UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D. C. 20549





FORM
      10-QSB




(Mark
      One)




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





For
      the
      quarterly period ended May 31, 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  Noo




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 June 25, 2007: 2,263,046  shares
      of
      common stock.




Transitional
      Small Business Disclosure Format (check one): Yes o No
      x










SOLITRON
      DEVICES, INC.





INDEX




PART
      1
      - FINANCIAL INFORMATION





Page
                No.Item
            1.
            Financial
                Statements (unaudited)Condensed
                Consolidated Balance Sheet May
                31, 2007
            1Condensed
                Consolidated Statements of Income  Three
                Months Ended May 31, 2007 and 2006
            2Condensed
                Consolidated Statements of Cash Flows Three
                Months Ended May 31, 2007 and 2006
            3Notes
                to Condensed Consolidated Financial Statements
            4-9Item
            2.
            Management’s
                Discussion and Analysis or Plan of Operation
            10-13Item
            3.
            Controls
                and Procedures
            13PART
                II - OTHER INFORMATIONItem
            6.
            Exhibits
            13Signatures
            
            14





i





PART
      I
      - FINANCIAL INFORMATION





ITEM
      1.   FINANCIAL
      STATEMENTS





SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED BALANCE SHEET


(Unaudited,
      in thousands)




May
                31, 2007**ASSETS**CURRENT
                ASSETSCash
                and cash equivalents
            
            $
            3,789Accounts
                receivable, net of allowance for doubtful accounts of $22
            
            
            646Inventories,
                net
            
            
            2,683Prepaid
                expenses and other current assets
            
            
            147TOTAL
                CURRENT ASSETS
            
            
            7,265PROPERTY,
                PLANT AND EQUIPMENT, net
            
            
            473OTHER
                ASSETS
            
            
            58TOTAL
                ASSETS
            
            $
            7,796**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**CURRENT
                LIABILITIESAccounts
                payable - Post-petition
            
            $
            353Accounts
                payable - Pre-petition
            
            
            1,135Accrued
                expenses and other current liabilities
            
            
            436TOTAL
                CURRENT LIABILITIES
            
            
            1,924LONG
                TERM LIABILITIES, net of current portion
            
            
            168TOTAL
                LIABILITIES
            
            
            2,092**STOCKHOLDERS’
                EQUITY**Preferred
                stock, $.01 par value, authorized 500,000 shares, none issued
            
            
            -0-Common
                    stock, $.01 par value, authorized 10,000,000 shares, 2,263,046
                    shares
                    issued and outstanding, net of 173,287 shares of treasury
                    stock
            
            
            23Additional
                paid-in capital
            
            
            2,733Retained
                earnings
            
            
            2,948TOTAL
                STOCKHOLDERS’ EQUITY
            
            
            5,704TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            7,796




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




1




SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF INCOME


THREE
      MONTHS ENDED MAY 31,


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




2007
            
            2006NET
                SALES
            
            $
            1,743
            
            $
            1,901Cost
                of Sales
            
            
            1,370
            
            
            1,697Gross
                Profit
            
            
            373
            
            
            204Selling,
                General and Administrative Expenses
            
            
            270
            
            
            288Operating
                Income/(Loss)
            
            
            103
            
            
            (84
            )OTHER
                INCOMEOther
                Income, Net
            
            
            4
            
            
            -Interest
                Income
            
            
            44
            
            
            31Interest
                Expense
            
            
            -
            
            
            -Other
                Income, Net
            
            
            48
            
            
            31Net
                Income/(Loss)
            
            $
            151
            
            $
            (53
            )INCOME/(LOSS)
                PER SHARE: Basic
            
            $
            .07
            
            $
            (0.02
            ):
                Diluted
            
            $
            .06
            
            $
            (0.02
            )WEIGHTED
                AVERAGESHARES
                OUTSTANDING: Basic
            
            
            2,288,279
            
            
            2,194,126:
                Diluted
            
            
            2,462,577
            
            
            2,433,196





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


2




SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS


THREE
      MONTHS ENDED MAY 31,


(Unaudited,
      in thousands)





2007
            
            2006CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                (Loss)/Income
            
            $
            151
            
            $
            (53
            )Adjustments
                to reconcile net income to net cashprovided
                by operating activities:Depreciation
                and amortization
            
            
            46
            
            
            46Changes
                in operating assets and liabilities:(Increase)
                Decrease in:Accounts
                receivable
            
            
            (4
            )
            
            5Inventories
            
            
            (1
            )
            
            54Prepaid
                expenses and other current assets
            
            
            (19
            )
            
            (57
            )Other
                assets
            
            
            (5
            )
            
            19Increase
                (Decrease) in:Accounts
                payable - Post-petition
            
            
            113
            
            
            (49
            )Accounts
                payable - Pre-petition
            
            
            (7
            )
            
            (7
            )Accrued
                expenses and other current liabilities
            
            
            6
            
            
            25Other
                long-term liabilities
            
            
            -
            
            
            -NET
                CASH PROVIDED BY OPERATING ACTIVITIES
            
            
            280
            
            
            (17
            )CASH
                FLOW FROM INVESTING ACTIVITIES:Purchases
                of property, plant and equipment
            
            
            (30
            )
            
            (65
            )NET
                CASH (USED IN) INVESTING ACTIVITIES
            
            
            (30
            )
            
            (65
            )CASH
                FLOW FROM FINANCING ACTIVITIES:Exercise
                of stock options
            
            
            -
            
            
            20NET
                CASH FROM FINANCING ACTIVITIES
            
            
            -
            
            
            20NET
                INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            250
            
            
            (62
            )CASH
                AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD
            
            
            3,539
            
            
            3,181CASH
                AND CASH EQUIVALENTS AT THE END OF PERIOD
            
            $
            3,789
            
            $
            3,119





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





3


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 May 31, 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.


4


SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




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 fiscal quarters ended May 31, 2007 and May 31, 2006 in
      accordance with SFAS No. 148.





No
      employee stock options were granted during fiscal quarters ended May 31, 2007
      and May 31, 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.




5




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 $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 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 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 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.




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 January 17, 2007, which provides for
      the
      tolling of applicable statutes of limitation through the earlier of September
      28, 2007, 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.




6




SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





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 May 31,2007
            
            2006Weighted
                average common shares outstanding
            
            
            2,288,279
            
            
            2,194,126Dilutive
                effect of employee stock options
            
            
            174,298
            
            
            239,070Weighted
                average common shares outstanding, assuming dilution
            
            
            2,462,577
            
            
            2,433,196




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 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. For the three-month period ended May 31, 2006, none  of
      the
      Company’s stock options were excluded from the calculation of diluted earnings
      per share.




5.  INVENTORIES:





As
      of May
      31, 2007 net inventories consisted of the following:





Raw
                Materials
            
            $
            1,409,000Work-In-Process
            
            
            1,723,000Finished
                Goods
            
            
            611,000Gross
                Inventories
            
            
            3,743,000Reserve
            
            
            (1,060,000
            )Net
                Inventories
            
            $
            2,683,000




7




SOLITRON
      DEVICES, INC. AND SUBSIDIARIES


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





6.  INCOME
      TAXES :





At
      May
      31, 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 100% valuation allowance. Should a
      cumulative change in the ownership of more than 50% occur within a three-year
      period, there could be an annual limitation on the use of the net operating
      loss
      carryforwards.





A
      reconciliation of the provision for income taxes to the amount calculated using
      the statutory federal rate (34%) for the periods ended May 31, 2007 and 2006
      is
      provided below:





Income
                Tax Provision at
            
            May
                31,
              2007
            
            May
                31,
              2006U.S.
                Statutory Rate
            
            $
            123,000
            
            $
            -State
                Taxes, Net of Federal Benefit
            
            
            21,000
            
            
            -Alternative
                Minimum Tax
            
            
            -
            
            
            -Utilization
                of Net Operating Loss Carryforward
            
            
            (144,000
            )
            
            -Income
                Tax Provision
            
            $
            -
            
            $
            -





No
      change
      in the valuation allowance on deferred tax assets was recorded for the period
      ended May 31, 2006.





7.  OTHER
      INCOME :





The
      $48,000 of other income reflected in the condensed consolidated statements
      of
      income for the quarter ended May 31, 2007 consists of $44,000 of interest income
      on cash and cash equivalents plus $4,000 of other income related to receivables
      adjustments. For the fiscal quarter ended May 31, 2006, the Company earned
      $31,000 of other income consisting entirely of interest income.





8.  ACCRUED
      EXPENSES :





As
      of May
      31, 2007 accrued expenses and other liabilities consisted of the
      following:




Payroll
                and related employee benefits
            
            $
            379,000Other
                liabilities
            
            
            57,000$
            436,000





8





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 are as
      follows:




Three
                months ended May 31,2007
            
            2006Export
                sales:Europe
                and Australia
            
            $
            269,000
            
            $
            159,000Canada
                and Latin America
            
            
            26,000
            
            
            11,000Far
                East and Middle East
            
            
            22,000
            
            
            10,000United
                States
            
            
            1,426,000
            
            
            1,721,000$
            1,743,000
            
            $
            1,901,000





Sales
      to
      the Company's top two customers accounted for approximately 54% of net sales
      for
      the quarter ended May 31, 2007 as compared to 59% for the quarter ended May
      31,
      2006. Sales to Raytheon Company accounted for approximately 41% of net sales
      for
      the quarter ended May 31, 2007 as compared to 52% for the quarter ended May
      31,
      2006. During the quarter ended May 31, 2007, sales to the United States
      Government represented approximately 13% of net sales as compared to 7% for
      the
      quarter ended May 31, 2006.





9





Item
      2. MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION





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 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 May 31, 2007 the Company’s book-to-bill ratio was
      approximately 1.31 as compared to approximately .98 for the three months ended
      May 31, 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
      continuously identifies and implements 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 decrease over the next twelve months,
      the
      Company may be required to implement additional cost cutting or other downsizing
      measures to continue its business operations.





Results
      of Operations-Three Months Ended May 31, 2007 Compared to Three Months Ended
      May
      31, 2006 :





Net
      sales
      for the three months ended May 31, 2007 decreased 8% to $1,743,000 as compared
      to $1,901,000 for the three months ended May 31, 2006. This decrease was
      primarily attributable to a lower level of orders that were shipped in
      accordance with customer requirements.




10




Cost
      of
      sales for the three months ended May 31, 2007 decreased to $1,370,000 from
      $1,697,000 for the comparable period in 2006. Expressed as a percentage of
      sales, cost of sales decreased to 79% from 89% for the same period in 2006.
      This
      change was due primarily to lower raw material costs resulting from higher
      product yields and decreases in direct labor wages and manufacturing overhead
      expenses.





Gross
      profit for the three months ended May 31, 2007 increased to $373,000 from
      $204,000 for the three months ended May 31, 2006. Accordingly, gross margins
      on
      the Company’s sales increased to 21% for the three months ended May 31, 2007 in
      comparison to 11% for the three months ended May 31, 2006. This change was
      due
      mainly to lower raw material costs and decreases in direct labor wages and
      manufacturing overhead expenses as discussed above.





For
      the
      three months ended May 31, 2007, the Company shipped 199,346 units as compared
      to 58,448 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 12%, from $4,472,000 to $5,006,000,
      for the three months ended May 31, 2007, as compared to a decrease of 1% for
      the
      three months ended May 31, 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 22% in the level of bookings during
      the
      quarter ended May 31, 2007 as compared to a 19% 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 decreased to $270,000  for
      the
      three months ended May
      31,
      2007 from
      $288,000 for the comparable period in 2006. During the three months ended May
      31,
      2007 ,
      selling, general, and administrative expenses as a percentage of net sales
      remained at 15%, equal to the percentage of net sales for the three months
      ended May
      31,
      2006 .
      The
      decrease in dollar value was due primarily to decreases in sales commissions
      and
      selling wages.





Operating
      income for the three months ended May 31, 2007 increased to $103,000  from
      an
      operating loss of $84,000 for the three months ended May 31, 2006. This increase
      is due mainly to a decrease in cost of sales, and a decrease in selling, general
      and administrative expenses.




The
      Company recorded net other income of $48,000 for the three months ended May
      31,
      2007 as
      compared to $31,000 for the three months ended May
      31,
      2006 .
      Included in net other income was interest income of $44,000 for the three months
      ended May
      31,
      2007 as
      compared to $31,000 for the three months ended May
      31,
      2006. The increase in interest income is due primarily to higher cash and
      equivalents balances as well as higher rates of return on invested
      funds.




Net
      income for the three months May 31, 2007 increased to $151,000  versus
      a
      net loss of $53,000 for the same period in 2006. This increase is due mainly
      to
      a decrease in cost of sales, and a decrease in selling, general and
      administrative expenses .





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.




11




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 May
      31,
      2007, the Company has paid approximately $713,000 to its unsecured creditors.
      The Company’s remaining obligation is approximately $1,135,000  to
      holders of allowed unsecured claims to be paid in quarterly
      installments.





The
      Company reported net income of $151,000 and operating income of $103,000 for
      the
      three months ended May 31, 2007. The Company has significant obligations arising
      from settlements related to its bankruptcy proceeding which require it to make
      substantial cash payments, which cannot be supported by the Company’s current
      level of operations.





At
      May
      31, 2007, February 28, 2007 and May 31, 2006, the Company had cash of
      approximately $3,789,000, $3,539,000 and $3,119,000, respectively. Increases
      in
      accounts payable and other accrued expenses contributed $119,000 to the last
      nine months’ cash flow generated by ongoing operations.





At
      May
      31, 2007, the Company had working capital of $5,341,000 as compared with a
      working capital at May 31, 2006 of $4,529,000. At February 28, 2007, the Company
      had a working capital of $5,179,000. The $162,000 increase for the three months
      ended May 31, 2007 was due mainly to a $250,000 increase in cash offset by
      increases in current liabilities.





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:




·
            the
                loss of certification or qualification of the Company’s products or the
                inability of the Company to capitalize on such certifications and/or
                qualifications;





·
            unexpected
                rapid technological change;





·
            a
                misinterpretation of the Company’s capital needs and sources and
                availability of liquidity;





·
            a
                change in government regulations which hinders the Company’s ability to
                perform government contracts;





·
            a
                shift in or misinterpretation of industry
                trends;





·
            unforeseen
                factors which impair or delay the development of any or all of its
                products;





·
            inability
                to sustain or grow bookings and
                sales;





·
            inability
                to capitalize on competitive strengths or a misinterpretation of
                those
                strengths;





·
            the
                emergence of improved, patented technology by
                competitors;





·
            inability
                to protect the Company’s proprietary
                technologies;





·
            a
                misinterpretation of the nature of the competition, the Company’s
                competitive strengths or its reputation in the
                industry;





·
            inability
                to respond quickly to customers’ needs and to deliver products in a timely
                manner resulting from unforeseen
                circumstances;





·
            inability
                to generate sufficient cash to sustain
                operations;





·
            inability
                to adequately respond to continued pricing pressure;





·
            failure
                to successfully implement cost-cutting or downsizing measures, strategic
                plans or the insufficiency of such measures and
                plans;





·
            changes
                in military or defense
                appropriations;





12





·
            inability
                to make or renegotiate payments under the Plan of
                Reorganization;





·
            inability
                to move into new markets or develop new products;





·
            unexpected
                impediments affecting ability to fill
                backlog;





·
            inability
                to be released from certain environmental
                liabilities;





·
            an
                increase in the expected cost of environmental
                compliance;





·
            changes
                in law or industry regulation;





·
            unexpected
                growth or stagnation of the
                business;





·
            any
                changes that render the Company’s headquarters and manufacturing
                facilities unsuitable or inadequate to meet the Company’s current needs;





·
            significant
                fluctuations in the price and volume of trading in the Company’s common
                stock; and





·
            unforeseen
                effects of inflation, other unforeseen activities, events and developments
                that may occur in the future.





ITEM
      3.  CONTROLS
      AND PROCEDURES





Based
      on
      the evaluation of the Company’s disclosure controls and procedures as of May 31,
      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 of May 31,
      2007.





There
      were no changes in the Company’s internal control over financial reporting
      during the quarter ended May 31, 2007, that have materially affected or are
      reasonably likely to materially affect the Company’s internal control over
      financial reporting.





ITEM
      6. EXHIBITS:





Exhibits




10.1
            Solitron
                Devices, Inc. 2007 Stock Incentive Plan (incorporated by reference
                to
                Exhibit 10.1 of the Company’s Form 8-K/A filed on June 12,
                2007).





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.




13




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: June 26, 2007
            
            /s/
                Shevach SarafShevach
                Saraf
              Chairman,
                President,
              Chief
                Executive Officer,
              Treasurer
                andChief
                Financial Officer





14


EXHIBIT
      INDEX






EXHIBIT
                NUMBER
            
            DESCRIPTION10.1
            
            Solitron Devices, Inc. 2007 Stock
              Incentive Plan (incorporated by reference toExhibit
              10.1 of the Company’s Form 8-K/A filed on June 12, 2007).*31
            
            Certification of Chief Executive
              Officer and Chief Financial Officerpursuant
              to Section 302 of the Sarbanes-Oxley Act of 2002.32
            
            Certification of Chief Executive
              Officer and Chief Financial Officerpursuant
              to Section 906 of the Sarbanes-Oxley Act of
              2002.


*
        Management contract or compensatory plan, contract or arrangement.
  15