,000
            
            
            0
            
            
            0
            
            
            5,000
            
            
            21,000Far
                East and Middle East
            
            
            7,000
            
            
            0
            
            
            0
            
            
            26,000
            
            
            33,000United
                States
            
            
            328,000
            
            
            996,000
            
            
            285,000
            
            
            342,000
            
            
            1,951,000Totals
            
            $
            358,000
            
            $
            1,020,000
            
            $
            286,000
            
            $
            373,000
            
            $
            2,037,000





Revenues
      from domestic and export sales to unaffiliated customers for the three months
      ended November 30, 2006 are as follows:




Power
            
            
            
            Field
                Effect
            
            PowerGeographic
                Region
            
            Transistors
            
            Hybrids
            
            Transistors
            
            MOSFETS
            
            TotalsEurope
                and Australia
            
            $
            3,000
            
            $
            240,000
            
            $
            19,000
            
            $
            0
            
            $
            262,000Canada
                and Latin America
            
            
            10,000
            
            
            0
            
            
            0
            
            
            29,000
            
            
            39,000Far
                East and Middle East
            
            
            9,000
            
            
            0
            
            
            0
            
            
            3,000
            
            
            12,000United
                States
            
            
            425,000
            
            
            1,057,000
            
            
            146,000
            
            
            279,000
            
            
            1,907,000Totals
            
            $
            447,000
            
            $
            1,297,000
            
            $
            165,000
            
            $
            311,000
            
            $
            2,220,000




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 accounted for approximately 43% of net sales
      for
      the quarter ended November 30, 2007 as compared to 61% for the quarter ended
      November 30, 2006. Sales to Raytheon Company accounted for approximately 32%
      of
      net sales for the quarter ended November 30, 2007 as compared to 52% for the
      quarter ended November 30, 2006. During the quarter ended November 30, 2007,
      sales to the United States government represented approximately 11% of net
      sales
      as compared to 9% for the quarter ended November 30, 2006. Based on the history
      of sales to these two customers, the Company does not believe that the
      period-to-period changes in sales to these two customers reflects a
      trend.


10





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





Overview:




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




The
      following discussion and analysis of factors which have affected the Company's
      financial position and operating results during the periods included in the
      accompanying condensed consolidated financial statements should be read in
      conjunction with the Consolidated Financial Statements and the related Notes
      to
      Consolidated 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-KSB for the year ended February 28, 2007 and the Condensed
      Consolidated Financial Statements and the related Notes to the Condensed
      Consolidated Financial Statements included in Item 1 of this Quarterly Report
      on
      Form 10-QSB.




Critical
      Accounting Policies:




The
      discussion and analysis of our financial condition and results of operations
      are
      based upon the condensed consolidated financial statements included elsewhere
      in
      this Form 10-QSB 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 and
      intangible assets, 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 the Consolidated Financial Statements” in Item 7 of our Annual
      Report on Form 10-KSB for the fiscal year ended February 28,
      2007.




Trends
      and Uncertainties :




During
      the three months ended November 30, 2007, the Company’s book-to-bill ratio was
      approximately 1.40 as compared to approximately .35 for the three months ended
      November 30, 2006, reflecting an  increase
      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.




Inventory :




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
                for.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.





Results
      of Operations-Three Months Ended November 30, 2007 Compared to Three Months
      Ended November 30, 2006 :





Net
      sales
      decreased 8%, from $2,220,000 to $2,037,000 for the three months ended November
      30, 2007, as compared to the three months ended November 30, 2006. This decrease
      was primarily attributable to a lower level of orders that were shipped in
      accordance with customer requirements.




Cost
      of
      sales for the three months ended November 30, 2007 decreased to $1,536,000
      from
      $1,607,000 for the comparable period in 2006. Expressed as a percentage of
      sales, cost of sales increased to 75% from 72% for the same period in 2006.
      This
      change was due primarily to increases in direct labor wages and raw material
      price increases.





Gross
      profit for the three months ended November 30, 2007 decreased to $501,000 from
      $613,000 for the three months ended November 30, 2006. Accordingly, gross
      margins on the Company’s sales decreased to 25% for the three months ended
      November 30, 2007 in comparison to 28% for the three months ended November
      30,
      2006. This change was due primarily to increases in direct labor wages, raw
      material price increases and a decrease in sales as discussed
      above.





For
      the
      three months ended November 30, 2007, the Company shipped 266,527 units as
      compared to 149,231 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 sale 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 increased 14%, from $5,898,000 to $6,717,000,
      for the three months ended November 30, 2007, as compared to a decrease of
      25%
      for the three months ended November 30, 2006. Changes in backlog reflect changes
      in the intake of orders and in the delivery dates required by
      customers.





The
      Company has experienced an increase of 264% in the level of bookings during
      the
      quarter ended November 30, 2007, as compared to an 82% decrease in bookings
      for
      the same period in 2006 principally as a result of a shift in defense spending
      priorities, resulting in an increase in the monetary value of, and timing
      differences in the placement of contracts by the Department of Defense and
      its
      prime contractors.





Selling,
      general, and administrative expenses increased to $225,000  for
      the
      three months ended November 30, 2007 from $223,000 for the comparable period
      in
      2006. During the three months ended November 30, 2007, selling, general, and
      administrative expenses as a percentage of net sales increased to 11% as
      compared with 10% for the three months ended November 30, 2006. The increase
      was
      due primarily to increases in sales commissions and selling wages.





Operating
      income for the three months ended November 30, 2007 decreased to
      $276,000  as
      compared to $390,000 for the three months ended November 30, 2006. This decrease
      is due mainly to a lower level of sales in accordance with customer requirements
      and increases in direct labor wages and raw material prices.





The
      Company recorded net other income of $39,000 for the three months ended November
      30, 2007 versus net other expenses of $85,000 for the three months ended
      November 30, 2006. Net other income for the three months ended November 30,
      2007
      consists entirely of interest income. For the three months ended November 30,
      2006, the Company accrued $118,000 of environmental expenses related to an
      FDEP
      claim for its unreimbursed expenses associated with two of the Company’s former
      sites (Port Salerno and Riviera Beach) in accordance with the Consent Final
      Judgment. Also recognized during the quarter ended November 30, 2006 was $33,000
      in interest income. The increase in interest income for the three months ended
      November 30, 2007 was due to a higher cash position.




12


Net
      income for the three months ended November 30, 2007 increased to
      $315,000  versus
      $305,000 for the same period in 2006. This increase was due primarily to a
      decrease in net other expenses as described above .




Results
      of Operations-Nine Months Ended November 30, 2007 Compared to Nine Months Ended
      November 30, 2006 :





Net
      sales
      decreased 5%, from $5,900,000 to $5,627,000 for the three months ended November
      30, 2007, as compared to the three months ended November 30, 2006. This decrease
      was primarily attributable to a lower level of orders that were shipped in
      accordance with customer requirements.




Cost
      of
      sales for the nine months ended November 30, 2007 decreased to
      $4,457,000  from
      $4,816,000  for
      the
      comparable period in 2006. Expressed as a percentage of sales, cost of sales
      decreased to 79%  from
      82%
      for the same period in 2006. The change was due primarily to lower raw material
      costs resulting from a lower level of shipments and decreases in direct labor
      wages and manufacturing overhead expenses associated with a lower level of
      shipments.




Gross
      profit for the nine months ended November 30, 2007 increased to
      $1,170,000  from
      $1,084,000 for the nine months ended November 30, 2006. Accordingly, gross
      margins on the Company’s sales increased to approximately 21% for the nine
      months ended November 30, 2007 in comparison to approximately 18% for the nine
      months ended November 30, 2006. This change was primarily due to lower raw
      material costs resulting from a lower level of shipments and decreases in direct
      labor wages and manufacturing overhead expenses as discussed above.





For
      the
      nine months ended November 30, 2007, the Company shipped 671,663 units as
      compared to 333,604 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 increased 50%, from $4,472,000 to $6,717,000
      for the nine months ended November 30, 2007, as compared to a decrease of
      approximately 27% for the nine months ended November 30, 2006. Changes in
      backlog resulted from changes in the intake of orders and in the delivery dates
      required by customers.





The
      Company has experienced an increase in the level of bookings of approximately
      81% for the nine months ended November 30, 2007, as compared to a decrease
      of
      50% for the same period for the previous year principally as a result of a
      shift
      in defense spending priorities, resulting in an increase in the monetary value
      of, and timing differences in the placement of contracts by the Department
      of
      Defense and its prime contractors.





Selling,
      general, and administrative expenses decreased to $730,000 for the nine months
      ended November 30, 2007 from $788,000 for the comparable period in 2006. During
      the nine months ended November 30, 2007, selling, general, and administrative
      expenses as a percentage of net sales remained at 13%  as
      compared to the nine months ended November 30, 2006. The reduction was a result
      of lower levels of sales wages and sales commissions.





Operating
      income for the nine months ended November 30, 2007 increased to
      $440,000  as
      compared to $296,000  for
      the
      nine months ended November 30, 2006. This increase is due mainly to a decrease
      in cost of sales, and a decrease in selling, general and administrative expenses
      as discussed above




The
      Company recorded net other income of $130,000 for the nine months ended November
      30, 2007 versus net other expense of $21,000 for the nine months ended November
      30, 2006. Included in net other income/(expense) was interest income of $129,000
      for the nine months ended November 30, 2007 as compared to $97,000 for the
      nine
      months ended November 30, 2006. The increase in interest income is due primarily
      to higher cash and equivalents balances invested. For the nine months ended
      November 30, 2006, the Company accrued $118,000 of environmental expenses
      related to an FDEP claim for its unreimbursed expenses associated with two
      of
      the Company’s former sites (Port Salerno and Riviera Beach) in accordance with
      the Consent Final Judgment.


13


Net
      income for the nine months ended November 30, 2007 increased to $570,000 as
      compared to $275,000 for the same period in 2006. This increase was due
      primarily to a decrease in cost of sales, and a decrease in selling, general
      and
      administrative expenses, and an increase in other income.





Liquidity
      and Capital Resources:




The
      Company’s sole source of cash is revenue generated by ongoing operations. The
      Company’s liquidity is expected to 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-KSB filed for
      the period ended February 28, 2007.





The
      Company is required to make quarterly payments to holders of unsecured claims
      until they receive 35 percent (35%) of their pre-petition claims. As of November
      30, 2007, the Company has paid approximately $727,000 to its unsecured
      creditors. The Company’s remaining obligation is approximately $1,121,000 to
      holders of allowed unsecured claims to be paid in quarterly
      installments.





The
      Company reported net income of $570,000 and operating income of $440,000 for
      the
      nine months ended November 30, 2007.





At
      November 30, 2007, February 28, 2007 and November 30, 2006, the Company had
      cash
      of approximately $4,390,000, $3,539,000 and $2,937,000 respectively. Increases
      in accrued expenses and receipt of a customer prepayment contributed $367,000
      to
      the last nine months’ positive cash flow generated by ongoing
      operations.





At
      November 30, 2007, the Company had working capital of $5,787,000 as compared
      with a working capital at November 30, 2006 of $5,010,000. At February 28,
      2007,
      the Company had a working capital of $5,179,000. The $777,000 increase for
      the
      nine months ended November 30, 2007 was due primarily to cash generated by
      net
      income.





Off-Balance
      Sheet Arrangements:





The
      Company is not involved in any off-balance sheet arrangements .





FORWARD-LOOKING
      STATEMENTS




Some
      of
      the statements in this Quarterly Report on Form 10-QSB 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 this Quarterly Report on Form 10-QSB, including those identified
      below. We do not undertake any obligation to update forward-looking statements.




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.




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.




·
            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.




15


ITEM
      3.   CONTROLS
      AND PROCEDURES





Based
      on
      the evaluation of the Company’s disclosure controls and procedures as of
      November 30, 2007, Shevach Saraf, Chairman, President, Chief Executive Officer,
      Treasurer and Chief Financial Officer of the Company, has concluded that the
      Company’s disclosure controls and procedures were effective, as defined in
      Exchange Act Rules 13a-15(e) and 15d-15(e), as of November 30,
      2007.




There
      were no changes in the Company’s internal control over financial reporting
      during the quarter ended November 30, 2007, that have materially affected or
      are
      reasonably likely to materially affect the Company’s internal control over
      financial reporting.




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
                906of
                the Sarbanes-Oxley Act of 2002.


16




SIGNATURES





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly authorized.





SOLITRON
                DEVICES, INC.Date:
                January 3, 2008/s/
                Shevach SarafShevach
                SarafChairman,
                President,Chief
                Executive Officer,Treasurer
                andChief
                Financial Officer





17





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.


18