UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-Q


(Mark
one)





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


For the
quarterly period ended August 31, 2010





or


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


For the
transition period from _______ to _______





Commission
File No.  1-4978





SOLITRON DEVICES,
INC.


(Exact
Name of Registrant as Specified in Its Charter)





Delaware
                
                22-1684144(State
      or Other Jurisdiction of
                
                (I.R.S.
      EmployerIncorporation
      or Organization)
                
                Identification
      No.)





3301 Electronics Way, West Palm Beach,
      Florida
                
                33407(Address
      of Principal Executive Offices)
                
                (Zip
      Code)





(561)
848-4311


(Registrant’s
Telephone Number, Including Area Code)




Indicate
by check mark whether the registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports); and (2) has been subject to such filing
requirements for the past 90 days.    Yes  x    No   ̈




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
   Yes   ̈    No   ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,”  “accelerated filer,”
and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one)





Large
      accelerated filer   ̈
              
              Accelerated
      filer   ̈Non-accelerated
      filer     ̈
              
              Smaller
      reporting company  x




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




The
number of shares of the registrant’s common stock, $0.01 par value, outstanding
as of September 30, 2010 was 2,263,775.





SOLITRON
DEVICES, INC.





TABLE OF
CONTENTS




PART 1 - FINANCIAL
INFORMATION





Page No.Item
                                  1.
                                  Financial
      Statements (unaudited)Condensed
      Balance Sheets
                                  3August
      31, 2010 and February 28, 2010Condensed
      Statements of Income
                                  4Three
      and Six Months Ended August 31, 2010 and 2009Condensed
      Statements of Cash Flows
                                  5Six
      Months Ended August 31, 2010 and 2009Notes
      to Condensed Financial Statements
                                  6-11Item
                                  2.
                                  Management’s
      Discussion and Analysis of Financial Condition andResults
      of Operations
                                  12-14Item
                                  3.
                                  Quantitative
      and Qualitative Disclosures about Market Risk
                                  15-16Item
                                  4.
                                  Controls
      and Procedures
                                  17PART II – OTHER INFORMATIONItem
                                  6.
                                  Exhibits
                                  17Signatures
                                  
                                  18


2


PART I – FINANCIAL
INFORMATION





ITEM
1.          FINANCIAL
STATEMENTS





SOLITRON
DEVICES, INC.


CONDENSED
BALANCE SHEETS


AS OF
AUGUST 31, 2010 AND FEBRUARY 28, 2010


(Unaudited)





Aug
      31,
                    
                    
                    Feb
      28,2010
                    
                    
                    2010(in
      thousands, except for shares)ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                    
                    $
                    468
                    
                    
                    $
                    400Treasury
      bills
                    
                    
                    5,853
                    
                    
                    
                    5,601Accounts
      receivable, less allowance for doubtful accounts of $2
                    
                    
                    855
                    
                    
                    
                    685Inventories,
      net (Note 5)
                    
                    
                    2,952
                    
                    
                    
                    2,809Prepaid
      expenses and other current assets
                    
                    
                    122
                    
                    
                    
                    125TOTAL
      CURRENT ASSETS
                    
                    
                    10,250
                    
                    
                    
                    9,620PROPERTY,
      PLANT AND EQUIPMENT, net
                    
                    
                    648
                    
                    
                    
                    561OTHER
      ASSETS
                    
                    
                    52
                    
                    
                    
                    52TOTAL
      ASSETS
                    
                    $
                    10,950
                    
                    
                    $
                    10,233LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable-Post-petition
                    
                    $
                    299
                    
                    
                    $
                    266Accounts
      payable-Pre-petition, current portion
                    
                    
                    1,044
                    
                    
                    
                    1,058Customer
      deposits
                    
                    
                    230
                    
                    
                    
                    39Accrued
      expenses and other current liabilities    (Note
      8)
                    
                    
                    430
                    
                    
                    
                    505TOTAL
      CURRENT LIABILITIES
                    
                    
                    2,003
                    
                    
                    
                    1,868LONG-TERM
      LIABILITIES, net of current portion
                    
                    
                    138
                    
                    
                    
                    148TOTAL
      LIABILITIES
                    
                    
                    2,141
                    
                    
                    
                    2,016COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS’
      EQUITYPreferred
      stock, $.01 par value, authorized 500,000 shares, none
    issued
                    
                    
                    -
                    
                    
                    
                    -Common
      stock, $.01 par value, authorized 10,000,000 shares,2,263,775
      shares issued and outstanding, net of 173,287 shares of treasury
      stock
                    
                    
                    23
                    
                    
                    
                    23Additional
      paid-in capital
                    
                    
                    2,733
                    
                    
                    
                    2,733Retained
      earnings
                    
                    
                    6,053
                    
                    
                    
                    5,461TOTAL
      STOCKHOLDERS' EQUITY
                    
                    
                    8,809
                    
                    
                    
                    8,217TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                    
                    $
                    10,950
                    
                    
                    $
                    10,233





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


3





SOLITRON DEVICES,
INC.


CONDENSED STATEMENTS OF
INCOMEFOR
THE


THREE AND SIX MONTHS ENDED
AUGUST 31,


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





Three months
                    
                    
                    Six Months2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009NET
      SALES
                    
                    $
                    2,286
                    
                    
                    $
                    1,938
                    
                    
                    $
                    4,409
                    
                    
                    $
                    3,758Cost
      of Sales
                    
                    
                    1,609
                    
                    
                    
                    1,316
                    
                    
                    
                    3,287
                    
                    
                    
                    2,865Gross
      Profit
                    
                    
                    677
                    
                    
                    
                    622
                    
                    
                    
                    1,122
                    
                    
                    
                    893Selling,
      General and Administrative Expenses
                    
                    
                    246
                    
                    
                    
                    241
                    
                    
                    
                    538
                    
                    
                    
                    512Operating
      Income
                    
                    
                    431
                    
                    
                    
                    381
                    
                    
                    
                    584
                    
                    
                    
                    381OTHER
      INCOME (EXPENSES)Other
      Income, Net (Note 7)
                    
                    
                    2
                    
                    
                    
                    16
                    
                    
                    
                    2
                    
                    
                    
                    9Interest
      Income
                    
                    
                    6
                    
                    
                    
                    3
                    
                    
                    
                    11
                    
                    
                    
                    11Income
      Tax Expense
                    
                    
                    (2
                    )
                    
                    
                    -
                    
                    
                    
                    (5
                    )
                    
                    
                    -Other,
      Net
                    
                    
                    6
                    
                    
                    
                    19
                    
                    
                    
                    8
                    
                    
                    
                    20Net
      Income
                    
                    $
                    437
                    
                    
                    $
                    400
                    
                    
                    $
                    592
                    
                    
                    $
                    401Net
      Income Per Share    : Basic
                    
                    $
                    .19
                    
                    
                    $
                    .18
                    
                    
                    $
                    .26
                    
                    
                    $
                    .18:
      Diluted
                    
                    $
                    .18
                    
                    
                    $
                    .16
                    
                    
                    $
                    .24
                    
                    
                    $
                    .16Weighted
      AverageShares
      Outstanding   : Basic
                    
                    
                    2,263,775
                    
                    
                    
                    2,263,775
                    
                    
                    
                    2,263,775
                    
                    
                    
                    2,263,775:
      Diluted
                    
                    
                    2,466,310
                    
                    
                    
                    2,451,081
                    
                    
                    
                    2,470,541
                    
                    
                    
                    2,452,983





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


4





SOLITRON DEVICES,
INC.


CONDENSED STATEMENTS OF CASH
FLOWS FOR THE


SIX MONTHS ENDED AUGUST
31,


(Unaudited,
in thousands)





2010
                      
                      
                      2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income
                      
                      $
                      592
                      
                      
                      $
                      401Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Depreciation
      and amortization
                      
                      
                      100
                      
                      
                      
                      100Changes
      in operating assets and liabilities:(Increase)
      Decrease in:Accounts
      receivable
                      
                      
                      (170
                      )
                      
                      
                      (72
                      )Inventories
                      
                      
                      (143
                      )
                      
                      
                      (137
                      )Prepaid
      expenses and other current assets
                      
                      
                      3
                      
                      
                      
                      (5
                      )Other
      non-current assets
                      
                      
                      -
                      
                      
                      
                      (4
                      )Increase
      (Decrease) in:Accounts
      payable – Post-petition
                      
                      
                      33
                      
                      
                      
                      (42
                      )Accounts
      payable – Pre-petition
                      
                      
                      (14
                      )
                      
                      
                      (14
                      )Customer
      deposits
                      
                      
                      191
                      
                      
                      
                      (22
                      )Accrued
      expenses and other current liabilities
                      
                      
                      (75
                      )
                      
                      
                      (216
                      )Other
      non-current liabilities
                      
                      
                      (10
                      )
                      
                      
                      (10
                      )NET
      CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                      
                      
                      507
                      
                      
                      
                      (21
                      )CASH
      FLOW FROM INVESTING ACTIVITIES:Investment
      in treasury bills
                      
                      
                      (252
                      )
                      
                      
                      (212
                      )Purchases
      of property, plant and equipment
                      
                      
                      (187
                      )
                      
                      
                      (78
                      )NET
      CASH (USED IN) INVESTING ACTIVITIES
                      
                      
                      (439
                      )
                      
                      
                      (290
                      )NET
      INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
                      
                      
                      68
                      
                      
                      
                      (311
                      )CASH
      AT THE BEGINNING OF PERIOD
                      
                      
                      400
                      
                      
                      
                      440CASH
      AT THE END OF PERIOD
                      
                      $
                      468
                      
                      
                      $
                      129





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


5


SOLITRON
DEVICES, INC.


NOTES TO CONDENSED FINANCIAL
STATEMENTS


(Unaudited)





1.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Nature of Operations and
Activities


Solitron
Devices, Inc., a Delaware corporation (the “Company” or “Solitron”), designs,
develops, manufactures, and markets solid-state semiconductor components and
related devices primarily for the military and aerospace markets.  The
Company was incorporated under the laws of the State of New York in 1959 and
reincorporated under the laws of the State of Delaware in August
1987.





Basis of
Presentation


The
financial statements have been prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America. In management’s opinion, all adjustments necessary for a fair statement
of the results of the interim periods have been made. All adjustments are of a
normal, recurring nature.





Cash and Cash
Equivalents


Cash and
cash equivalents include demand deposits and money market accounts.





Investment in Treasury
Bills


Investment
in Treasury Bills includes treasury bills with maturities of one year or less
and is stated at market value.





Accounts
Receivable


Accounts
receivable consists of unsecured credit extended to the Company’s customers in
the ordinary course of business.  The Company reserves for any amounts
deemed to be uncollectible based on past collection experiences and an analysis
of outstanding balances using an allowance account.  The allowance
amount was $2,000 as of August 31, 2010 and February 28, 2010.





Shipping and
Handling


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





Inventories


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




The
Company’s inventory valuation policy is as follows:





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





Finished
      goods:
            All
      finished goods with firm orders for later delivery are valued (material
      and overhead) at the lower or cost or market.  All finished
      goods with no orders are fully
reserved.





Direct
      labor costs:
            Direct
      labor costs are allocated to finished goods and work in process
      inventory  based on engineering estimates of the amount of
      man-hours required from the different direct labor departments to bring
      each device to its particular level of
  completion.


6


SOLITRON
DEVICES, INC.


NOTES TO CONDENSED FINANCIAL
STATEMENTS


(Unaudited)





Financial
Statement  Estimates


The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from these estimates,
and the differences could be material.  Such estimates include
depreciable life, valuation allowance, and allowance for inventory
obsolescence.





Concentrations of Credit
Risk


Financial
instruments, which potentially subject the Company to concentration of credit
risk, consist principally of cash and trade receivables.  The Company
places its cash with high credit quality institutions.  At times, such
amounts may be in excess of the $250,000 FDIC insurance limits.  The
Company has not experienced any losses in such account and believes that it is
not exposed to any significant credit risk on the account.  As of
August 31 and February 28, 2010 , $218,000 and $150,000 respectively, of the
Company’s cash reserves were subject to this risk.  With respect to
the trade receivables, most of the Company’s products are custom made pursuant
to contracts with customers whose end-products are sold to the United States
Government.  The Company performs ongoing credit evaluations of its
customers’ financial condition and maintains allowances for potential credit
losses.  Actual losses and allowances have historically been within
management’s expectations.





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 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.
            COMMITMENTS AND
      CONTINGENCIES:





Environmental


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, 2009; 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 fiscal years 2010-2013.  For payment to USEPA to be above
$10,000 for any of these five years, the Company’s net income must exceed
$700,000 for such year, which has happened in fiscal year 2001, fiscal year
2006, fiscal year 2009 and fiscal year 2010.  In February 2010, the
Company paid $10,000 to USEPA for fiscal year 2010 based on preliminary net
income projections. In July 2010, the Company paid an additional $4,000 for
fiscal year 2010 pursuant to its obligations under the Settlement Agreement. The
Company has accrued $30,000 for its remaining minimum obligations under the
Settlement Agreement.  This amount is reflected in “Accrued expenses
and other current liabilities” on the Company’s balance sheets at August 31,
2010.


7


SOLITRON
DEVICES, INC.


NOTES TO CONDENSED FINANCIAL
STATEMENTS


(Unaudited)





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





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





Prior to
the sale of the Port Salerno Site and Riviera Beach Site, USEPA took over from
FDEP as the lead regulatory agency for the remediation of the
Sites.   At the closing of the sale of each Site, the net
proceeds of sale were distributed to USEPA and/or FDEP or other parties, as
directed by the agencies.  In addition, upon the sale of the Riviera
Beach Site, the Riviera Beach Escrow Account was transferred to USEPA, as
directed by the agencies.  The Company continues to maintain the Port
Salerno escrow account with a current balance of approximately $58,000 as of
August 31, 2010.  At present, work at the Port Salerno Site is being
performed by USEPA.  Work at the Riviera Beach Site is being performed
by Honeywell, Inc. (“Honeywell”), pursuant to an Administrative Order on Consent
entered into between Honeywell and USEPA.  The Company has been
notified by FDEP that the successful performance of remediation work in
accordance with the Consent Final Judgment standards by USEPA at the Port
Salerno Site and by Honeywell at the Riviera Beach Site will be construed by
FDEP as discharging the Company’s remediation obligations under the Consent
Final Judgment.





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





By letter
dated November 16, 2006, FDEP notified the Company that FDEP has unreimbursed
expenses associated with the Port Salerno Site and Riviera Beach Site of
$214,800.  In 2006, FDEP also 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 in 2006 with the Company’s attorney, FDEP advised the
Company that FDEP would prepare a justification for the asserted unreimbursed
expenses.  Upon receipt of the cost reimbursement package, the Company
is required to transfer $55,000 from the Port Salerno Escrow Account to FDEP as
partial payment for FDEP’s unreimbursed expenses that are otherwise recoverable
under the Consent Final Judgment.  FDEP further stated, during the
telephone conversation, that FDEP will work with the Company to establish a
reduced payment schedule for the Company to resume under the Consent Final
Judgment based on an appropriate showing by the Company of financial
hardship.  The Company is currently awaiting receipt of FDEP’s cost
reimbursement package.  Upon receipt of that documentation, the
Company will be required to provide a recommendation to FDEP for resumption of
payments to FDEP under the Consent Final Judgment based on the Company’s present
ability to pay.


8


SOLITRON
DEVICES, INC.


NOTES TO CONDENSED FINANCIAL
STATEMENTS


(Unaudited)





On August
7, 2002, the Company received a Request for Information from the State of New
York Department of Environmental Conservation (“NYDEC”), seeking information on
whether the Company had disposed of certain wastes at the Clarkstown Landfill
Site located in the Town of Clarkstown, Rockland County, New York (The
Clarkstown Landfill Site”).  By letter dated August 29, 2002, the
Company responded to the Request for Information and advised NYDEC that the
Company’s former Tappan, New York facility had closed in the mid-1980’s, prior
to the initiation of the Company’s bankruptcy proceedings described
below.  The Company contends that, to the extent that NYDEC has a
claim against the Company as a result of the Company’s alleged disposal of
wastes at the Clarkstown Landfill Site prior to the closing of the Company’s
former Tappan facility in the mid-1980’s, the claim was discharged in bankruptcy
as a result of the Bankruptcy Court’s August 1993 Order.  At NYDEC’s
request, the Company entered into a revised Tolling Agreement with NYDEC on
December 28, 2009, which provides for the tolling of applicable statutes of
limitation through the earlier of November 19, 2010, 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 by NYDEC. The Clarkstown Landfill Joint Defense Group (“Clarkstown JDG”), a
group of potentially responsible parties formed to respond to claims by NYDEC
for recovery of closure and clean-up response costs at the Clarkstown Landfill
Site, is negotiating with NYDEC to settle the claims of NYDEC against all
potentially responsible parties at the Clarkstown Landfill site that participate
in the Clarkstown JDG.  In connection with those negotiations, the
Clarkstown JDG, by letter dated March 17, 2010, offered to pursue a settlement
of NYDEC’s potential claim against the Company in return for the Company’s
agreement to pay the sum of $125,000.00, representing the Company’s alleged
share of the overall settlement with NYDEC.  The Company rejected the
settlement offer on March 29, 2010, based on its continuing contention that any
claim of NYDEC against the Company was discharged in bankruptcy as a result of
the Bankruptcy Court’s August 1993 Order.





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
                  August 31,
                
                
                For the six months ended
                  August 31,2010
                
                
                2009
                
                
                2010
                
                
                2009Weighted
      average common shares outstanding
                
                
                2,263,775
                
                
                
                2,263,775
                
                
                
                2,263,775
                
                
                
                2,263,775Dilutive
      effect of employee stock options
                
                
                202,535
                
                
                
                187,306
                
                
                
                206,766
                
                
                
                189,208Weighted
      average common shares outstanding, assuming dilution
                
                
                2,466,310
                
                
                
                2,451,081
                
                
                
                2,470,541
                
                
                
                2,452,983





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 and six month periods ended August 31, 2010
and August 31, 2009, 13,500 shares (at $3.95) underlying  the
Company's stock options were excluded from the calculation of diluted earning
per share because the exercise prices of the stock options were greater than or
equal to the average price of the common shares, and therefore their inclusion
would have been anti-dilutive.





5.
            INVENTORIES:





As of
August 31, 2010, inventories consist of the following:





Gross
                    
                    
                    Reserve
                    
                    
                    NetRaw
      Materials
                    
                    $
                    1,727,000
                    
                    
                    $
                    (396,000
                    )
                    
                    $
                    1,331,000Work-In-Process
                    
                    
                    2,488,000
                    
                    
                    
                    (868,000
                    )
                    
                    
                    1,620,000Finished
      Goods
                    
                    
                    481,000
                    
                    
                    
                    (480,000
                    )
                    
                    
                    1,000Totals
                    
                    $
                    4,696,000
                    
                    
                    $
                    (1,744,000
                    )
                    
                    $
                    2,952,000


9


SOLITRON
DEVICES, INC.


NOTES TO CONDENSED FINANCIAL
STATEMENTS


(Unaudited)





As of
February 28, 2010, inventories consist of the following:





Gross
                    
                    
                    Reserve
                    
                    
                    NetRaw
      Materials
                    
                    $
                    1,515,000
                    
                    
                    $
                    (379,000
                    )
                    
                    $
                    1,136,000Work-In-Process
                    
                    
                    2,364,000
                    
                    
                    
                    (760,000
                    )
                    
                    
                    1,604,000Finished
      Goods
                    
                    
                    557,000
                    
                    
                    
                    (488,000
                    )
                    
                    
                    69,000Totals
                    
                    $
                    4,436,000
                    
                    
                    $
                    (1,627,000
                    )
                    
                    $
                    2,809,000





6.
            INCOME
      TAXES:





At August
31, 2010, the Company has net operating loss carryforwards of approximately
$15,247,000 that expire through 2024.  Such net operating losses are
available to offset future taxable income, if any.  As the utilization
of such net operating losses for tax purposes is not assured, the deferred tax
asset has been mostly reserved through the recording of a 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 carryforward.





Total net
deferred taxes were comprised of the following as of August 31 and February 28,
2010:





Deferred tax assets:
                  
                  August 31,
                    2010
                  
                  
                  February 28,
                    2010Loss
      carryforwards
                  
                  $
                  5,738,000
                  
                  
                  $
                  6,005,000Allowance
      for doubtful accounts
                  
                  
                  1,000
                  
                  
                  
                  1,000Inventory
      allowance
                  
                  
                  656,000
                  
                  
                  
                  612,000Depreciation
                  
                  
                  107,000
                  
                  
                  
                  109,000Section
      263A capitalized costs
                  
                  
                  126,000
                  
                  
                  
                  126,000Total
      deferred tax assets
                  
                  
                  6,628,000
                  
                  
                  
                  6,853,000Valuation
      allowance
                  
                  
                  (6,628,000
                  )
                  
                  
                  (6,853,000
                  )Total
      net deferred taxes
                  
                  $
                  0
                  
                  
                  $
                  0





The
change in the valuation allowance on deferred tax assets is due principally to
the utilization of the net operating loss for the quarter ended August 31, 2010
and for the year ended February 28, 2010.





A
reconciliation of the U.S. federal statutory tax rate to the Company’s effective
tax rate for the quarter ended August 31, 2010 and for the year ended February
28, 2010 is as follows:





August 31,
                    2010
                  
                  
                  February 28,
                    2010U.S.
      federal statutory rate
                  
                  
                  34.0
                  %
                  
                  
                  34.0
                  %Change
      in valuation allowance
                  
                  
                  (34.0
                  )
                  
                  
                  (34.0
                  )Effective
      income tax rate
                  
                  
                  0.0
                  %
                  
                  
                  0.0
                  %





7.
            OTHER
      INCOME:





The
$6,000 of other income reflected in the condensed statements of income for the
quarter ended August 31, 2010 consists of $6,000 of interest income on
investment in treasury bills net of changes in market value plus $2,000 of
income tax benefit minus $2,000 of income tax expense. The $19,000
of  net other income reflected in the condensed statements of income
for the quarter ended August 31, 2009 consists of $3,000 of interest income on
investment in treasury bills net of changes in market value plus $16,000 of
income tax benefit.


10


SOLITRON
DEVICES, INC.


NOTES TO CONDENSED FINANCIAL
STATEMENTS


(Unaudited)





8.
            ACCRUED
      EXPENSES:





As of
August 31, 2010 and February 28, 2010, accrued expenses and other liabilities
consisted of the following:





August 31,
                    2010
                  
                  
                  February 28,
                    2010Payroll
      and related employee benefits
                  
                  $
                  386,000
                  
                  
                  $
                  469,000Other
      liabilities
                  
                  
                  44,000
                  
                  
                  
                  36,000$
                  430,000
                  
                  
                  $
                  505,000





9.
            EXPORT SALES AND MAJOR
      CUSTOMERS:





Revenues
from domestic and export sales to unaffiliated customers for the three months
ended August 31, 2010 are as follows:





Power
                
                
                
                
                
                Field
      Effect
                
                
                PowerGeographic Region
                
                Transistors
                
                
                Hybrids
                
                
                Transistors
                
                
                MOSFETS
                
                
                TotalsEurope
      and Australia
                
                $
                4,000
                
                
                $
                507,000
                
                
                $
                26,000
                
                
                $
                0
                
                
                $
                537,000Canada
      and Latin America
                
                
                6,000
                
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                6,000Far
      East and Middle East
                
                
                1,000
                
                
                
                0
                
                
                
                0
                
                
                
                82,000
                
                
                
                83,000United
      States
                
                
                322,000
                
                
                
                799,000
                
                
                
                218,000
                
                
                
                321,000
                
                
                
                1,660,000Totals
                
                $
                333,000
                
                
                $
                1,306,000
                
                
                $
                244,000
                
                
                $
                403,000
                
                
                $
                2,286,000





Revenues
from domestic and export sales to unaffiliated customers for the three months
ended August 31, 2009 are as follows:





Power
                
                
                
                
                
                Field
      Effect
                
                
                PowerGeographic Region
                
                Transistors
                
                
                Hybrids
                
                
                Transistors
                
                
                MOSFETS
                
                
                TotalsEurope
      and Australia
                
                $
                50,000
                
                
                $
                61,000
                
                
                $
                4,000
                
                
                $
                3,000
                
                
                $
                118,000Canada
      and Latin America
                
                
                11,000
                
                
                
                0
                
                
                
                24,000
                
                
                
                1,000
                
                
                
                36,000Far
      East and Middle East
                
                
                0
                
                
                
                0
                
                
                
                0
                
                
                
                48,000
                
                
                
                48,000United
      States
                
                
                150,000
                
                
                
                960,000
                
                
                
                249,000
                
                
                
                377,000
                
                
                
                1,736,000Totals
                
                $
                211,000
                
                
                $
                1,021,000
                
                
                $
                277,000
                
                
                $
                429,000
                
                
                $
                1,938,000





Revenues
from domestic and export sales are attributed to global geographic region
according to the location of the customer’s primary manufacturing or operating
facilities.





For the
quarter ended August 31, 2010, sales to the Company's top two customers,
Raytheon Company (17%) and BAE Systems Australia (22%), accounted for 39% of net
sales.  For the quarter ended August 31, 2009, sales to the Company's
top two customers, Raytheon Company (49%) and BAE Systems Australia (5%),
accounted for 54% of net sales.  The Company’s shipments to its
customers depend upon the customer’s specific requirements and upon the
availability of raw materials.





10.
            EXPORT SALES AND MAJOR
      CUSTOMERS:





Purchases
from the Company’s two top suppliers, WUXI Streamtek ltd. (10%) and Air
Products, Inc. (7%), accounted for 17% of total purchases of production
materials for the quarter ended August 31, 2010.  For the quarter
ended August 31, 2009, purchases from the Company’s two top suppliers,
Platronics Seals (22%) and Eastern States Components, Inc. (10%), accounted for
32% of the Company's total purchases of production
materials.


11


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





Overview:




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




The
following discussion and analysis of factors which have affected the Company's
financial position and operating results during the periods included in the
accompanying Condensed Financial Statements should be read in conjunction with
the Financial Statements and the related Notes to Financial Statements and
Management’s Discussion and Analysis of Financial Condition and Results of
Operations included in the Company’s Annual Report on Form 10-K for the year
ended February 28, 2010 and the Condensed Financial Statements and the related
Notes to Condensed Financial Statements included in Part I, Item 1 of this
Quarterly Report on Form 10-Q.




Significant Accounting
Policies:




The
discussion and analysis of our financial condition and results of operations are
based upon the Condensed Financial Statements included in Part I, Item 1 of this
Quarterly Report on Form 10-Q which are prepared in accordance with accounting
principles generally accepted in the United States. Preparing financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue, and expenses. These estimates
and assumptions are affected by management’s application of accounting policies.
Our significant accounting policies include inventories, valuation of property,
plant and equipment, revenue recognition and accounting for income taxes. A
discussion of all of these significant accounting policies can be found in Note
1 of the “Notes To Financial Statements” in Part I, Item 8 of our Annual Report
on Form 10-K for the fiscal year ended February 28, 2010.




Trends and
Uncertainties:




During
the three months ended August 31, 2010, the Company’s book-to-bill ratio was
approximately .83 as compared to approximately 1.05 for the three months ended
August 31, 2009, reflecting a decrease in the volume of orders
booked.  Generally, the intake of orders varies greatly from period to
period 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. This fluctuation in the intake of orders has existed for the
past 18 years and is expected to continue over the next 24 months. The Company
continues its efforts to reduce its variable manufacturing costs to offset the
potential impact of low volume of orders to be shipped.  However,
should order intake fall drastically below the level experienced in the last
twenty four months, the Company might be required to implement further cost
cutting or other downsizing measures to continue its business
operations.




Inventories


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




The
Company’s inventory valuation policy is as follows:





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


12


Finished
      goods:
            All
      finished goods with firm orders for later delivery are valued (material
      and overhead) at the lower of cost or market.  All finished
      goods with no orders are fully
reserved.





Direct
      labor costs:
            Direct
      labor costs are allocated to finished goods and work in process inventory
      based on engineering estimates of the amount of man hours required from
      the different direct labor departments to bring each device to its
      particular level of completion.





Results of Operations-Three
Months Ended August 31, 2010 Compared to Three Months Ended August 31,
2009:





Net sales
for the three months ended August 31, 2010 increased 18% to $2,286,000 as
compared to $1,938,000 for the three months ended August 31,
2009.  This increase was primarily attributable to a higher level of
orders that were shipped in accordance with customer requirements.





Cost of
sales for the three months ended August 31, 2010 increased to $1,609,000 from
$1,316,000 for the comparable period in 2009, primarily due to an increase in
net sales and higher cost of raw materials.  Expressed as a percentage
of sales, cost of sales increased to 70% from 68% for the same period in
2009.  This increase in percentage was due primarily to an increase in
cost of raw materials percentage.





Gross
profit for the three months ended August 31, 2010 increased to $677,000 from
$622,000 for the three months ended August 31, 2009, primarily due to an
increase in net sales offset by higher cost of
materials.  Accordingly, gross margins on the Company’s sales
decreased to 30% for the three months ended August 31, 2010 in comparison to 32%
for the three months ended August 31, 2009.  This percentage decrease
was due primarily to higher sales offset by an increase in cost of raw materials
percentage.





For the
three months ended August 31, 2010, the Company shipped 34,882 units as compared
to 32,221 units shipped during the same period of the prior year.  It
should be noted that since the Company manufactures a wide variety of products
with an average sales price ranging from less than one dollar to several hundred
dollars, such periodic variations in the Company’s volume of units shipped
should not be regarded as a reliable indicator of the Company’s
performance.





The
Company’s backlog of open orders decreased 6% to $6,510,000 for the three months
ended August 31, 2010 as compared to the same period in the prior year. For the
three months ended August 31, 2009, the Company’s backlog of open orders
increased 2% to $5,327,000 as compared to the same period in the prior
year.  Changes in backlog reflect changes in the intake of orders and
in the delivery requirements of customers.





The
Company has experienced a decrease of 7% to $1,894,000 in the level of bookings
during the quarter ended August 31, 2010 as compared to the same period in the
prior year. For the three months ended August 31, 2009, the Company experienced
a 31% decrease to $2,040,000 in the level of bookings as compared to the same
period in the prior year. The decrease in bookings for the current quarter is
principally as a result of a decrease in defense spending, resulting in a
decrease in the monetary value of, and timing differences in the placement of
contracts by the Department of Defense and its prime contractors.





Selling,
general, and administrative expenses increased to $246,000 for the three
months ended August 31, 2010 from $241,000 for the comparable period in
2009.  The increase reflects higher labor and sales commission
expenses. During the three months ended August 31, 2010, selling, general, and
administrative expenses as a percentage of net sales fell to 11% as compared
with 12% for the three months ended August 31, 2009.  The percentage
decrease was due primarily to an increase in net sales.





Operating
income for the three months ended August 31, 2010 increased to $437,000 as
compared to $381,000 for the three months ended August 31, 2009. This increase
is due primarily to higher net sales offset by higher cost of
materials.





The
Company recorded net other income of $6,000 for the three months ended August
31, 2010 as compared to $19,000 for the three months ended August 31,
2009.  Included in net other income was $6,000 of interest income on
investment in treasury bills net of changes in market value for the three months
ended August 31, 2010 plus $2,000 of income tax benefit offset by $2,000 of
income tax expense.  For the three months ended August 31,
2009,  the Company recorded $3,000 of interest income on investment in
treasury bills net of changes in market value in addition to $16,000 of other
income tax benefit.  The increase in interest income is due primarily
to higher rates of return on invested funds.




13




Net
income for the three months August 31, 2010 increased to $437,000 as
compared to $400,000 for the same period in 2009.  This increase is
due primarily to higher net sales.


Results of Operations-Six
Months Ended August 31, 2010 Compared to Six Months Ended August 31,
2009:





Net sales
for the six months ended August 31, 2010 increased 17% to $4,409,000 as
compared to $3,758,000 for the six months ended August 31, 2009.  This
increase was primarily attributable to a higher level of orders that were
shipped in accordance with customer requirements.




Cost of
sales for the six months ended August 31, 2010 increased to $3,287,000 from
$2,865,000 for the comparable period in 2009, primarily due to an increase
in net sales and higher cost of materials.  Expressed as a percentage
of sales, cost of sales decreased to 75% from 76% for the same period in
2009.  This percentage decrease was due primarily to an increase in
net sales, offset by higher cost of raw materials.




Gross
profit for the six months ended August 31, 2010 increased to
$1,122,000 from $893,000 for the six months ended August 31, 2009,
primarily due to an increase in net sales offset by higher cost of raw
materials. Gross margins on the Company’s sales increased to 25% from 24% for
the same period in 2009.  This percentage increase was primarily due
to an increase in net sales, offset by higher cost of raw
materials.




For the
six months ended August 31, 2010, the Company shipped 86,123 units as compared
to 80,680 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 10% to $6,510,000 for the six months
ended August 31, 2010 when compared with the six months ended August 31, 2009.
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 of 80% to $4,991,000 in the level of
bookings during the six months ended August 31, 2010 when compared with the six
months ended August 31, 2009. The increase occurred 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. The increase occured primarily during the
three months ended May 31, 2010.





Selling,
general, and administrative expenses increased to $538,000 for the six months
ended August 31, 2010 from $512,000 for the comparable period in 2009, primarily
due to higher sales commissions and general labor costs.  During the
six months ended August 31, 2010, selling, general, and administrative expenses
as a percentage of net sales decreased to 12% as compared to 14% for the
six months ended August 31, 2009.  This percentage decrease was
primarily due to an increase in net sales.





Operating
income for the six months ended August 31, 2010 increased to $584,000 from
$381,000 for the six months ended August 31, 2009. This increase is due
primarily to an increase in net sales offset by higher cost of raw
materials.





The
Company recorded net other income of $8,000 for the six months ended August 31,
2010 as compared to net other income of $20,000 for the six months ended August
31, 2009.  Included in net other income was interest income of $11,000
for the six months ended August 31, 2010, $2,000 of income tax benefit, and
$5,000 of income tax expense. Included in net other income for the six months
ended August 31, 2009 was $11,000 of interest income, and $16,000 of income tax
benefit offset by $7,000 of expense from receivables adjustments.




Net
income for the six months ended August 31, 2010 increased to $592,000 from
$401,000 for the same period in 2009.  This increase was due primarily
to an increase in net sales and a decrease in cost of sales percentage as
discussed above.


14


Liquidity and Capital
Resources:




Subject
to the following discussion, the Company expects its sole source of liquidity
over the next twelve months to be cash from operations. The Company anticipates
that its capital expenditures required to sustain operations will be
approximately $250,000 during the current fiscal year and will be funded from
operations.





Based
upon (i) management’s best information as to current national defense
priorities, future defense programs, as well as management’s expectations as to
future defense spending, (ii) a fluctuation in the intake of orders as discussed
above (see Part I, Item 2 of this Quarterly Report on Form 10-Q), and an
increase in the cost of raw materials and operations that will result in the
potential erosion of profit levels and continued price pressures due to severe
price lowering pressures by defense customers, and (iii) the continued intense
competition in the defense and aerospace market, the Company believes that it
will have sufficient cash on hand to satisfy its operating needs during the
current fiscal year.  However, due to the level of current backlog and
new order intake (due to the status of the general economy and the shift to
Commercial Off –The-Shelf (COTS) by the defense industry), the Company might
operate at a break even or a small profit during  the balance of the
current fiscal year.  In the event the Company experiences a
significant slowdown in the intake of new orders, the Company may be required to
implement cost-cutting or other downsizing measures to continue its business
operations.  Such cost-cutting measures could inhibit future growth
prospects. In appropriate situations, the Company may seek strategic alliances,
joint ventures with others or acquisitions in order to maximize marketing
potential and utilization of existing resources and provide further
opportunities for growth.





The
Company reported net income of $592,000 and operating income of $584,000 for the
six months ended August 31, 2010.





At August
31, 2010, February 28, 2010 and August 31, 2009, the Company had cash of
approximately $468,000, $400,000 and $129,000, respectively.  Net
income contributed $575,000 to the last six months’ cash flow generated by
ongoing operations.





At August
31, 2010, February 28, 2010 and August 31, 2009, the Company had investments in
treasury bills of approximately $5,853,000, $5,601,000 and $5,325,000,
respectively.





At August
31, 2010, the Company had working capital of $8,230,000 as compared with a
working capital at August 31, 2009 of $7,381,000.  At February 28,
2010, the Company had a working capital of $7,752,000.  The $478,000
increase for the six months ended August 31, 2010 was due mainly to a $490,000
combined increase in cash, receivables and investments in treasury bills offset
by an increase in customer deposits.





Off-Balance Sheet
Arrangements:





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





ITEM
      3.
            QUANTITATIVE AND
      QUALITATIVE DISCLOSURE ABOUT MARKET
RISK





Not
applicable


15


FORWARD-LOOKING
STATEMENTS




Some of
the statements in this Quarterly Report on Form 10-Q are "forward-looking
statements," as that term is defined in the Private Securities Litigation Reform
Act of 1995. These forward-looking statements include statements regarding our
business, financial condition, results of operations, strategies or
prospects. You can identify forward-looking statements by the fact that these
statements do not relate strictly to historical or current matters. Rather,
forward-looking statements relate to anticipated or expected events, activities,
trends or results. Because forward-looking statements relate to matters that
have not yet occurred, these statements are inherently subject to risks and
uncertainties. Many factors could cause our actual activities or results to
differ materially from the activities and results anticipated in forward-looking
statements. These factors include those described under the caption "Risk
Factors" in our Annual Report on Form 10-K for the year ended February 28, 2010,
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, parts and finished components
      on a timely basis and at a cost-effective
price.


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


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


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


·
            Environmental
      regulations could require us to incur significant
  costs.


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


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


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


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


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


·
            We
      may not achieve the intended effects of our 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.


·
            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.


16


ITEM
      4.
            CONTROLS AND
      PROCEDURES





Our
Evaluation of Disclosure Controls and Procedures





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





Changes
in Internal Control over Financial Reporting





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





PART II– OTHER
INFORMATION





ITEM
      6.
            EXHIBITS





Exhibits





31
              
              Certification
      of  Chief Executive Officer and Chief Financial Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002.32
              
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      906  of the Sarbanes-Oxley Act of
  2002.


17


SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





SOLITRON
      DEVICES, INC.Date:
      October 11, 2010/s/
      Shevach SarafShevach
      SarafChairman,
      President,Chief
      Executive Officer,Treasurer
      andChief
      Financial Officer(Principal
      executive officer andprincipal
      financial officer)


18


EXHIBIT
INDEX




EXHIBIT NUMBER
              
              DESCRIPTION31
              
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.32
              
              Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of
2002.


19